Identity Theft: New Ways to Steal Your Money

Identity theft is on the rise, and criminals are becoming more brazen. Tiny electronic devices called 'skimmers' can be used to steal your credit card information in stores, restaurants, or even at the gas pump! And if you get an e-mail from your bank or online merchant company, forget about supplying any personal information. You'll likely be handing over your financial assets to an identity thief.

Hand-held devices called 'skimmers' are the new tool of choice for identity thieves. These are small card reading devices that fit in the palm of a hand. Store clerks and waiters have been known to use them to swipe customer's credit cards. Once the card information is in the skimmer, identity thieves can use it to make purchases online or over the phone. Skimmers have also been placed inside gas pumps to steal card numbers.

Once identity thieves have your name and credit card number, they can go on a spending spree. But many merchants require a 3-digit security code from the back of the credit card to complete a transaction. Identity thieves come looking for these numbers by telephone or e-mail. They usually pose as bank employees or representatives of an online merchant company, such as Paypal. Supplied with your name and credit card number, the identity thieves might say that they're contacting you about a suspicious purchase or security breach on your account. They will ask for personal information, such as the 3-digit code from your credit card. Once they have this information, your money is as good as theirs.

The good news is that you can take steps to prevent identity theft. Skimmers can be thwarted by keeping a watchful eye on your credit or debit card whenever it leaves your hand. If you don't feel comfortable entrusting your card to a waiter or store clerk, simply pay in cash. And if your gas pump looks fishy, go pay inside.

Always pay attention to your bank balance and credit card statements. If you see suspicious activity, report it immediately. Dispute the charges, cancel your credit card, and have a new one issued. Banks are very understanding about identity theft since, unfortunately, it's quite common. You might be asked to sign a waiver as part of the dispute. Just cooperate with the bank's requests, and things will go smoothly. Likewise with credit cards; they come with fraud protection, and most card issuers have 24 hour emergency numbers that you can call to get your card replaced. If your credit card is ever lost, cancel it immediately.

Don't forget to look at your credit report. You might find all kinds of interesting bumps and bruises that you aren't responsible for. By disputing fraudulent items on your report, you can improve your credit score. If you're certain that you've been the victim of identity theft, you can contact all three major credit bureaus (Equifax, Experian, and TransUnion) and have a freeze placed on your credit. This prevents identity thieves from opening new lines of credit in your name. The freeze can be temporarily lifted when you need to make legitimate purchases. Expect to pay unspecified fees for lifting and reinstating credit freezes. Contact the bureaus for specific fee information.

If you use online merchant or auction services, be sure to change your password and security questions regularly. Set up a bank account specifically for use with these types of services. That way, if you do fall victim to hackers and identity thieves, your primary bank account won't be touched. And if you receive official-looking e-mails, don't be fooled. They contain links to fraudulent web sites that look exactly like your bank or online service. Never follow the links in these e-mails. Instead, call the company or visit their web site by manually typing their URL into your web browser. Once you're assured that your account is fine, report the e-mails to the company.

Identity thieves can make a lucrative living off of the wages of honest people. Credit cards and the Internet have made money scams easier than ever. I know - I've been the victim of identity theft twice in the past three years. Luckily, I was able to recover my lost money both times with minimal hassle. Others aren't so lucky. My advice is to keep your eyes open, guard your personal information, shred personal documents, and take action immediately if your finances don't add up.

Sources:
"Identity Theft Dangers: All Too Real", by Janna Weiss. CreditorWeb.