Session 6
— Wise Use of Credit
Case Study 4.6e "Credit Fraud "
Directions: Complete the following case study and record your answers on a separate sheet of paper.
Topic: Social Security number use as a form of credit identification fraud and credit card fraud.
Objective: To understand what credit fraud is, how to dispute it and how to protect yourself from it.
U.S. citizens are required to obtain a Social Security number (SSN) in order to report any form of income to the Internal Revenue Service (IRS). Your SSN is also linked to your Social Security benefits. Your SSN is a nine-digit number. The first three numbers represent your state of residence when the SSN was issued.
Your Social Security Card is proof of your SSN. You may be asked to show it to your employer, who may need to keep a copy on file. Your SSN is also a main financial identifier. It is used track your financial history when applying for loans or credit. Your credit report is located by means of your name, SSN and address. If any of these factors change, the older versions will remain attached to your credit report. For example, if you have used more than one name in a financial or credit situation, you will have an AKA ("also known as") on your credit report. Your current address, as well as previous ones, will show on your credit report.
CS Question #1: Is it important for every citizen to have a Social Security number? Explain your answer.
Identity fraud is most often committed by using another individual's SSN without his or her knowledge or consent. If someone is fraudulently using your SSN to obtain a job, you need to contact the Social Security Administration and the Internal Revenue Service to straighten out the problem. If someone is fraudulently using your SSN to obtain credit or accumulate debt, you need to contact the three major credit report bureaus of Equifax, Trans Union and Experian (formerly TRW). Obtain a copy of your credit report and review all items. If you find any to be fraudulent, you need to dispute them. This dispute should be filed with the credit reporting bureaus and/or the creditor. You may also want to place a fraud alert on your credit report. In this way, potential creditors will be advised of the situation.
If the fraudulent use of your SSN includes any of the following types of fraud, you will need to contact the appropriate government agency:
Here are ways to protect the privacy of your SSN:
CS Question #2: Why do you think different agencies are involved in investigating SSN fraud?
Computer technology enables easier counterfeiting of personal identification documents and financial documents, such as checks. Computer technology has also caused an increase in credit card fraud. Crimes like hacking into databases and creating numerical password decoders are also more prevalent. Credit card fraud is part of a broader category of fraud known as access device fraud. Access device fraud includes fraud that involves the following:
If you are the victim of access device fraud, you will need to take the following steps:
CS Question #3: How can you better protect yourself against access device fraud?
Here are suggestions for protecting your debit and credit cards:
Fraud losses in the United States are valued at an estimated $660 billion a year. In some cases, identity theft is committed by someone you know, like a family member who has access to personal records. Sometimes a parent will use their children's information before they are even old enough to use their own credit. When the perpetrator is a friend or relative, the victim, in many cases, chooses not to prosecute and is left with the responsibility of the debt.
More commonly, identity fraud is committed by criminals - individuals you do not know - who gain access to your records by means of technology or the theft of a purse or wallet. It is important to protect yourself from fraud. Cases of fraud can be hard to prove, and victims may be stuck with fraudulent charges or a bad credit record. In any case, they must spend much time and energy investigating and untangling identity theft.
CS Question #4: Would you choose to prosecute a family member or friend who committed identify fraud using your personal information? What would the factors of your decision be?
Further Thought: