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Home Equity Lines Vulnerable to Identity Theft

[Nov 25, 2008.]


According to the Star Ledger, "Four men were arrested yesterday in connection with an international identity theft scheme that siphoned at least $2.5 million from home equity lines of credit at dozens of banks, including at least 11 in New Jersey"

The men were able to obtain personal information like social security numbers and mothers' maiden names to mislead bank employee and successfully have over $2 million transferred into their own bank accounts.

The Boston Herald has reported that Home equity lines of credit related scams rose 31 percent in 2007.

Home equity lines of credit, which many homeowners have opened but not drawn against, represent large piles of cash to identity thieves. Consumers who do not actively use their credit lines may learn of the theft well after it takes place and they receive the first bill. Considering that some equity lines of credit represent hundreds of thousands of dollars - the theft can be quite significant.

Homeowners are encouraged to:

  1. Obtain a free copy of their credit report from one of the three credit bureaus (Equifax, Experian, and Transunion) once every 4 months to monitor any new activity.

  2. Open their monthly statements from their home equity line of credit provider - even if they haven't been using it.

  3. Shred statements before disposing of them.

  4. Do not carry debit/credit cards associated with the home equity line of credit in their wallets.

  5. Do not use debit/credit cards associated with the line of credit for online purchases.

  6. Never give personal information out over the phone unless you initiated the phone call and have a trusted business relationship with the company.

At first sign of theft, homeowners should:

  1. Contact their bank immediately.

  2. Place a fraud alert with all three credit bureaus.

  3. File a complaint with the FTC.

  4. File a report with your local police department.

Home equity lines of credit are a useful financial tool, however, homeowners must be diligent in guarding their personal information and monitoring their line of credit to prevent or reduce the impact of identity theft.


About Author:

Chris Rocks is the Regional Director of the National Credit Federation (NCF), a consumer advocacy group that assists small business owners and consumers overcome debt and credit challenges.

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