Identity Theft Myths: You don’t have to worry if you have bad credit

I’m going to do a series on identity theft myths over the next couple weeks. I might not end up doing them all in a row, though.

A lot of people think they don’t have to worry about identity theft if their credit is lousy. “Use it all you want,” they think. “You’re not going to get approved for anything anyway, and you can’t make my credit any worse than it is.”

Wrong.

For one thing, even though our current financial situation has made it a little harder to obtain credit, there’s still a possibility that somebody, somewhere will grant the identity thief credit using your information.

However, identity theft isn’t always about obtaining credit and making purchases.

Someone could use your information when they get arrested. When they don’t show up in court, the police could appear on your doorstep, and they’ve heard “you’ve got the wrong guy” a million times, so that won’t help you much. Trying to get a mistaken police record cleared up is a hassle you want to steer clear of.

Someone could also use your information to obtain employment. There is a story I see all the time about a woman who applied for a job at Target, then found out she already worked there, according to their records. Someone was working there using her social security number. I actually haven’t seen a version of this story specific enough to indicate it’s anything more than a made-up anecdote, but the fact is that people steal identities in order to obtain employment. Perhaps it doesn’t hurt you at all, and perhaps you never even find out. However, what if they commit a crime while on the job? It could end up following you.

There’s also medical identity theft.  This is the scariest scenario, because it could cost you your life. When someone uses your identity to obtain medical care, you could end up with insurance companies and hospitals calling to collect payments on services you did not receive. Worse still, incorrect medical records attached to your name, including information such as chronic diseases and allergies, could kill you. What if the fact that you’re severely allergic to a drug gets removed from your record, and you’re brought in unconscious and unable to speak up?

So, even if your credit is less-than-perfect (or just plain awful), don’t assume you’re safe from identity theft. Just because they can’t buy a car using your name and information, doesn’t mean they can’t use it for something (or sell it to someone who can).

Unfortunately for the rest of us, thieves are resourceful that way.

Scamming the scammers: a really, really bad idea

One of the cool things about running this site is that I get to see the search terms people have used to find their way here. “WA Surveys” has been a surprisingly common search that has led visitors to the FPU, and “mystery shopper scam” has brought in some traffic. I hope I’ve provided some value to those folks.

However, you also get some weird ones.

The other day, the search term that led someone to the Fraud Prevention Unit was “i want to scam the mystery shopper scam.”

This was a little disturbing to me.

I know what some people are thinking; “Well, they’re crooks, so it’s alright to try to rip them off, right?” And I can understand the impulse—vigilante justice, give them a taste of their own medicine, free money in a down economy, etc.

But it’s a really bad idea to even try. For one thing, the crooks perpetrating the scam aren’t going to feel your wrath at all. They just printed up a bunch of fake checks and sent them out to thousands of people. They’re usually not linked to any real accounts at all, and they’re certainly not linked to accounts owned by the criminals themselves.

But wait, there’s more!

At the point you knowingly present a fraudulent instrument (such as a cashier’s check) to a bank or credit union, you are committing fraud on a financial institution. That is a federal offense, and it carries a prison term if you’re found guilty.

This is serious, serious business.

Besides, a lot of these scams are run by organized crime operations. At some level, there are probably some violent people involved. These are not people you want to go messing around with.

Okay, there’s not a huge chance they’ll find out about your little attempted counter-scheme, but why risk it? You’re already not going to get to keep the money, and you might end up in a federal prison. Do you really need goons coming after you, on top of everything else?

Cash for Clunkers Scam: I just can’t stand it.

What does it take for criminals to put up a scam website these days, four minutes?

Honestly, if I just embedded an audio file of myself sighing heavily, and made that the entire post, I think you’d get my meaning. But I’ll go into a little more detail than that.

It’s ridiculous. Last fall they took advantage of the government’s “Stimulus Package,” because a lot of people only heard the word “stimulus” and instantly thought “that means I get another check!” Which it didn’t, by the way—shame on Washington for repurposing the same language. So the crooks started sending emails, making phone calls and setting up websites, asking for personal information to receive your “stimulus check.” And it worked.

Well, now they’re doing it with the “Cash for Clunkers” program we’ve been hearing about. That’s the program that gives you a certain trade-in on your old gas-hog car if you buy a new one with better fuel economy.

Already, there are fake websites telling you that you have to “pre-register” for your Cash for Clunkers rebate. These sites ask for your personal information.

You don’t have to pre-register for anything, and just like with your annual credit report, there is only one site to visit for Cash for Clunkers information: cars.gov.

