Can you lose money during identity theft?

[matthew1234]

Hi all,

I have a personal finance / credit related question.

I recently received a class action settlement notice which is offering up to two years of identity theft insurance from a company called Debix.

I never enrolled in such identity theft programs before, but what has startled me is that I have never realized until now that one can LOSE money if someone steals your identity which is why I suppose it is an insurance policy.

But I thought that if you are a victim of identity theft, you are not responsible for any charges or fees involved and that the companies you do business with (or any accounts opened fraudulently) takes care of everything for you at no cost.

Can someone please explain to me exactly how you can lose money if your identity is stolen?

Thanks!

[GrimJack]

If someone opens credit cards, store cards, take out loans, et cetera in your name - you have to prove that it was not you who did it. This could take years, at least months, of writing all the creditors explaining the situation over and over again then your debt can be sold to a debt collector who can hound you. If they file a change of address and start receiving your mail, they will find out where your money is invested and could possibly withdraw it - this includes IRAs or such so not only do you lose the money you put into the accounts but the IRS will come looking for taxes, interest and penalties.

No company wants to take a loss but most companies do not put a lot of effort into verifying identities when opening lines of credit. So, it is probably true that in the long run you will not be out any money - but at the very least you will be lose time. If it is too easy to claim identity theft, then people would run up debts and then claim id theft.

[snafu]

The data I've looked at doesn't support a need for identity theft insurance but it's a new product available. Do you know someone whose identity was stolen? How vulnerable are you? The research suggests you are most at risk from your bank, medical provider and restaurants that don't use the hand held device at your table.

[mcfroggin]

Yes identity theft can cause you to lose money.

[jpg7n16]

yup.

The hidden costs of identity theft - CNN

[matthew1234]

Wow, I didn't realize it is so severe.

I'm not sure if this counts as identity being stolen, but a few months ago someone spent around two grand in a hardware store using my credit card number. I assume it was an on-line transaction since the card was in my possession. I called the credit card company to notify them and they issued me a new account number and refunded the credit.

That CNN article was interesting, she mentioned that she found out that it was her employer who used her information, but when I was trying to get ANY information from the credit card company's fraud department they refused to tell me anything. It would be helpful to know WHO and/or HOW it happened.

One of you guys mentioned that it is possible for criminals to withdraw money, now that is scary. Would you still be protected in such a situation after they investigate that it was not you? I'm also surprised how a change of information happens without them contacting the current information on file for verification.

[sternchen]

identity theft will not only ruin your financial status, it will also ruin your personality and your image to other people

[GrimJack]

Wow, I didn't realize it is so severe.

they refused to tell me anything. It would be helpful to know WHO and/or HOW it happened.

No one wants a vigilante out looking for revenge so of course they would not tell you. As for how it happened, there are too many ways - from shoulder-surfing to corporate hacking.

One of you guys mentioned that it is possible for criminals to withdraw money, now that is scary. Would you still be protected in such a situation after they investigate that it was not you? I'm also surprised how a change of information happens without them contacting the current information on file for verification.

The particular story I had in mind was a doctor who had a change of address put in for just her and not for anyone else in the family so mail was still being received. The redirected mail included information about her 403b and IRA accounts - these accounts were cleaned out. They did not catch on until the IRS contacted her about penalties and such.

The take-away was to know what mail to expect (or get financial via email). There was a cascade of problems that allowed this particular situation to occur including the post office misdirected the change of address notification. As far as I know there is no 'saving throw' when early withdrawals are made from retirement accounts - although I am sure that some negotiation is available. I read the story when it happened a couple of years ago and do not know what the eventual outcome was.

[Frugal]

I think there might be a need for this kind of insurance, but I doubt the industry would charge a reasonable amount.

[danieldroga]

You have to prove that you are a victim of theft first and have to undergo to a certain process.

[Tobby782]

I recently had my identity stolen. The criminals didn't accomplish much though. They managed to open up several accounts in my name, but none of my personal money was actually stolen thankfully. Just annoying having to try and repair my credit reputation by alerting all of the agencies.

[snafu]

Tobby, do you know how they got access to information sufficient to open several accounts? I see the banks are now holding clients responsible for losses as it's our task to be ever vigilant.

[photo]

I recently had my identity stolen. The criminals didn't accomplish much though. They managed to open up several accounts in my name, but none of my personal money was actually stolen thankfully.

I could be mistaken, but I think having accounts fraudulently opened under your name is different from what is generally labeled as identity theft. With the latter, I've heard it can cost upwards of $100,000 because even your passport, driver's license, birth certificates, etc don't actually prove who you are because someone else used your name and social security number to prove that he was you. In fact, I believe the identity theft can be stealthily taken so that people generally don't discover it right away.

One of the worst consequences of identity theft is medical. I recall reading about a case where someone used an identity to have surgery, and then when the real man happened upon the same hospital, they said he (the real man) looked amazing for someone in the final stages of cancer, and of course, the real man was fairly healthy. So, if your records are hijacked with someone else's physical history, consequences could be devastating for someone with diabetes or allergy whose record (someone else's medical history) is not accurate.

I don't have identity theft protection, but I stagger my 3 free reports a year so that I receive a different one every 4 months. I also refuse to give my social security number to the doctor's office or anywhere else that it isn't mandatory. Yet, thieves are clever, and I'm vulnerable, as well.

[naomibatac]

Can you lose money during identity theft?

You will not just lose money, you will lose plenty of money if you are not able to act on it immediately. It will also be difficult for your to bring back your life after the theft.

[KennySoward]

One thing I have taken comfort in since starting my budgeting several years ago is that budgeting forces me to look at my bank statements. I have noticed once someone charged a few pennies to my account. I feel they were testing the waters to see if anyone would notice.

Of course, I immediately had the account closed because I could not account for the withdraw. That reminds me...I probably need to pull my credit report soon and review it.