On average, it takes 12 months before a victim realizes their identity has been stolen. According to statistics, the average amount stolen from a victim ranges from as much as $3,000 to as little as $500.00. It all depends on what the thief does once your personal information is stolen. Therefore, preventing identity fraud is quite important.
Once a thief has stolen your information, he can open a credit account in your name. Once the thief receives the card, he will go on a shopping spree, quickly maxing out the card with no intention of paying off the balance. When they do not pay the bill, you are contacted by the credit card collections department requesting payment of a card you know nothing about. Therefore, preventing identity fraud is vital to your good credit standing as this credit card company is now reporting to the credit bureaus regarding the late payment on the card.
Penny Abrams had her wallet stolen while on vacation in San Francisco. While she was smart enough to cancel her credit cards and contact her bank, she forgot she had her social security card in her wallet. About six months later, she received a call from a credit card company demanding payment. She had never applied for this card but the thief applied for and received a credit card in her name.
Another good reason for preventing identity fraud is phone or utility fraud. Once a thief has your name and other personal information, he or she can open a cell phone account and run up the bill on your personal account. Or, the identity thief can use your personal information to get cable TV or electricity. In general, it is easier to use a stolen identity to get utilities than a new credit card. Penny also found out that her purse-snatcher had opened a cell phone account in her name. The bill was over $500.
Because Penny reacted quickly once her personal information was stolen, the thief who tried to use her debit card was turned down. Unfortunately, Penny did not put a fraud alert on her credit file and the thief was able to get a loan in her name. Penny now has derogatory credit on her credit file for non-payment of her loan. So far she has made a police report, contacted the company that holds the loan for a copy of the loan documents, and has reported the fraud to the credit bureau. She is still working on getting the fraudulent loan and credit card removed from her credit file.
Another reason for preventing identity fraud is the creation of false legal documents. The criminal can get a drivers license in your name or a state identification card with your personal information. A thief can even file a false tax return in your name making you responsible to pay taxes due.
There are plenty of other false claims an identity thief can make. The thief can use your personal information to get a job or receive medical attention. An identity thief can also file for benefits from the government under your name or give your personal information to the police if arrested.
Imagine what Penny was thinking when she was pulled over for speeding to find out she had a warrant out for her arrest for failure to pay a previous speeding ticket. This was the first time she had been pulled over for this offense. Now, Penny has to pay the cost of a lawyer to help her clear her name. And, with a job at the bank, getting arrested can seriously jeopardize her position.
Preventing identity fraud is not only a clever practice but could help prevent you losing your job or even getting arrested. A thief can use your personal information to obtain a credit card, file taxes, or obtain a drivers license.