The banks are losing money… Your money!

Anyone paying attention to the news must know that financial institutions have been losing money, and they have been losing big. The amounts of write-offs are mind-boggling: Washington Mutual: $1.4 billion, Bank of America: $6.5 billion; Citigroup $13 billion… And these just first-quarter losses (for 2008).

Anyway, while banks are losing money, it’s time to check your own statements, because you may have been losing money, too. It may be a coincidence, but for some reason, within the last 3-4 weeks I was charged four times, all by mistake. First, Citibank imposed a monthly finance charge on the account I had for years. I’m sure that I met all requirements of the free account, but the charge sneaked on me, and I would not have detected it if not for a warning from Mint.com (after this notification, I came to appreciate Mint’s services). Then I received an annual charge for my free AAdvantage card (a customer service representative said that it was a mistake). Then, I got a charge for an annual credit card transaction summary, which I had never requested, nor received (I don’t even know what it’s for). Finally, one of the credit cards suddenly enrolled me in a protection plan (it’s one of these deals when they send you check for $6 or so, cashing which you get automatically enrolled in the plan; I’m pretty sure I have not cashed any such checks lately).

I’m no conspiracy theorist, but this seems very suspicious. (BTW, these incidents do not seem to be related to my identity theft issue, since these are legitimate accounts belonging to me.) Fortunately, banks agreed to reverse the charges, but if I were less attentive, I would’ve lost $50-$60 in few weeks. In the big scheme of things, $50-$60 is not a big amount, but I would rather spend it on things other than erroneous finance charges. I suspect you would, too, so go ahead and check your bank statements.

Someone stole my identity. Now what?

The 2007 tax season brought me an unpleasant surprise: my (e-filed) federal tax return was rejected. The Federal EF Rejection Diagnostics form indicated the problem:

“Reject: Error Code 0515: Your Social Security number cannot be used more than once in the return or on another return.”

Apparently someone had already filed a tax return using my name and Social Security number. A classic case of identity theft. So what do I do now?

I started by visiting the local IRS office. After waiting a couple of hours, I talked to a nice lady who appeared genuinely surprised to learn about my problem. Based on the IRS computer record, the person using my identity filed his (her?) tax return in New York, NY (I’m in Northern California). The IRS lady instructed me to send my tax return forms via regular mail and recommended to contact Social Security Administration to make sure it did not issue a duplicate number (I can’t imagine how this can happen, but who knows). She also suggested to file ID theft reports with the Federal Trades Commission (FTC) and police.

From the IRS office, I headed straight to Social Security Administration. As I suspected, my number had not been issued to anybody else (duh!) and my record (address, employer, etc) looked fine.

Then I called Equifax to set up a fraud alert. Equifax promised to alert the other two credit bureaus — Experian and TransUnion — and indeed, a few days later I received confirmation letters from both of them (I did not have to call them). I do not remember if I requested a credit report, or if it was part of the fraud alert process, but in about two weeks, I also got my credit report from Equifax (in future, I would recommend getting a credit report first, because once a fraud alert is set, getting a credit report will be more difficult). I did not find any suspicious activities in the credit report.

Next stop was the local police station (I think police reports are supposed to be filed at the department based on the home address). An officer filed an identity theft report and gave me the report number. Several days later, I got a call from an investigating officer, who said that they would’ve transferred my case to New York, but since they did not know the exact address of the scammer, they did not know which precinct should’ve handled the case. He said that they would transfer the case to IRS (I assume, to the Criminal Investigation unit).

Finally, I filed an ID theft complaint with FTC. The FTC form and instructions are a bit confusing. For example, in one section, it asks for the information related to police report (name of police department where report was filed, report number), but the instructions tell you to take the FTC complaint form to police so it can be filled there. I guess the order does not matter as long as both FTC and police are notified.

About a month later, I called IRS to check out the status of my case. I did not find out much. An IRS representative mentioned that me that my tax return still listed the New York address (which, I assume is phony) and that the case was handled by a different department. She said that I should expect IRS to contact me within 45 days of the call. I think this is the same promise I heard in the IRS office, but it has not been 45 days, yet, so I’ll be waiting. Based on accounts of other people who experienced the same problem, I do not expect a quick resolution. I will keep you posted.

In the meantime, here are some suggestions for people who run into a similar problem.

First, report the problem to IRS. Either visit a local IRS office or call the advertised number (1-800-829-1040; you may need to check the number in case it changes). If you call, you need to navigate the maze of voice prompts to get to a real person, and you may get a message saying that there are too many callers. Don’t give up, try calling at a different time. For example, I had to wait about 10 minutes around 4 PM PST on Monday before reaching a person, while a few hours before I got disconnected because of the high call volume. When you talk to an IRS representative, try to find as much about the thief as possible (reported address, date when tax return was filed, etc). Also record the representative’s name and ID. And mark the date, so you do not forget to follow up if you do not hear from IRS within 45 days. Second, contact Social Security Administration to verify your personal information: address, employer, etc. It’s very unlikely that someone else gets your Social Security number, but check it just in case. Third, request credit reports from Equifax, Experian, and TransUnion, and then set up a fraud alert (you can set up a fraud alert at on of the credit bureaus). Forth, file a police report with your local police department. Record the report number. Fifth, submit an ID theft complaint to FTC. Finally, call IRS again to verify that your case is being investigated.

Here are some helpful links:
What can I do if I think someone has filed a tax return using my social security number?
What To Do If Your Personal Information Has Been Compromised
Identity Theft and Your Tax Records
Has Your Identity Been Stolen?
ID Theft Complaint Instructions
Recover From Identity Theft
Your Access to Free Credit Reports
Helping Victims

More on IRS and identity theft in the news:
IRS Promises Identity Theft Protection in Testimony to Senate Committee
IRS chief to tackle identity theft

UPDATE: My case was eventually resolved in July 2008 with the help from Taxpayer Advocate Service (TAS). After a trip to a local IRS office and three phone calls which despite the promises led nowhere, an IRS representative suggested that I open a case with TAS, which I did (actually, the same IRS representative opened the case for me). Within a few days, I got a phone call from a TAS worker, who was genuinely nice and seemed to be eager to help me. She asked me to mail (or fax) her a copy of my tax return, police report, and documents confirming my identity. She promised to call me back in a couple of weeks and gave me the timeline (i.e. when I could expect the case to be resolved, etc). She called me a few more times to inform me on the progress and finally, when I got my return (with small interest), to close the case. Overall, I was very impressed with the TAS service. She told me that may file was marked in case someone tries to use my SSN for tax return in future, so I’ll see how it goes in 2009.