Financial Identity Theft Lawyer

Financial identity theft occurs when someone uses another person’s personal information without permission to obtain credit, open accounts, borrow money, make purchases, or conduct other financial activity under that person’s identity.

The victim may not discover the fraud until an unfamiliar account appears on a credit report, a lender seeks payment for a debt the victim never incurred, or a credit application is unexpectedly denied.

Financial identity theft can also follow a data breach involving Social Security numbers, dates of birth, account information, or other identifying data.

Net Law Advocates represents individuals nationwide in identity theft, data breach, and privacy matters. When financial identity theft can be traced to compromised personal information, determining how the information was obtained can become an important part of evaluating potential legal claims.

What Is Financial Identity Theft?

Identity theft generally involves the unauthorized use of another person’s personal or financial information.

The Federal Trade Commission explains that identity thieves may use stolen information to open new credit cards, make purchases, access financial accounts, obtain services, and engage in other activity under someone else’s identity.

Financial identity theft can take several forms.

Someone might use a stolen Social Security number and date of birth to apply for a loan. Another thief might open a credit card using the victim’s identity and run up charges before the victim knows the account exists.

Other incidents involve fraudulent checking accounts, lines of credit, financing arrangements, or other financial products.

The defining feature is that someone is using another person’s identity or financial information without authorization for financial purposes.

New-Account Fraud and Existing-Account Fraud Are Different

Financial identity theft often falls into two broad categories.

New-Account Fraud

New-account fraud occurs when someone uses stolen identity information to establish a financial account or obtain credit in another person’s name.

Examples include:

• Opening a credit card
• Obtaining a personal loan
• Financing a vehicle
• Opening a checking account
• Establishing a line of credit
• Obtaining another financial product using the victim’s identity

Because the account is new, the victim may have no reason to monitor it. The first indication of fraud might be an unfamiliar credit inquiry, a new account appearing on a credit report, collection activity, or a change in creditworthiness.

Existing-Account Fraud

Existing-account fraud involves unauthorized use of an account the victim already owns.

Examples include fraudulent credit card purchases, unauthorized withdrawals, transfers from a bank account, or someone gaining access to an existing financial account.

These incidents can overlap with identity theft, but the specific issues surrounding unauthorized activity involving existing bank and credit card accounts are addressed separately in Net Law Advocates’ planned resource on credit card and bank account fraud.

What Information Can Be Used to Commit Financial Identity Theft?

Different types of fraud require different information.

An identity thief may use combinations of:

• Name
• Date of birth
• Social Security number
• Current or previous addresses
• Driver’s license information
• Bank account numbers
• Credit or debit card information
• Online banking credentials
• Email addresses and phone numbers
• Employment or income information
• Answers to account security questions

Social Security numbers are particularly significant because they are persistent identifiers used throughout financial and credit systems.

When a Social Security number is exposed in a data breach, the person affected may need to watch for new accounts and other forms of identity misuse long after the initial breach.

Warning Signs of Financial Identity Theft

Financial identity theft is sometimes discovered through ordinary account monitoring. Other cases remain hidden until the fraudulent activity affects the victim’s credit.

Possible warning signs include:

• Accounts on your credit report that you did not open
• Credit inquiries you do not recognize
• Bills for loans or accounts that are not yours
• Debt collection calls concerning unfamiliar debts
• Unexpected changes to your credit
• Credit applications being denied without an apparent reason
• Mail concerning unfamiliar financial accounts
• Missing financial statements
• Unauthorized withdrawals or transfers
• Checks written from an account you did not open
• Notifications concerning changes to account contact information

The FTC recommends reviewing bills, bank statements, and credit reports for transactions, withdrawals, and accounts that you do not recognize.

A single unfamiliar item does not always establish identity theft. Errors can occur. Suspicious activity should nevertheless be investigated promptly.

How Can a Data Breach Lead to Financial Identity Theft?

Data breaches can expose information that criminals later use to impersonate individuals.

An incident involving names and email addresses presents different concerns from one involving names, Social Security numbers, dates of birth, driver’s license information, and financial data.

The more useful the compromised information is for verifying an identity, the more opportunities there may be for misuse.

But exposure and identity theft are not the same event.

A data breach means information was compromised or potentially compromised. Financial identity theft occurs when someone’s identity or financial information is actually used without authorization.

