You've Been Targeted! Now What?

Target is a very popular retail store. If you were to review the Berno family credit card charges, I can prove to you that my wife goes there regularly every month. So what should you do if you shopped there when data identity thieves were lurking in their computer system? [Tweet "Less than 1% of households experienced new account fraud in 2010, according to the Department of Justice."]

What to Do When Your Personal Information Is Stolen

First, don't overreact. (OK, if you already replaced your credit card, that's fine.) Federal regulations limit credit card owners' liability to $50 per account and most credit card companies waive that. Debit card holders are a different story, and they have less protection. To be perfectly safe, you may have to close the checking account that the debit card is linked to, which may be a real pain if you have a lot of automatic transactions scheduled, especially direct deposit of your payroll check.

Credit card holders, on the other hand, can simply check transactions every few days on your credit card company's website. Report any unauthorized transactions you notice.

Second, there is the longer-term issue of what to do if any of your personal information may have been comprised. You have three options:

  1. You can place a fraud alert on your credit file at the three major credit reporting companies: Equifax, Experian and TransUnion. A Fraud Alert is good for 90 days.
  2. You can place a "freeze" on your credit file. There is a small fee to do this, based on the state you live in. In Ohio it is $5. (Hint: That's much cheaper than a credit monitoring service.)
  3. Do not reply to any emails you receive asking you to verify any information. Just last night I got an email that was reportedly from Costco stating that my delivery had been delayed due to an incorrect address and click to update the address or the order would be cancelled less an 18% charge. Guess what? I've never shopped at Costco (I'm a Sam's Club guy myself), so I knew it was a fraud. Hit "delete." Even if an email is from a company you do business with, do not reply to it or click on any links. Go directly to the company's website or call a customer service number that you identify on your own, not from the email.

Facts About Identity Theft

Here are a few reassuring facts on identity theft, compliments of Consumer Reports:

  1. Two-thirds of ID theft cases reported to the Annual National Crime Victimization Survey involve stolen credit cards, not stolen identities. There is a big difference. Adding stolen debit cards, check forgery and existing account fraud brings the total to 80%.
  2. Less than 1% of households experienced new account fraud in 2010, according to the Department of Justice.

Credit monitoring is a flawed process and over-sold. Many false alarms are triggered by routine transactions and you may not be warned about fraudulent activity for days, weeks or months after the fact, according to Consumer Reports.

You can request a free credit report from each of the three major agencies annually at www.annualcreditreport.com. Order one from a different agency every four months.

Your greatest risk may be physical theft or loss of your wallet or purse. Keep a record of your credit card account numbers and telephone numbers so you can quickly alert your credit card companies and bank if your wallet or purse is stolen or lost.

Use Common Sense

Use common sense and be cautious to avoid identity theft. But don't be so alarmed that the sky is falling and you should never leave your house. Financial and retail institutions have a major incentive to maintain your faith and confidence and new and better consumer protections will continue to evolve.