David Lerner Associates: Identity Theft Fraud Tips

David Lerner Associates: Identity Theft Fraud Tips

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Reports of the rise in identity theft are in the news all the time, yet many people think it will never happen to them. Then one day they find that their bank account has been drained or credit card bills are through the roof, and they’re getting late notices for accounts they never opened.

To minimize losses, it’s imperative to act fast. Contact, in this order:

  • The credit card companies
  • The bank
  • The three major credit bureaus
  • Local, state, or federal law enforcement authorities

Credit card companies

Credit card companies are getting better at detecting fraud.  In many cases, if they spot activity outside the mainstream of the normal card usage, they'll call to confirm that the charge is legitimate.  However,  the responsibility to notify them of lost or stolen cards is with the account holder, not the card company.

By notifying them within 30 days, the loss will be no more than $50 in fraudulent charges per card.  Ask that the accounts be closed, and open new accounts with password protection.

If an identity thief opens new accounts using the identity that’s been stolen, it will be necessary to prove that it was done fraudulently. If in your name, you'll need to prove it wasn't you who opened them. Ask the creditors for copies of application forms or other transaction records to verify that the signature on them isn't yours.

Follow up your initial creditor contacts with letters indicating the date you reported the loss or theft. Watch your subsequent monthly statements from the creditor; if any fraudulent charges appear, contact them in writing.

The bank

If its’ a debit (ATM) card that is lost or stolen, the owner of the card is not held responsible for any unauthorized withdrawals, as long as the theft is reported before the card is used. Otherwise, the extent of the liability depends on how quickly the loss is reported.

  • If the loss is reported within two business days after the card is missing, liability is up to $50 of unauthorized withdrawals. (If the card doubles as a credit card, you may not be protected by this limit).
  • If the loss goes unreported for more than two days, the liability can be up to $500 in unauthorized withdrawals.
  • Failing to report the loss of a card or an unauthorized withdrawal within 60 days after the statement is mailed, can lead to unlimited loss.

If it’s a checkbook that is lost or stolen, stop payment on any outstanding checks, then close the account and open a new one. Dispute any fraudulent checks accepted by merchants in order to prevent collection activity.

The three major credit bureaus

As soon as a credit card is lost or stolen, it’s important to call the fraud number of any one of the three national credit reporting agencies: Equifax, Experian, and TransUnion. It is only necessary to call one – they are required to contact the other two.

Place a fraud alert on the credit report. If an existing account is used fraudulently or the thief opens new credit in that name, place an extended fraud alert on the credit report once a report has been filed with a law enforcement agency.

Once a fraud alert has been placed on a credit report, anyone asking for a credit report on an individual is required to verify their identity before extending any existing credit or issuing new credit in that name. For extended fraud alerts, this verification process must include contacting the person by telephone at a number specifically provided for that purpose.

Most states now allow credit reports to be “frozen.” (In the few that don't, the credit bureaus allow state residents to freeze their reports voluntarily). Once a report is frozen, no one--creditors, insurers, and even potential employers--will be allowed access to that credit report unless it has been "thawed" by that person.

To freeze a credit report, contact all three major credit reporting agencies. In many cases, victims of identity theft are not charged a fee to freeze and/or thaw their credit reports, but the laws vary from state to state. Contact the office of the attorney general in the state of residence for more information.

It is possible to contest fraudulent transactions on a credit report through the credit bureaus. Do so in writing, and provide a copy of the identity theft report file. Do the same with the merchant, bank, or creditor who reported the information to the credit bureau. Both the credit bureaus and those who provide information to them are responsible for correcting fraudulent information on a credit report and for taking pains to assure that it doesn't resurface there.

Law enforcement agencies

While the police may not catch the person who stole the identity, it’s best to file a report about the theft with a federal, state, or local law enforcement agency. Make sure to keep a copy of the report, as it will be needed to file an extended fraud alert with the credit bureaus. It may also be needed by banks or creditors before they'll forgive any unauthorized transactions.

Give the law enforcement officer as much information about the crime as possible--the date and location of the loss or theft, information about any existing accounts that have been compromised, and/or information about any new credit accounts that have been opened fraudulently. Write down the name and contact information of the investigator who took the report, and give it to creditors, banks, or credit bureaus that may need to verify the case.

If the identity theft or fraud involved any mail tampering (such as stealing credit card offers or statements from your mailbox or filing a fraudulent change of address form), notify the U.S. Postal Inspection Service. If a driver's license has been used to pass bad checks or perpetrate other forms of fraud, contact the state’s Department of Motor Vehicles. If a passport is lost or stolen, contact the U.S. Department of State. Finally, if a Social Security card is lost or stolen, notify the Social Security Administration.

Follow through

Once resolved, most instances of identity theft stay resolved, but it pays to remain alert. Monitor credit reports regularly, check the monthly card and bank statements for any unauthorized activity, and be on the lookout for other signs such as missing mail and debt collection activity.


Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Some of this material has been provided by Broadridge Investor Communications Solutions, Inc.


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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website: http://www.davidlerner.com

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Jake Mendlinger
Account Manager
516.829.8374 X 232

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