Legal Steps to Take If You’re a Victim of Identity Theft

They say you’re one identity theft incident away from witnessing your world crumble in front of your eyes. According to research, that’s usually the story of one in every five people.

If this sounds like what you or a loved one is dealing with, all is not lost. Importantly, you’re not alone. You do have rights worth protecting.

Legal Steps to Take If You’re a Victim of Identity Theft

Identity theft cases are more common today partly because sensitive information is usually just a few clicks away from scammers. This crime can mess up your finances, damage your credit score, and compromise your personal security. You might face unexpected bills, denied loans, or even legal troubles because of actions you didn’t take. But when you know what to do and when to do it, you can protect yourself and work toward recovering your identity and financial stability.

Understanding Identity Theft

Let’s first break down what “identity theft” really means.

What Is Identity Theft?

As the name implies, identity theft is when someone uses your personal information without authorization to commit fraud or theft. Personal information, in this context, could be your:

• Social Security number

• Bank account information

• Medical records

• Insurance details

• Login credentials

For perspective, let’s look at some common types of identity theft.

• Credit card fraud

Criminals may use your credit card information for unauthorized purchases. This could land you in debt or even legal battles with creditors.

• Tax identity theft

When a malicious party has access to your tax identity information, they may use it to file false tax returns. The goal here is to claim refunds under your name.

• Medical identity theft

Scammers can steal your personal information and use it to obtain medical services or even insurance benefits. This type of theft is actually pretty serious; you or a loved one may be at risk of receiving incorrect medical treatment due to inaccurate health records.

Key Statistics on Identity Theft

To give you a further perspective on how prevalent and serious identity theft cases are, let’s explore some eye-opening statistics:

• About one in five persons have experienced identity theft in their lifetime ( Bureau of Justice Statistics)

• In 2022 alone, the FBI reported at least 27,922 victims of identity theft ( Federal Bureau of Investigations)

• There were about 27,820 cases of medical identity theft in 2022 ( Consumer Sentinel Network)

• Children aren’t spared either; there were 915,000 cases of child identity theft in 2022 ( Javelin Strategy & Research)

• Identity theft cases happen every 22 seconds ( IdentityTheft.org)

These statistics, and many more, lead us to only one conclusion: No one is immune from identity theft.

Signs Your Identity May Have Been Stolen

With that said, how do you know someone’s using your identity for malicious reasons? Your identity might have been stolen if:

• You notice purchases or withdrawals you didn’t make or authorize.

• You’ve been denied credit, despite having good financial standing.

• You’ve received notices from the IRS about unfiled taxes.

• You start getting bills or collection notices for accounts you never opened.

• Your bank or credit card company alerts you about suspicious activity on your accounts.

• You find incorrect or unfamiliar information on your credit report.

These are not all the signs of identity theft out there, but they’re pretty solid reasons to suspect someone’s using your information.

Immediate Steps to Take if You’re a Victim

You can beat the other party at their own game if you know the right steps to take. Here’s what should do:

• Alert Financial Institutions

The first step is to contact your banks and credit card companies immediately. Inform them about the fraudulent activity and request a freeze or closure of any compromised accounts. Most financial institutions have fraud departments that can help you dispute unauthorized transactions and secure your accounts to prevent further misuse.

• Place a Fraud Alert or Credit Freeze

Next, let Equifax, Experian, and TransUnion, the three major credit bureaus, know that your identity has been stolen. The fraud alert notifies creditors to verify your identity before opening new accounts in your name. A credit freeze, on the other hand, restricts access to your credit file altogether.

• File an Identity Theft Report with the FTC

Visit IdentityTheft.gov to file a report with the Federal Trade Commission. On the website:

• Click “Report Fraud” on the top menu

• Click “Report Now” on the new page

• Provide the requested information

Usually, the required information includes your personal details, a description of the identity theft incident, and any supporting documents.

• Contact Local Law Enforcement

Local law enforcement may not always be able to investigate the case, but you need an official police report for documentation purposes. You can use this report to prove your case to creditors, insurance companies, or other entities involved in your recovery process.

Know Your Legal Rights

You may be a victim of identity theft, but that doesn’t mean you’re helpless. You have legal rights that deserve protection.

