Practice Tip: Identity Theft

Divorce is almost always a painful process for all involved. While your clients do their best to deal with emotional anguish, custody battles and legal complexities, they may also be leaving themselves particularly vulnerable to an unseen danger: Identity theft.

The Prevalence of Identity Theft

Every two seconds, another American falls victim to identity theft. It has even happened to Michael Jordan, Bill Gates, Tiger Woods and Beyonc'. But the real surprise is the way many people get their identities stolen: According to one study, 38% of victims discover that a family member or relative was responsible for the theft, while 18% were victimized by a friend or neighbor.

During and after a divorce, ex-spouses often have more than enough information to commit fraud ' as do their friends and family members. Consider some of the most common security questions: mother's maiden name, what city you were married in, where you were born. Your clients' ex-spouses would certainly be privy to that information and more.

Protecting the Children

It's not just your clients' identities that may be stolen ' children whose parents are undergoing a divorce are also at risk. Whether the parent or family member covets the child's clean record or he or she is simply being vindictive makes little difference ' stealing a child's identity can wreak havoc on his or her credit in adult life, and may not be noticed for up to 18 years.

If your clients suspect their child's identity was compromised, it is best to pull their children's credit report from each of the three major bureaus. However, advise your clients to tread carefully: Pulling the child's credit report establishes a report record, making it easier to steal his or her identity in the future, as an unexpected request will now raise fewer red flags.

How to Defend Yourself from Identity Theft

First and foremost, your clients should close any and all jointly held accounts they may share with the ex-spouse. Secondly, they should pull their own credit reports and review them carefully for any fraudulent charges; federal law allows consumers to receive up to three free reports a year from AnnualCreditReport.com.

For ongoing protection, they should actively monitor their credit. The sooner they catch something wrong, the smaller the damage will be. More intensively, a credit block will put a hold on your clients' accounts, which requires explicit permission to be lifted. Both of these measures can be done by the individual, but they take time and expertise; a credit management adviser may be an ideal solution.

What to Do if Your Identity Has Been Stolen

Credit monitoring and blocking are great preventative measures, but what should your clients do if the deed has already been done? Pull a copy of their credit report immediately, and review all inquiries from the last 120 days. Once you have identified the instances of fraud, contact the creditors in writing to notify them of the identity theft. While many banks will often forgive fraud, they usually require it to be identified within 90 days or so.

Your clients should also write a letter to each of the three credit bureaus and place a fraud alert on their account. While this alert will not stop a thief like a credit block would, it does encourage creditors to be extremely vigilant for a period of three months.

Finally, advise your client to complete and notarize an identity theft affidavit, file a police report, and send both to each of the credit bureaus along with a copy of their credit report with fraudulent items circled. Your clients may also call the Federal Trade Commission's (FTC) identity theft hotline at 877-438-4338 (877-IDTHEFT) to contact other government agencies for further action.

Conclusion

Divorce is always complicated ' many of your clients are probably too distracted to notice identity theft when it happens. By advising them to be prudent, vigilant, and intelligent about the facts, you can help prevent identity theft before it happens.

Anthony Davenport is the president of Regal Financial, a New York City-based credit management firm. He can be reached at [email protected] or 646-450-0153.

Divorce is almost always a painful process for all involved. While your clients do their best to deal with emotional anguish, custody battles and legal complexities, they may also be leaving themselves particularly vulnerable to an unseen danger: Identity theft.

The Prevalence of Identity Theft

Every two seconds, another American falls victim to identity theft. It has even happened to Michael Jordan, Bill Gates, Tiger Woods and Beyonc'. But the real surprise is the way many people get their identities stolen: According to one study, 38% of victims discover that a family member or relative was responsible for the theft, while 18% were victimized by a friend or neighbor.

During and after a divorce, ex-spouses often have more than enough information to commit fraud ' as do their friends and family members. Consider some of the most common security questions: mother's maiden name, what city you were married in, where you were born. Your clients' ex-spouses would certainly be privy to that information and more.

Protecting the Children

It's not just your clients' identities that may be stolen ' children whose parents are undergoing a divorce are also at risk. Whether the parent or family member covets the child's clean record or he or she is simply being vindictive makes little difference ' stealing a child's identity can wreak havoc on his or her credit in adult life, and may not be noticed for up to 18 years.

If your clients suspect their child's identity was compromised, it is best to pull their children's credit report from each of the three major bureaus. However, advise your clients to tread carefully: Pulling the child's credit report establishes a report record, making it easier to steal his or her identity in the future, as an unexpected request will now raise fewer red flags.

How to Defend Yourself from Identity Theft

First and foremost, your clients should close any and all jointly held accounts they may share with the ex-spouse. Secondly, they should pull their own credit reports and review them carefully for any fraudulent charges; federal law allows consumers to receive up to three free reports a year from AnnualCreditReport.com.

For ongoing protection, they should actively monitor their credit. The sooner they catch something wrong, the smaller the damage will be. More intensively, a credit block will put a hold on your clients' accounts, which requires explicit permission to be lifted. Both of these measures can be done by the individual, but they take time and expertise; a credit management adviser may be an ideal solution.

What to Do if Your Identity Has Been Stolen

Credit monitoring and blocking are great preventative measures, but what should your clients do if the deed has already been done? Pull a copy of their credit report immediately, and review all inquiries from the last 120 days. Once you have identified the instances of fraud, contact the creditors in writing to notify them of the identity theft. While many banks will often forgive fraud, they usually require it to be identified within 90 days or so.

Your clients should also write a letter to each of the three credit bureaus and place a fraud alert on their account. While this alert will not stop a thief like a credit block would, it does encourage creditors to be extremely vigilant for a period of three months.

Finally, advise your client to complete and notarize an identity theft affidavit, file a police report, and send both to each of the credit bureaus along with a copy of their credit report with fraudulent items circled. Your clients may also call the Federal Trade Commission's (FTC) identity theft hotline at 877-438-4338 (877-IDTHEFT) to contact other government agencies for further action.

Conclusion

Divorce is always complicated ' many of your clients are probably too distracted to notice identity theft when it happens. By advising them to be prudent, vigilant, and intelligent about the facts, you can help prevent identity theft before it happens.

Anthony Davenport is the president of Regal Financial, a New York City-based credit management firm. He can be reached at [email protected] or 646-450-0153.