What to do when a family member wrecks your credit

It’s upsetting when a criminal racks up debt in your name, but the emotional blow can be even worse if you find the thief has been sitting right across from you at the dinner table.

When a relative commits ID theft, the personal relationship between victim and perpetrator adds a layer of complexity to an already difficult problem, says Eva Velasquez, president and CEO of the Identity Theft Resource Center, an organization that offers assistance to ID theft victims. “It can really disrupt a family dynamic,” she says.

That’s a lesson Cassie Williams (who asked that her real name not be used, due to her relationship with the person who stole her identity) learned in her early 20s when she and her husband tried to buy a house and found out her credit score was being dragged down by two maxed-out cards.

“My first emotion was shock, then anger,” Williams says.

She had opened the two cards herself during college and had the statements sent to her mother’s house. Because she never used the cards, she didn’t check the accounts. When she was 21, her mom asked if she could charge part of a family vacation to Mexico on her daughter’s card if she promised to pay it off.

“I said yes and didn’t think much more about it,” she says.

Not only did her mom charge part of the fancy trip, which included visits to beaches, cities and ruins, she bought clothes, electronics and other items on her daughter’s account without permission. The total tab ballooned to over $20,000.

When Williams confronted her mom, she demanded the balance be paid off immediately. Her mom told her she’d have to withdraw money from her 401K.

“I told her, ‘I don’t care what you have to do, just pay it off,’” Williams says.

Opportunity allows family fraud

Identity thieves need access to personal information, and relatives generally have more opportunity to access this data than strangers. ID theft is a “crime of opportunity,” Velasquez says.

In 2016, a record 15.4 million people in the United States were victims of ID theft, an increase of 16 percent over the previous year, according to the 2017 Identity Fraud Study by the research firm Javelin Strategy & Research.

It’s difficult to get hard data on the amount of ID theft by relatives due to a lack of information on the numbers of prosecutions, Velasquez says.

“We have lots of information about the victims, but it’s hard to get good information about the perpetrators,” she says.

However, based on its surveys of ID fraud victims, Javelin found that more than half a million people a year in the United States say their identity was stolen by someone they know and that students are more than four times as likely as other Americans to become victims of so-called “familiar fraud” by people they know.

The perpetrator can be anyone in a position to get ahold of a Social Security number, date of birth and other identifying information, from a parent to a spouse to sibling to a distant cousin who sneaks into your file cabinet on a visit to your house.

Children are particularly vulnerable to fraud committed by their parents because mothers and fathers may have complete access to information, and the fraud can take years to be discovered, Velasquez says.

The consequences can be devastating when a young adult goes to take out a student loan, buy a car, rent an apartment or, like Williams, buy a house.

Running into roadblocks due to bad credit just as you’re trying to launch “can really set you back in life,” Velasquez says.

Dealing with ID theft by a relative

If you discover that a family member has stolen your identity, you first have to decide whether to involve the cops or deal with the matter at home.

“I’ve talked to people in tears saying, ‘Do I ruin Mom or Dad’s life or mine?’” Velasquez says. “It’s a horrible choice to have to make.”

When Williams was faced with that dilemma, she decided to handle the matter herself, partly because it was a first offense and also because her mom agreed to her demand and paid off the cards right away.

“If my mom hadn’t taken that action, I probably would have gone to the police,” she says.

If you find yourself in a similar situation, here are four steps you can take to deal with family fraud:

  1. Consider your choices. When you know your ID thief, you essentially have three options, according to the ITRC: file a police report and cooperate with the investigation, try to work out a solution with your relative and your creditors or pay off the debt yourself.

    “In order to alleviate the financial burden created by ID theft, you have to file a police report and basically attest to the fact that it was a thief who stole your information and misused it,” Velasquez says. “The conundrum is you might not want to see that person get in trouble.”

  2. Enlist help from other family members. If you decide not to go to the police, it’s likely you’ll be on the hook for the debt racked up in your name. Other relatives often have strong opinions about how the situation should be handled, Velasquez says. If yours are urging you not to involve law enforcement, ask if they’d be willing to help pay off the debt. If possible, get the ID thief to pay off all or part of the debt, or repay you and other family members.
  3. Take steps to prevent future theft. Once the thief has your information, there’s no way to get it back, Velasquez points out. So, it’s crucial to protect your credit just as you would if a stranger stole your ID, says identity theft expert Robert Siciliano. Consider a credit freeze, which essentially locks your credit, preventing prospective creditors from checking it, until you lift the freeze. This makes it a lot less likely that anyone will be able to open credit in your name. In many states, ID theft victims who have a police report can place a freeze for free. However, if you’ve chosen not to go to the cops, you might have to pay a $5 to $10 fee, depending on where you live. Alternatively, you can place a free fraud alert on your credit to let creditors know that they need to take extra steps to verify your identity before extending credit.
  4. Keep an eye on your credit. Check your credit reports with the three major bureaus for free every year at AnnualCreditReport.com. Consider checking a different bureau every four months, rather than all three at once, so you can monitor your credit throughout the year. If any more fraud occurs, as it might, you want to catch it early.

Even if you decide to go to the police, there’s no guarantee your relative will get in trouble. That was the case when Réal Hamilton-Romeo, a PR professional in New York, found that an $8,000 check had been written from her bank account, her signature forged.

She went straight to the police and told them she suspected a distant relative who had briefly had access to her purse, with her checkbook in it, a few days earlier. She got a police report to give to her credit union as evidence that the check was fraudulent so she wouldn’t be on the hook to pay the funds.

However, the police never caught the thief.

“They said unless there was video of this person cashing the check they wouldn’t be able to pursue it any further,” Hamilton-Romeo says.

Now, she’s much more careful with her personal information. “I always thought if someone is going to steal, they’re not going to steal from their family,” she says. “But now I trust no one.”

One of our forum members is dealing with family ID fraud. Read more here.

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