Credit identity theft typically happens when your personal and financial information is stolen, either physically or digitally, and then used by the thief to obtain credit or purchase goods in your name! This fraudulent activity can seriously damage your credit record, causing financial issues for you - to include not being able to buy a car or rent an apartment or qualify for a home loan. Here are some common ways credit identity theft occurs:

1. Phishing Scams: In these instances, criminals use email, phone calls, or text messages to trick victims into giving them personal information. They often pose as banks or other trusted institutions to make their requests seem legitimate.

2. Data Breaches: Hackers can break into a company's or organization's database to steal customers' personal data. This information is often sold on the black market to identity thieves.

3. Mail Theft: Physical mail is another source of personal information. Criminals might steal credit card bills, tax information, or other documents directly from a person's mailbox.

4. Physical Theft: Wallets and purses carry a lot of personal information. If these items are stolen, criminals may be able to access credit card numbers, driver's licenses, or even social security cards.

5. Unsecure Internet Connections: If a person uses an unsecured internet connection, hackers can potentially intercept the data being sent or received. This is particularly risky when conducting financial transactions or inputting personal data online.

6. Spyware and Malware: These types of malicious software can be installed on a person's computer without their knowledge. They can track keystrokes or gather other information, providing a wealth of data to the hacker.

7. Dumpster Diving: Although it may sound primitive, some thieves will go through a person's trash to find discarded documents that contain personal information.

8. Skimming Devices: These devices can be installed on ATMs or credit card readers. When a card is swiped, the device records its information, giving thieves everything they need to make fraudulent transactions.

9. Social Engineering: This involves manipulating people into giving up their personal information. It might be done through impersonation, deception, or by exploiting people's trust.

To protect against credit identity theft, it's important to safeguard personal information, be cautious when sharing personal information, use secure internet connections, keep an eye on your credit reports, and be vigilant for signs of identity theft.

In California, as in most states, victims of credit identity theft are not responsible for charges made on fraudulent accounts. Federal law, specifically the Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA), limit your responsibility for unauthorized charges.

For credit cards, the FCBA states that your maximum liability for unauthorized charges is $50. However, if you report the loss before your credit card is used, you aren't responsible for any charges you didn't authorize. If your credit card number is stolen, but not the card, you're not liable for unauthorized use.

For ATM or debit cards, the EFTA states your liability depends on when you report the loss. If you report it before any unauthorized transactions are made, you won't be responsible for any. But if you report the loss within 2 business days after you learn about the loss or theft, your liability can go up to $50. If you report it after 2 business days, it could go up to $500, or even all the money in your account.

However, to make sure you're not held responsible, it's important to take immediate action upon discovering the theft:

  1. Report the Fraud: As soon as you discover the fraudulent account, report it to the financial institution where the account was opened. Make sure to follow up with a written statement.

  2. Report to Credit Bureaus: Inform the three major credit bureaus (Experian, Equifax, and TransUnion) about the fraud and request a fraud alert be placed on your credit reports.

  3. Police Report: File a report with your local police department. This provides a record of the theft and can help when dealing with creditors.

  4. Federal Trade Commission: File a complaint with the FTC. They provide a recovery plan and an affidavit that can be used when dealing with creditors.

  5. Close Fraudulent Accounts: Request that the fraudulent accounts be closed or frozen to prevent further fraudulent activity.

  6. Monitor Your Credit Reports: Regularly check your credit reports for any new fraudulent activity.

As a resident of California, you have additional protections. California's Identity Theft Resolution Act provides victims of identity theft with a standardized process for disputing fraudulent accounts and charges with creditors. But don't do it yourself, get in touch with us ASAP so we can help resolve any issues related to credit identity theft - there's a good chance you're gonna need a lawyer!

Michael F. Cardoza, Esq.
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U.S. Marine & Consumer Financial Protection Attorney helping victims of ID theft and Credit Reporting errors.
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