Filed under: Children and Money, Ripoffs and Scams, Relationships

Imagine this: Your 15-year-old goes to apply for his first after-school job…and finds out he has a number of black marks for credit fraud marring his record. And you were worried about his report card?

According to some sources, 500,000 children are victims of identity theft every year. Minors comprise the fastest-growing segment of identity theft victims.

Great. Just one more thing for a parent to fret over.Criminals prey on children because they have clean credit records, and most parents don’t check their children’s credit records (why would you?) so the crime can go undetected for years.

But, according to Experian, which has a website devoted to just this topic, the consequences of child identity theft include:

• Difficulty getting accepted into college
• Difficulty opening a savings account
• Difficulty applying for a driver’s license
• Inability to secure a job
• Arrest warrants in your child’s name
• Collection notices addressed to your child.

Naturally the credit rating companies (Experian, Equifax and Trans union), all offer monitoring systems to help you keep tabs on your credit rating. Even though everyone is entitled to one free credit report a year, monitoring your report costs money.

What they don’t want you to know, however, is that there’s a low-cost way to freeze your credit report (or your child’s). As our resident expert Lita Epstein wrote recently, as of November 1, 2007, you can write to each of the credit reporting concerns and request that they freeze your report, effectively keeping it out of the hands of both legitimate and illegitimate parties until you un-freeze it.

They’ll do this for free if you’ve already been a victim of ID theft, but for $10, they’ll do it regardless. This means that for $10, you can freeze your kids’ credit report until you’re ready to send them on their way.

With the problem of ID theft growing like, well, like a teenager, $10 and your time to freeze your child’s credit report might be money well spent.

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Filed under: Cards, Ripoffs and Scams, Fraud

Identity theft encompasses any act in which your identity is used fraudulently. I’m sure you’ve head of credit card fraud, where someone opens an account in your name or uses your credit card number without your permission. But, that’s not the only type of identity theft against which you must protect yourself.

Here are some of the most common identity theft scams:

* Phone or utilities fraud: Someone opens an account in your name or runs up charges on your existing accounts.

* Bank/finance fraud: Someone opens an account in your name and writes bad checks. Someone can take a copy of your voided check or a check used to make a payment or donation and print checks in your name with your account number. Someone can find out enough information about you to authorize electronic transfers and drain your savings. Someone can take out a loan in your name proving their identity with a fake ID.

* Government documents fraud: Someone can get a driver’s license or government ID in your name and put his or her picture on it.

* Someone can use your Social Security number when they apply for a job or a loan.

* A rental contract or medical services can be set up in your name.

* Your name can be given to a police officer during an arrest. When you don’t show up in court, a warrant can be issued in your name.

All these types of identity theft have happened to people. If any type of identity theft happens to you it can take years to clear your good name. Your ideal weapon against identity theft is to avoid exposing yourself to it. Read my post about reducing exposure to identity theft to find what you can do to help avoid exposing yourself to identity theft.

Lita Epstein has written 20 books including the “Complete Idiot’s Guide to Improving Your Credit Score.”

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Filed under: Debt, Ripoffs and Scams

During my blogging “career”, I’ve found myself defending the payday lending industry on more than one occasion. I don’t do it because I think payday lenders are good for consumers but rather because there’s a widely-held assumption that the industry is earning large profits at the expense of consumers, which isn’t the case. Looking at the financials of these companies, you can swiftly see that they’re really not that profitable. They make small loans and have substantial overhead. Without insanely high rates on the loans, they wouldn’t be able to turn a profit. So the industry is basically a bad deal for consumers and a below-average deal for the lenders.

According to the Community Financial Services Association of America, an industry trade group, “A study by the FDIC Center for Financial Research found that “operating costs lie in the range of advance fees” [collected] and that, after subtracting fixed operating costs and “unusually high rate of default losses,” payday loans “may not necessarily yield breathtaking profits. “So I’m willing to defend the industry when it’s appropriate. But I’ve seen some “public service announcements” for the industry on TV lately (CNBC of all places — How many CNBC viewers use payday loans? Only the ones who actually follow the stock tips of the pundits, I bet ….). I can’t find the latest one on the web but here’s an old one you can watch on YouTube. At the end of the video, which features smiling well-spoken voices explaining how payday loans have helped them, a voice cautions consumers to “always use payday loans responsibly.”

Here’s my question: If the payday lending industry only made loans to people who are using them responsibly, would they be able to turn a profit? I somehow doubt it.

I appreciate the message behind the commercial but it seems a bit like a tobacco company saying (They’re not allowed to state this by the way) “Please smoke responsibly.” True, smoking once a year would be perfectly responsible … But how many people do that or use payday loans responsibly.

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Filed under: Ripoffs and Scams, Fraud

Credit Card fraud isn’t the only kind of identity theft. Identity theft happens in many different ways. You can reduce your risk of being a victim of identity theft if you understand how thieves get hold of your personal data and take away their access.

Here are some of the most common ways identity thieves get people’s information:

* Dumpster diving: Thieves rummage through trash to look for bills or other personal financial information. Do yourself a favor. Shred all personal financial information before you throw it away.

* Skimming: Thieves steal your credit card or debit card information by using a special storage device when processing your card. Be careful about using a credit card when you go into a store you don’t frequent regularly.

* Phishing: Thieves make you think you’re linking to a financial institution or other legitimate company and then ask you to supply your personal financial information for a loan, purchase or to update your records. Never give your financial information if you’ve clicked on a link from an unsolicited email. Many phishing thieves can make an email and web page look like it’s actually the bank’s website and it’s not. Your best bet is to go to the official web site for the financial institution or company and then give the information to update the account or make a buy. You can avoid the phishers that way.

* Changing Your Address: Thieves sometimes change your address with a credit card company before they start using your card. They can then get all the information they need mailed to them. If you don’t get a credit card bill when you’re anticipating to receive it, call to check on the delay. It could be someone else is getting that bill so you don’t see the charges they’re making. Personally I go into the website and check my account on the internet for each of my credit cards at least weekly. If I see a charge I don’t recognize, i call immediately. Most times it’s a charge I forgot about or a charge under a company name different than the one I visited. But, I’ve caught a number of fraudulent charges over the years.

* Stealing it: Thieves get their information by stealing your purse or wallet or by taking pre-approved credit card offers out of your mail box. They also may take a new box of checks or tax information sent by mail. Some steal information by hacking into business websites or your employer’s files. Others bribe employees to get the information.

Often people don’t even find out about an identity theft until the thieves have charged thousands of dollars on your credit cards or opened new loans in your name. Read more about securing your information here.

Lita Epstein has written more than 20 books including the “Complete idiot’s Guide to Improving Your Credit Score.”

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