• Federal Protections

Certain federal laws can protect you if you’re a victim of identity theft. The Fair Credit Billing Act (FCBA), for instance, protects you against unauthorized credit card charges. Importantly, it limits your liability to $50 in most cases.

The same applies to the Electronic Fund Transfer Act (EFTA). This regulation protects you from fraudulent electronic transfers by making sure you’re not held responsible if you report the theft promptly.

Finally, the Identity Theft and Assumption Deterrence Act makes identity theft a federal crime. And in return, it gives enforcement more power to pursue offenders.

• State-specific Laws

Federal laws aside, your state may also offer additional protection. Many states provide resources, such as identity theft hotlines or programs to assist victims in recovering their financial stability.

Check with your state’s attorney general office or consumer protection agency for information on specific laws and support available to you or your loved ones.

• Credit Reporting Rights

Identity theft can damage your credit. However, there are federal laws you can utilize to dispute errors on your credit report caused by identity theft and have them corrected.

Also, you should receive at least one annual credit report from each of the three major credit bureaus. This annual reporting allows you to monitor your credit for suspicious activity.

Resolving Identity Theft Issues

With the right steps, you can resolve the issue of identity theft. Here are some useful tips.

Dispute Fraudulent Charges

Don’t ignore an unauthorized transaction. Even smaller transactions matter. Sometimes, criminals use smaller transactions to test if you’re monitoring your accounts. If they find out that you aren’t paying attention, they’ll hit you with a bigger transaction. Inform your creditors immediately if you spot a suspicious charge on your credit card. The financial institution might ask for supporting documents, like your FTC identity theft report or police report, to demonstrate the fraudulent nature of the charges.

Correct Credit Report Errors

Address errors on your credit report caused by identity theft. Ideally, you should contact the three credit bureaus and file a dispute for each incorrect item.

Work with Law Enforcement and the FTC

Remember to join hands with law enforcement and the FTC. Keep detailed records of your communications and provide updates whenever new information becomes available.

Success Stories: Reclaiming Your Identity

Let’s discuss some hypothetical success stories to help you.

Case Study 1: Recovering from Tax Identity Theft with IRS Support

Sarah is a freelance graphic designer. She’s noticed that her tax refund has been delayed one year. She then calls the IRS and finds out that someone had already filed a tax return using her Social Security number and also claimed a large refund.

These are not uncommon incidents; in 2014, Indianapolis media outlet WRTV reported a story of a woman whose five kids were victims of tax identity theft. The scammer had claimed the woman’s kids in their tax returns and even got a refund.

In the case of Sarah, she immediately contacts the IRS, files an identity theft report, and completes a Form 14039. This is the form used to notify the IRS about suspected identity theft.

The IRS places a flag on her tax account to make sure that no further fraudulent claims can be made. After several months of follow-ups and verifying her identity, Sarah finally receives her legitimate refund.

Case Study 2: Using Credit Monitoring Tools to Catch and Stop Fraud Early

Tom signs up for a credit monitoring service after hearing about the growing threat of identity theft. A few months later, he receives an alert from the service notifying him of a credit inquiry he doesn’t recognize. He decides to investigate and realizes that someone has opened a credit card account in his name. Tom immediately freezes his credit with the three major bureaus.

He then contacts the bank where the fraudulent account was opened, and with supporting documents from his credit monitoring service and the police, the bank closes the account and removes any charges.

From Sarah's and Tom’s experiences, here’s what we’ve learned:

• Act fast, whether it’s contacting the IRS or alerting your bank.

• Use available tools.

• Document your communications with creditors, agencies, and authorities.

Empowering Yourself Against Identity Theft

When identity theft knocks you down, there are certain steps you can take to rise back on your feet. Among others, these steps include alerting your financial institutions, placing fraud alerts, filing reports with the FTC, and working with law enforcement.

You’re also now aware of your rights under federal laws and how to correct errors on your credit report. These actions, coupled with vigilance, can reduce the risk of further damage and help you regain control of your personal and financial security.

Lastly, it’s important to be proactive. The more you monitor your financial accounts, the better your chances of preventing identity theft from occurring in the first place.