Identity Theft Recovery: 6 Essential Steps To Get Back On Your Feet

The number of reported identity theft incidents continues to climb. In 2021, The Bureau of Justice Statistics reported that nearly 25 million Americans have been victimized by identity theft, and approximately 1 in 5 persons had experienced identity theft in their lifetime. In 2024, identity theft continues to increase, as reflected in the 1.4 million cases already reported to the Federal Trade Commission (FTC).  

Experts estimate that a new case of identity theft occurs every 22 seconds. While prevention is the ultimate goal, knowing how to recover if you become a victim is crucial. 

How to Recover from Identity Theft

The largest number of identity theft incidents involve Social Security numbers. With those nine digits, criminals open credit cards and bank accounts in the victim's name. When thieves gain access to driver's licenses, mailing addresses, passport information, and others, they can orchestrate what is known as synthetic identity theft.

This means criminals may be able to reroute your mail, take out loans, and open checking accounts to write bad checks. When repeat offenders get arrested, they sometimes trick law enforcement into believing they are you. When creditors start contacting you about outstanding debts, strange charges appear on credit card statements, or the police show up with an arrest warrant, honest people suddenly feel the weight of being an identity theft victim. Undoing the damage of identity theft is possible. If you fall victim to identity theft, take these steps to get back on your feet. 

Step 1: File a Report with the FTC

Reversing the damage done by identity thieves starts with filing a report with the Federal Trade Commission (FTC.) Filing a complaint helps you document the fact criminals used your personal information. It can also help absolve you of the debts and crimes committed by unscrupulous parties.

Visit IdentityTheft.gov and follow the steps to create a report online or call 1-877-438-4338.  Once you complete the process, print copies of the complaint and provide them to local law enforcement. 

What You Will Need to Report Identity Theft:
Given the crime, it may seem almost ironic, but you will need to prove your identity to the FTC. Official documents usually include a Social Security card, driver's license, state-issued ID, passport, and birth certificate.

Step 2: Place a Fraud Alert with Major Credit Bureaus

The effects of identity theft are far-reaching. Your financial health and well-being can be upended, along with suffering a negative reputation. One of the harms that eventually surfaces involves your credit score. The unpaid and late credit card bills, bad checks, and loan defaults orchestrated by criminals will all be reported to the three major bureaus — Experian, Equifax, and TransUnion and impact your credit.

Place a free, one-year fraud alert by contacting one of the three credit bureaus:  Experian, Equifax, or TransUnion. Be prepared to provide a copy of the FTC complaint and show official documents proving your identity.

The bureau you contact is required to inform the other two.  You'll receive a letter from each credit bureau confirming the fraud alert has been placed on your file.

A fraud alert is free. It will make it harder for someone to open new accounts in your name. When you have an alert on your report, a business must verify your identity before it issues new credit in your name.  You can renew the fraud alert after one year.

Review and Dispute False Credit Report Activity
Reclaim your credit and restore your rightful credit score. Request free copies of your credit history. Document and correct any false claims caused by fraudsters. If you find additional accounts and debts you weren't aware of, notify the credit bureaus and ask them to be corrected. 

Step 3: Call the Companies or Financial Institutions Where the Fraud Occurred

The FTC and police reports will provide a strong foundation when dealing with financial institutions. These documents prove that lenders and retailers were scammed into falsely approving charges, lines of credit, or loans.

• Contact the fraud department at the impacted companies and explain that someone stole your identity.  New accounts falsely opened in your name should be closed.   Ask to remove any charges that were made fraudulently to existing accounts and whether you should place a freeze on your account or open a new account.
• Each company may have its own fraud reporting/error resolution process you need to follow.  If not submitted online, it may be prudent to use certified mail if you need to send documents.
• Keep track of who you spoke with and when, and ask for confirmation of their actions taken.
  
• Change logins, passwords, and PINS to all your accounts.

Step 4: Secure Your Online Accounts

Hackers are relentless when it comes to identity theft. They can breach cellphones and electronic devices to steal Social Security numbers, credit card accounts, and wide-reaching personal information. Maximizing the cybersecurity measures that protect online accounts and wallets is crucial.

Consider using multi-factor authentication to protect financial accounts. Update your passwords, and always use at least one capital letter, symbol, and number. Strong passwords never include things like "1,2,3" or are easily guessed.

Stay Informed and Stay Safe! Download our Free Checklists: Identity Theft Defense: 3 Critical Checklists to Prevent, Report, and Recover from Fraud

Step 5: Monitor Your Credit Reports and Accounts

An identity theft recovery process involves erasing the paper trail left by fraudsters. You will be tasked with closing out accounts opened by unauthorized individuals in your name. Undoing this damage may take some time and patience.

Having companies correct their misinformation is only half the battle. Ask them to send their corrections to the credit bureaus to ensure they are officially updated. Follow up on these requests by continuing to monitor your credit report to make sure the errors have been corrected. One thing to keep in mind is that identity thieves may try again. Hackers often sell personal identity information on the dark web. Continuing to monitor your credit for unusual activity in the future is crucial.

Step 6: Consider Adding a Credit Freeze or an Extended Fraud Alert

Credit freezes are excellent short-term deterrents that prevent scammers from opening new accounts or applying for loans. The downside is that they are a nuisance for victims who apply for automobile loans, HELOCs, credit cards, and other lending opportunities. The freeze prevents any credit from being pulled and loans being issued.  At some point, releasing the credit freeze will ease the burden and allow the victim to try to regain their financial footing. 

Not knowing whether someone will try to strike again can be a scary thought. Fortunately, fraud alerts serve as a similar protection. Fraud alerts notify you when unusual activity occurs, or a lending application is filed. Victims of identity theft crimes can secure an extended fraud alert lasting upwards of seven years, and it's free.  The protection is also available for members of the military on active duty.

How Long Does it Take to Recover from Identity Theft?

How long identity theft recovery takes largely depends on what types of accounts were used and the speed and decisiveness of your actions. Once you have copies of the FTC complaint and police reports, those documents are often enough to persuade most companies to undo the damage. Organizations that are not as helpful may require you to work with the credit bureaus directly to remove the blemishes from your record.

Except for insurance companies, most people can make a full financial and credit history recovery within a few months. As long as you are methodical, determined, and polite, identity theft is a bump in the road that teaches a valuable lesson about protecting personal information.

Middlesex Federal Can Provide Helpful Resources

Middlesex Federal is committed to helping our customers and community members protect their personal information. If you've been a victim of identity theft, we have resources to help you recover. Explore our resources for identity theft prevention and resolution at Middlesex Federal today.

If you enjoyed exploring identity theft recovery tips, take a closer look at our free guide, "Identity Theft Defense: 3 Critical Checklists to Prevent, Report, and Recover from Fraud" to ensure you properly report the crimes and prevent another exposure in the future.