Not everyone affected by a breach will experience identity theft, and discovering identity theft after a breach does not automatically establish that the breach was the source of the information.

That connection may need to be investigated.

Financial Identity Theft Can Appear Months After Information Is Stolen

Identity theft does not necessarily happen immediately after a data breach.

Stolen information can potentially be stored, transferred, combined with information from other sources, or used later.

That can make causation complicated.

For example, someone may receive a breach notice stating that a Social Security number and date of birth were compromised. Months later, the individual discovers a loan opened using those same identifiers.

The timing and matching information may be relevant, but additional evidence can still matter because personal information can be compromised through more than one source.

Preserving both the original breach notice and records of subsequent fraud can help establish the sequence of events.

What Should You Do After Discovering Financial Identity Theft?

Acting promptly can help prevent additional misuse and create documentation of what happened.

Contact the Financial Institution or Creditor

Contact the fraud department of the company where the fraudulent account or transaction occurred.

The FTC recommends explaining that your identity was stolen, asking the company to close or freeze affected accounts, and changing relevant passwords and PINs.

Keep records of who you spoke with and what action was taken.

Review Your Credit Reports

Check your credit reports for unfamiliar accounts, inquiries, addresses, or other information.

IdentityTheft.gov recommends reviewing reports from all three nationwide credit bureaus because fraudulent accounts may not necessarily appear identically across each report.

Document anything you do not recognize.

Consider a Credit Freeze

A credit freeze restricts access to your credit file, making it harder for an identity thief to open additional credit accounts in your name.

The FTC states that credit freezes are free to place and lift, do not affect your credit score, and remain in effect until you lift them. A freeze must be placed separately with Equifax, Experian, and TransUnion.

A freeze primarily addresses new credit. It does not stop fraudulent activity involving an existing account.

Consider a Fraud Alert

A fraud alert tells businesses reviewing your credit report that they should take additional steps to verify your identity before extending new credit.

An initial fraud alert is free and generally lasts one year. Unlike a credit freeze, you can initiate the alert by contacting one of the three nationwide credit bureaus, which must notify the other two.

Report the Identity Theft

IdentityTheft.gov allows victims to report identity theft to the Federal Trade Commission and receive a recovery plan based on what happened.

The resulting FTC Identity Theft Report can also help establish that fraudulent accounts and information resulted from identity theft.

Can Fraudulent Information Be Removed From Your Credit Report?

Federal law provides identity-theft victims with rights concerning fraudulent information appearing on their credit reports.

IdentityTheft.gov instructs victims to identify information resulting from identity theft and request that the credit reporting companies block it. An FTC Identity Theft Report and proof of identity may be required as part of that process.

The documentation matters.

Keep copies of disputes, identity theft reports, correspondence with creditors and credit bureaus, and responses you receive.

Correcting the credit file can be a separate process from closing the fraudulent account itself.

What If Someone Opened a Bank Account in Your Name?

Financial identity theft is not limited to credit reports.

Someone may use stolen identity information to open a checking account and then write bad checks, overdraw the account, or otherwise use it fraudulently.

IdentityTheft.gov recommends obtaining a ChexSystems report when you believe someone opened a checking account in your name and contacting each financial institution where a fraudulent account was established.

This is an important distinction because traditional credit monitoring may not identify every type of financial identity theft.

The FTC notes that credit-monitoring services generally monitor changes to credit reports but do not necessarily alert consumers when someone withdraws money from a bank account.

Credit Monitoring Does Not Prevent Every Form of Financial Identity Theft

Credit monitoring can be useful, particularly for detecting new accounts or credit inquiries.

But it has limits.

Monitoring generally alerts you after certain information appears on your credit report. It does not necessarily prevent someone from attempting to use your identity, and it may not identify fraud occurring outside the traditional credit-reporting system.

A credit freeze serves a different function by restricting access to your credit file and making it more difficult to open new credit accounts.

Bank and credit card statements should also be reviewed directly because unauthorized activity involving existing accounts may not appear as a new credit account.

Keep Evidence of the Identity Theft

Documentation can become important when correcting fraudulent accounts, disputing credit information, and determining whether legal action may be available.

Preserve:

• Credit reports showing fraudulent accounts or inquiries
• Account applications or records you obtain from creditors
• Fraudulent bills and statements
• Collection notices
• Bank records
• Correspondence with lenders and financial institutions
• Credit bureau disputes and responses
• FTC Identity Theft Report
• Police report, if one was filed
• Data breach notification letters
• Records of expenses or losses related to the fraud
• Notes documenting calls and other communications

Do not discard records simply because a fraudulent account has been closed.

The documents can help establish how the identity was used and the consequences that followed.

Who May Be Responsible When Financial Identity Theft Follows a Data Breach?

The identity thief is responsible for the fraudulent activity, but another question may be whether an organization bears civil responsibility for the compromise of information used to commit it.

An attorney evaluating that issue may consider:

• Where the stolen information came from
• What information was involved in the breach
• Whether there is evidence the information was actually acquired
• Whether the information used in the fraud matches the breached data
• How the security incident occurred
• What protections were in place
• Which laws applied to the organization
• Whether a third-party vendor was involved
• What losses or other harm followed

The fact that identity theft occurred after a breach can be significant, but chronology alone does not necessarily prove causation or liability.

What If a Bank, Lender, or Financial Institution Experienced the Breach?

Financial institutions maintain information that can be valuable for identity fraud, including account information, identifying data, transaction histories, and other financial records.

A financial institution data breach can therefore present two separate questions.

The first concerns the breach itself: what information was compromised and whether the institution may bear legal responsibility for the security incident.

The second concerns what happened afterward: whether the exposed information was actually used for identity theft or fraud.

Those issues can overlap, but they should not be treated as interchangeable.

Can You Sue After Financial Identity Theft?

Potentially, depending on who is alleged to be responsible and what happened.

A legal claim against an organization that experienced a breach generally requires more than showing that someone’s identity was later stolen.

The analysis can involve the organization’s legal duties, the cause of the breach, what information was acquired, the connection between the breach and the fraud, the injuries experienced, and the laws that apply.

Actual fraudulent accounts, financial losses, collection activity, or damage to credit can provide evidence of concrete consequences, but they do not automatically establish liability against a particular company.

The appropriate legal theory and available remedies can also differ by jurisdiction.

What Losses Can Financial Identity Theft Cause?

The effects are not always limited to the amount initially stolen.

Financial identity theft can result in:

• Unreimbursed financial losses
• Fraudulent debts
• Collection activity
• Credit problems
• Difficulty obtaining legitimate credit
• Costs associated with correcting fraudulent records
• Time spent resolving accounts and disputes
• Other consequences recognized under applicable law

Some fraudulent transactions may ultimately be reversed or reimbursed. Others can require substantial documentation and repeated disputes before they are resolved.

What losses are legally recoverable depends on the facts, applicable law, and claims being pursued.

Financial Identity Theft Is Different From Financial Fraud Alone

Not every unauthorized financial transaction involves identity theft.

A stolen credit card number might be used for purchases without the thief pretending to be the cardholder in a broader sense. Someone who obtains enough personal information to open an entirely new credit account in the victim’s name is engaging in a different form of misuse.

Both situations can be serious.

Separating new-account identity theft from unauthorized transactions involving existing accounts helps determine which recovery steps are appropriate and what evidence should be preserved.

When May Attorney Review Be Appropriate?

Legal review may be worthwhile when financial identity theft appears connected to a known data breach, particularly when Social Security numbers or other sensitive identity information were compromised.

It may also be appropriate when the fraud resulted in substantial financial losses, multiple fraudulent accounts, persistent credit problems, collection activity, or other significant consequences.

The purpose of attorney review is to determine where the information may have come from, whether another party may bear legal responsibility, what law applies, and whether a viable civil claim exists.

Speak With Net Law Advocates About Financial Identity Theft

Financial identity theft can leave victims dealing with accounts, debts, credit records, and financial activity they never authorized. When the information used to commit that fraud was compromised through a data breach or another privacy or security failure, additional legal issues may arise.

Net Law Advocates represents plaintiffs nationwide in identity theft, data breach, and privacy matters. If your identity was used to open financial accounts, obtain credit, or conduct other unauthorized financial activity and you want to understand your legal options, contact Net Law Advocates at 888-913-2318 for a free, confidential consultation.