Identity theft and the resulting fraudulent use of the victim’s identity has become one of the largest and fastest expanding problems in the United States. It is a worldwide problem to be sure, but few countries enjoy the luxury of the seemingly endless supply of easy credit that flows on a daily basis in America. Coupled with a sharp upturn in sales and marketing trends that absolutely depend upon transactions being completed without a face-to-face encounter between the merchant and the customer, it is easy to see how this has become the case.

Many discussions and debates rage over who is to blame for this phenomenon, but most will fall into one of two camps. Either you tend to hold that it is a crisis of their own creation from the credit industry being lax with scrutiny and controls, or you tend to hold that it is the blame of the insatiable demand for credit by consumers. The truth is probably somewhere in between; but the fact remains, identity theft is far too easy to accomplish, and far too painful to experience, to remain passive.

In simple terms, identity theft takes place when someone uses the personally identifiable information of someone other than himself or herself for the purpose of conducting a fraudulent business transaction. The thief walks away with the goods or services obtained, while the identity theft victim is left with the bill for a transaction of which they were unaware, until the bill arrives. This delay allows the thief ample time in most cases to disappear.

While United States federal law protects the victim from being held liable for the fraudulent purchase, it does not free them from the burden of proving it was fraudulent. This is where the real pain starts for the identity theft victim. Once the victim becomes aware of the fraud, there are steps that must be taken in order to preserve their financial innocence, as well as to protect themselves from further, and potentially worse, problems. For example, it is not usually too painful to quickly cancel a credit card and wait two or three days for a replacement card. However, if the identity theft extends to bank or brokerage accounts, it quickly becomes a very different matter. If a thief obtains the needed information to access your checking account, and they make a withdrawal without using a Visa® or MasterCard® protected debit card, that money is simply gone. If the transaction is made using a debit card with credit card protection, then again the victim’s liability is limited.

The irony is that credit card companies are the most prolific in marketing identity theft and identity fraud protection plans. If you hold to the crisis being of their making, then this is much like hiring the fox to watch the hen house, so to speak. However, there are other companies that are now marketing identity theft insurance. While this is a good idea, be sure to examine what is being insured. Since this is a relatively new market, there is no real standard yet. Some will offer to insure you against the financial loss, which although it sounds good, it is a limited risk since most identity theft transactions involve credit cards, and the victim’s liability is already limited. Others offer insurance that actually cares for the many, many hours it will take to document, track, and clean up the mess caused by identity theft. It is likely that if your identity is stolen, you will undergo a complete review of all accounts, quite possibly closing and re-opening several. Every transaction for a period of time will need to be scrutinized, and there may be multiple letters to multiple creditors before it is all said and done. The type of insurance that assigns a person to guide, coach, and walk through this with you may well be worth the cost, if you ever need it.

If you find yourself the victim of identity theft or credit card fraud, there are several steps you must take as quickly as possible. Obviously, if you have identity theft insurance, you will want to work with them from the beginning, but if not, then consider the following steps, as adapted from the United States government web site, http://www.consumer.gov/idtheft/

First, contact the fraud department of one of the three major credit reporting agencies (Equifax, Experian, and TransUnion), and have them place a fraud alert on you credit report. This alert will cause creditors to follow certain procedures before opening any new accounts, and can go a long way to minimizing additional damage. At this point, start a written log of everything you do and everyone you speak with regarding this issue.

Second, close any accounts you know to have been compromised, and issue written disputes with the creditors. Keep copies of any written materials you send. Remember to log what was sent to whom, and when.

Third, file a complaint with the Federal Trade Commission. Instructions are available on the website mentioned above.

Fourth, and this is vital, file a police report either in your local community, or the community in which the fraud took place, if you know. Without a police report, it will be difficult to claim a crime was committed, even if the thief is located.

Needless to say, at least for the foreseeable future, Identity theft is here to stay and will increase. Yet another type of crime we must live with.  Remember, your Identity to a thief is just a mere shadow, something to stand in and appear as one in the same against the digital light cast by modern commerce.