Consumer advocates have argued long and hard that "instant credit" standards allow identity thieves to easily steal money with a stolen identity. Slowly the government is responding by requiring the credit industry to take extra steps to verify applications when an address is different than the one in the applicant's main credit file. This new FTC rule just went into effect in November of 2008.
Identity theft accounted for over 250,000 Federal Trade Commission complaints last year making it the leading reported consumer complaint for eight years in a row. The most common form of identity theft is the fraudulent use of a victim's existing accounts but the most serious forms involve the opening of new accounts using a stolen identity.
How does this new FTC rule affect consumers? The Chapgar family of Blue Bell, Pennsylvania was grieving after the death of their son. Imagine their pain when almost immediately they began receiving multiple phone calls from creditors, including American Express, Citibank and Best Buy, to verify if their son had applied for new credit cards. The Chapgar's learned that the deceased can easily become targets of identity theft and the grieving loved one's are not immune to the consequences either.
"We thought it was a freak thing," said Zal's mother, Kerban Chapgar. "It was only after the second call that we started to pay attention."
What Can Mourning Families Do to Stop Identity Theft?
The Chapgar family placed a "fraud alert" on their son's credit file as soon as they realized that his identity was being stolen. Consumer advocates recommend taking this step to put an extra speed bump in the road to slow down identity thieves.
"It's probably one of the last things you want to think about in a situation like that," said Tim Klein, a spokesman for Equifax, one of three major credit-reporting agencies.
Recommended Steps to Prevent Identity Theft of the Recently Deceased:
*Place a fraud alert on the deceased credit file.
*Notify the Social Security Administration of the death.
*Send a copy of a death certificate, police report or notarized letter to all three credit-reporting agencies.
*Notify all businesses that the person did business with of the death and provide a copy of the death certificate once it is available.
To place a fraud alert for 90 days consumers can contact any of the three main credit-reporting companies and the contacted company is then responsible for alerting the other two.
*Equifax, 1-800-525-6285 equifax.com
*Experian, 1-888-397-3742 or experian.com
*TransUnion, 1-800-680-7289 or transunion.com
"The fact of the matter is, there's a lot of identity theft that's in the pipeline that hasn't been discovered yet," said Paul Stephens, policy director of Privacy Rights Clearinghouse, a California nonprofit monitoring credit reporting.
New regulations put in place by the Federal Trade Commission should help slow down or prevent some instances of identity theft but grieving families may want to consider taking these steps on behalf of their loved ones. Look for more new regulations from the FTC to go into play in May of 2009 that will make it even tougher to get instant credit and will hopefully help to prevent identity theft crimes.
Lisa Carey is a contributing author for Identity Theft Secrets: prevention and protection. You can get tips on Identity theft protection, software, and monitoring your credit as well as learn more about the secrets used by identity thieves at the Identity Theft Secrets blog.
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