Identity Theft: my story

I have been giving this a lot of thought lately. Would you give your credit card number to a complete stranger? How about a high school or college student you had never met before and did not even know their name? I'm sure you want to say that you wouldn't, but isn't that what you do every time you pay your dining tab with a credit card? Or give your account number over the phone to an airline rep? In countless transactions every year we open ourselves up to a potential security breach. We rely on the honesty of others whenever our credit card is out of our sight or we give the card number to anyone over the phone or via the internet.

For me, this is compounded because I use a credit card logoed debit card as my primary financial tool. I carry very little cash. When I buy something I use my debit card the same as I would a credit card and just deduct the amount from my checkbook register. I also pay several of my monthly expenses online by credit card using this account.

Last night, the convenience was offset by reality. We were called by the transaction clearing house our bank uses to verify some "potentially fraudulent activity". After they could answer a few questions so I knew they were legit (hey, I am careful!), and I answered a few questions for them so they knew I was legit, we went through my recent activity. I had last used my debit card at lunch time when I had run an errand in West Des Moines, Iowa. A few hours later there was online transaction (originated in France) for $1.41. That must have been the test case. Not too long after that someone in Italy took a card, which is magnetically identical to mine and attempted to charge over $1200. It was reported to me that the transaction was a physical swipe meaning the magnetic strip was read off a card but fortunately the transaction was denied since my debit card carries a daily maximum limit which this transaction would have exceeded.

As Identity Theft goes, this could have been a lot worse. Last night my debit card was placed on a permanent block which essentially shuts down the card. I called the bank this morning and I will have a new card in 7 – 10 days. I'm only out $1.41 but it serves as a reminder that I am responsible for the first $50 of fraudulent activity.

Here is a checklist of what you should do if this happens to you:

• Speed counts! These crooks plan to do as much damage as they can before you notice. As soon as you even suspect something may be wrong, it is time to act.
• File a police report. The bank asked if I wanted to dispute the $1.41 charge. They were asking because they should, but I could tell they really wanted me to say no. It would be a lot of paperwork for a trivial amount of money. I told them I just wanted documentation in case we learned of other fraudulent transactions later. They suggested that I file a police report and provide them a copy.
• Contact the Credit Bureaus. You can place either a freeze or a fraud alert on your credit bureau reports. myIdentityTheftExpert.com does a good job explaining the difference. If it has been more than 12 months since you have received a copy of the report. Now would be a good time to exercise your right through www.annualcreditreport.com which is the "official" central site sponsored by only the three major credit bureaus.

Forty eight hours ago I would have thought that I was pretty low risk to be a victim of identity theft. I still want to believe that it by being careful that the damage has been limited and controllable. One of my questions when I got the phone call was "how did this happen?"

Their answer was "Mr. Dinkin, we can not tell you. It may have been a dishonest merchant, employee, or website. All we can tell you is that these people are smart; real smart. They would probably make a very good living if they were only honest."

Here I am an experienced professional financial planner and it happened to me. I am sharing my story with you to help you realize that it can happen to you too.

theif by maubrowncow

Comments

[Janet Green]

Art - sorry this happened but this was a great and helpful post. Could you share what questions you asked the clearing house folks to verify their authenticity? ~ Janet

[Tom Mahoney]

Art;

Sorry this happened to you and your points on what to do are right on target. But please, get it straight, you were not the victim of Identity Theft, you were only a victim of debit card fraud - and only because you decided not to dispute the $1.41.

Identity Theft and card fraud are only the same in the eyes of the media. Victims of identity theft might have to spend hundreds of hours and thousands of dollars clearing their credit. You had to deal with a phone call. They just aren't in the same league.

For the record, you were lucky - there are a lot of payment processors out there that don't do any fraud screening at all. They'd just let it go through because it doesn't cost them anything. In fact, they make money on fraud since they can charge the merchant fees for the tranaction and and other fee for the reversal - not to mention a hefty chargeback fee.

And, so you know, when you use a debit card, your losses are NOT pegged at $50. That's only for credit cards. I believe the ceiling for debit cards is $500 - and only if you report it in a timely fashion. Do yourself a favor and stop using a debit card for anything but ATM withdrawals. You have MUCH better protection with a credit card! Just pay off the balance each month and it amounts to the same thing.

Tom Mahoney
Director, Merchant911.org
Developer, PreventChargebacks.com

[Art Dinkin]

Janet, I would be happy to tell you what I did. I went online to my banking transactions and then I said "I made a transaction on (date) for (amount). Can you tell me the name of the merchant?" When they were able to answer that then I answered whatever questions they wanted.

Tom, Thank you for all the good information. I know that I am very, very lucky. I was not aware that there was a difference between identity theft and card fraud. I thought one was part of the other! The bank was the one that told me the limit for liability was $50 but I could not assure that is accurate.

[dimes]

Ugh! How crappy. I was so paranoid that something like that would happen to us while we moved cross-country; alternatively, that the banks would think OUR actions were fraudulent as we moved cross-country. Either would have been devastating due to our transient nature and would have caused great financial hardship. I'm glad they caught it in your case, but what if it had been legitimate?

[Art Dinkin]

Dimes, The clearing house now has my cell phone number so they can reach me even quicker in the future. If the transactions were legit then I would have simply only had to tell them so.

[Nancy]

ARt - That kind of wakes you up, I guess. Little WDM is not as sleepy as we thought. Glad you got right on it.

We missed you at Gray's. :D

[Art Dinkin]

Nancy,

Sorry about Gray's. I wanted to be there to support Runners Lounge. With the office move and then my daughter was not feeling well, it just was not in the stars.

For the life of me I will never know how my debit card went from West Des Moines to Europe!

[Sandy Renshaw]

Art,

Glad to hear you escaped with a small theft. I had something similar happen years ago. It's surprising and scary and makes a person feel totally out of control. Thanks for the tips on questions to ask.

Sandy