If you’re getting your information from any other website, it is not official. If you are entering personal information, you are about to become a victim of identity theft.

There is a good, in-depth article on this latest scam here.

Another article about getting your credit report

There is an excellent blog site called Get Rich Slowly that I highly recommend. It doesn’t really cover fraud or identity theft—the focus is on personal finance. Getting out of debt, saving money, spending wisely; J.D. covers it all, and he speaks from experience (he went from a mountain of credit card to zero over the course of a few years).

However, since we’ve been on the topic of credit reports and credit repair this week, I thought I’d post a link to a GRS article from a couple months ago. The article is about Annualcreditreport.com versus the one with the silly commercials, and you can read it right here. He also links to an article from yet another site. There’s plenty to read!

Normally I like to create the content for this site, but that’s just because I like to write. When someone else has an article I think you should read, I have no problem linking to it. Definitely check out Get Rich Slowly. It’s good stuff.

The Internet is just crawling with these people

Just as an illustration of how careful you have to be when it comes to credit repair/credit counseling/etc. on the Internet, after I posted yesterday’s article I also updated the FPU Twitter feed. The update contained the words “credit repair,” because I was stating how many of them were scams.

This morning I had three new followers on Twitter.

Every one of them was from a credit repair scam business. The first one was obvious…every post contained the same URL, they were following a thousand people but had three followers. The second was from a place with a D- rating by the BBB. The third had a big, fat F.

Needless to say, I blocked all three. Then I found a few that I’d missed, hiding out in my list of followers. I’m not allowing these criminals (which is what they essentially are) to follow the FPU on Twitter.

They’re watching Twitter for the words “credit repair” and latching onto anyone who mentions it. Not on my watch.

I may start calling them out by name every couple weeks if it happens enough to annoy me. I’ll just post their Twitter names, their business names, and their ratings from the BBB. And a warning that the Fraud Prevention Unit recommends you do NOT contact these businesses.

If they are contacting you first, it’s a scam. Pure and simple. There are legitimate credit counselors in your area. Do the research if you need their services. You can’t afford not to.

Credit Repair Scams

They’re out there.

They’re waiting for you.

They say they want to help you. They say they can fix your less-than-perfect credit history.

What they really want is to rip you off.

Big time.

First off, it is important to know that there are legitimate agencies that can help you get your financial situation back on track. I’ll talk about some of those later.

However, there are also a lot of agencies looking to help themselves to your cash. Here are a few things to remember:

  1. You should never pay an upfront fee for any type of credit counseling service. This is a major warning sign that they are up to no good.
  2. They must (by law) provide you with a copy of your rights as a consumer. This tells you what you may and may not do in regards to your credit history. If they do not provide this information, it is another warning sign.
  3. If your credit history has accurate negative information, it’s there to stay for seven years (ten for bankruptcy). There is no legal way to have it removed. Are they offering to delete records of a credit card you actually defaulted on? Warning sign.
  4. If there are mistakes on your report, know that you can correct them yourself for free. If an agency is trying to keep you from contacting a credit bureau yourself, that’s…you guessed it: a warning sign.
  5. It is illegal to try to create a new Social Security number or Employer Identification number for the purpose of creating a clean credit file. It doesn’t work, and it can get you into far worse trouble (we’re talking about the kind of trouble that could involve handcuffs and mugshots).
  6. Check out any credit reporting agency with the Better Business Bureau before you even consider using their services.
  7. The minute they use the term “piggybacking,” walk away. It doesn’t work. Warning sign.
  8. There are advertisements everywhere for credit repair services—email messages, on the radio, even on television. I’m just going to throw this out there: ignore them all. Maybe some of them are legit, but many are not. Do your own research and make your own decision. A flashy commercial that makes big promises is a definite (say it with me) warning sign.
  9. Legitimate credit counseling agencies are non-profit organizations. Every single one of them.

So…now that you know how to avoid a scam, where can you go for legitimate credit couseling?

REGIONAL Federal Credit Union works with Consumer Credit Counseling Services of Northwest Indiana (http://www.cccsnwi.org/), a non-profit agency. REGIONAL partners with CCCSNWI because they’re trustworthy, and they do exactly what a credit counseling service should do.

You can also find information about legitimate services nationwide from the National Foundation for Credit Counseling (http://www.nfcc.org/). They don’t work with scammers.

As always, before you use any credit counseling service, check them out with the Better Business Bureau (http://www.bbb.org). If they’re not BBB accredited, and if they don’t have a pretty spotless record, look elsewhere.

