First clues that your identity has been stolen

Article after article after article about identity theft urge consumers to monitor their credit reports to see if they are a victim of identity theft.  But what exactly should you look for first? 

Most people learn their identity is stolen when they get a letter or call from a creditor or collection agency attempting to collect a debt that they have never heard of and certainly never incurred.  But those that check their credit reports typically do not first see an account they do not owe.  Instead, these people first learn of their stolen identities when they see one of two things - either an address appears on their credit report where they never lived or an inquiry appears indicating an application for an account for which the person never applied.

The incorrect address could be an address used by the identity thief when he or she applied for a fraudulent account in the victim's name.  Credit bureaus get the addresses they list on consumers credit reports when information is reported to them from third parties (i.e. the consumers themselves, current creditors of the consumers or potential creditors who the consumer (or the identity thief) have submitted an application to).  Thus, an address on a consumer's credit report that he or she does not recognize is often a first sign of identity theft.

The other first sign is an inquiry that the consumer does not recognize.  However, there are many inquiries on every report that the consumer likely does not recognize.  These are primarily promotional type inquiries, which are done by companies that send you junk mail to see if you meet whatever criteria they are looking for.  Promotional inquiries that a consumer does not recognize is NOT a cause for concern.  What IS a cause for concern is a regular (a.k.a. "hard") inquiry which the consumer does not recognize.  A hard inquiry is only caused by a application for new credit, insurance or employment.  Thus, the consumer should almost always recognize the regular, hard iquiries on his or her credit report.  If they don't, that likely means someone else applied for credit in their name.

So, if and when you follow the advice of countless identity theft "pundits" and check your credit report to see if your identity has been stolen, look first for incorrect addresses in the current and former address section (usually towards the top of the credit report) and next for unrecognized hard inquiries in the inquiry section of the credit report (typically toward the bottom of the report).  And, if you find out you are a victim of identity theft and need help or advice, I am only an e-mail or phone call away at ckittell@merkel-cocke.com or 662-627-9641.

Closed credit cards - a sign of identity theft?

The following was posted on http://www.creditfyi.com/, which has some connection to http://www.freescore.com/.  I personally don't think its correct and I'll tell you why below the quote.

There can be any number of reasons why a credit card company closes a person's account.

With pending credit card reform likely to affect their bottom lines in 2010, card companies are trying to reduce risk and maintain their profit margins by closing accounts, among other things. However, if consumers see their accounts being closed even though they've paid off their debts, it could be a sign of identity theft.

In a recent blog post, personal finance columnist Liz Pulliam Weston noted that sudden closures of credit card accounts may indicate that a person has been the victim of identity theft. If faced with this situation, Pulliam Weston suggested consumers make a quick check of their credit report.

"If you discover credit accounts or collections that aren't yours, you'll need to file a police report and dispute the errors with the credit bureaus," she said.

After doing so, consumers should put a fraud alert on their credit reports and should also consider placing a credit freeze on their card accounts.

According to the Federal Trade Commission's 2006 Identity Theft Survey Report, 3.7 percent of respondents indicated they were the victim of identity theft, which translates to roughly 8.3 million American adults.

I do not believe that closed accounts are any real indication of identity theft.  First, the use of your existing accounts to make fraudulent charges is not identity theft, its account takeover which is similar, but very different. 

Identity theft occurs when a criminal uses a victim's name, SSN or other personal identifiers to open a new account in the victim's name.  This is a completely new account (credit card, mortgage, car loan, etc.) that the victim knows nothing about until the bills go unpaid and the duped creditor comes looking for the victim, rather than the identity thief, to pay.

Account takeover, on the other hand, occurs when a criminal somehow gains access to the victim's legitimately opened account and uses it to make fraudulent charges.  This is much more common and is commonly confused with identity theft.  For example, if someone uses your credit card in some far off place to make fraudulent charges, this is an account takeover.  The credit card is legitimate, the charges are not.  In identity theft, neither the credit card nor the charges are legitimate.

Most identity theft criminal statutes make both identity theft and account takeover a crime.

But even putting aside the fact that identity theft and account takeover are two separate animals, closed paid in full accounts are still no indication to me of identity theft.  Who is closing them?  Not the identity thief, they want them open to continue buying cool stuff on someone else's dime.  The credit card company is not going to close the credit card, absent a dispute of fraud charges, because they are getting paid and, as long as they get paid, they aren't too worried about whether the charges are legit.  And if the victim reports the fraudulent charges, then the victim already suspects identity theft and/or account takeover, so the fact that the account ends up closed after the fraud dispute does not indicate anything new to the victim.

The cynic in me thinks their advice to "check your credit report" if an account gets closed is just a ploy to generate more revenue for their affiliate http://www.freescore.com/.  But maybe I just don't see the real reason why a suddenly closed, paid account is an indication of identity theft.  Can any of the dozen or so people that actually read my blogly musings explain why a closed paid account is an indication of identity theft?