Personally, I’d never use an agency that had anything less than an “A+” rating.

Five Things About Credit Reports

  1. By law, you are entitled to one free credit report per year from each of the three major credit reporting agencies, TransUnion, Experian and Equifax.
  2. There is only ONE place to safely obtain these credit reports: https://www.annualcreditreport.com/. Beware of websites with similar names, since these could be spoof sites created to steal personal information (which you are required to provide when you get your credit reports). Also, do not be taken in by cute commercials with catchy songs. You know the ones I’m talking about. That is a service (of debatable value) that costs around $80 per year and, from what I hear, is very difficult to cancel. They’ve gotten in some hot water regarding advertising practices, too.
  3. You can obtain your credit score when you get your reports, but you will have to pay for this information. The report is free, getting the score is not. For the purposes of checking for identity theft, fraud and errors, you do not need your score. Actually, you don’t really need it for much of anything, unless you’re the type who wants to brag about your credit score. People are not impressed by that, incidentally.
  4. All three of the major credit reporting agencies are required to share new information with each other within 24 hours, so your credit reports should all contain the same information. Use this to your advantage: stagger your reports so (for example) you’re getting TransUnion in January, Equifax in May, and Experian in September. It’s a great way to keep tabs, rather than getting all three in January then waiting 12 months to check your reports again.
  5. When you read your credit reports, you’re looking for accounts you did not open, errors regarding late payments, charge-offs or collections, and balances that are wildly different than what you think they should be (if it says you owe Discover $14,000 when you’ve never owed more than $27, for example). Basically, you’re checking to make sure all the information is accurate.

Credit reports are a vast, complex subject. I’ll talk more about them this week—this could turn into a series!

Well, don’t be PARANOID, per se.

All this talk about fraud and identity theft can paint a pretty grim picture of the world.

This is not the intent of the Fraud Prevention Unit.

The point of this information is to help you know what to look for when it comes to this type of crime. You have to be watchful, but to become cynical and paranoid is taking things too far.

We each have an individual view of the world, a lens through which we view ourselves, other people, society and life in general. We each have a set of values and beliefs that influences how we perceive every single piece of data we encounter.

This is a good thing. It’s what makes us all different, and that keeps life interesting. But this flipside is that, whether we realize it or not, we also seek confirmation of those same values and beliefs. We seek out those things that reinforce our view of reality, and reject those that would contradict it.

If you convince yourself that “everyone but me is dishonest and is trying to steal everyone else’s identity and money,” you will end up only seeing those things which confirm this view of the world.

Without realizing it, you may even set yourself up to become a victim, since you expect it to happen all the time anyway. For example, if you always expect to be ripped off, you may actually decide to take your car to a less-than-trustworthy mechanic, without realizing why you even made this decision (your subconscious desire to prove that the world is an ugly, terrible place with nothing but bad people in it).

The fact is, most people are honest. Even in a crummy economy, if you drop your wallet, most people will try to return it to you. There are so many people doing good things to help out others every single day, all around the world. Let yourself see it. Sure, you’re getting phishing emails a couple times a week, but those are coming from a very small number of criminals. Be alert, but don’t let yourself become cynical. Life is just no fun that way.

By the way, you didn’t win the lottery

Here’s a good rule of thumb when deciding how to respond to a potentially fraudulent email message, letter, telephone call or other type of communication: if a stranger walked up to you on the street and said the exact same thing, would you believe them?

For example, you’re walking down the street when a random guy in a shabby gray suit approaches you. He says, “Greetings, I am a foreign dignitary currently in exile and would like to ask for your assistance in transferring my fortune into the United States, totaling 250 million USD. If you help, I will let you keep 25% of that amount. I will need your checking account number to complete this process.”

You’d tell the clown to get lost.

Or perhaps he says, “Congratulations! You have been selected in the Canadian lottery as the top prizewinner! In order to claim your prize of 2.5 million USD, please give me a cashier’s check for $2,945.23 to cover taxes and other fees.”

Unless you’re very gullible, your reaction would be the same.

I know that the economy isn’t good at the moment. You might be facing layoffs, reduction in pay, or worse. Your employer might be going out of business completely. You get an email that promises instant riches and it seems like all your prayers have been answered.

These thieves know that. That’s why they’re in the fraud business to begin with. They’re counting on your sleepless nights of worrying about where you’re going to get the money to make it. And they’re only going to make your situation worse.

You have to keep your guard up. Imagine that offer coming from a stranger on the street, and you will instantly see through it.

Stay vigilant.