Social Media a Prime Tool for Credit Bureaus to Identify Identity Theft

Identity theft is a serious and growing problem nationwide, which in turn means that the companies that keep track of consumers' sensitive financial information need to be more vigilant about the ways in which people can be affected by this type of crime in particular.

Now, credit monitoring bureaus and other financial institutions are keeping a closer eye on social media sites like Facebook and Twitter as a means of making sure people applying for new lines of credit or other types of accounts are who they claim to be or are in as strong financial positions as they claim, according to a report from Bloomberg News. The credit monitoring bureau Equifax and payment processing companies PayPal and Intuit are now trying to use social networks to determine certain aspects of consumers' finances or identities that they otherwise might not have been able to verify in the past. For instance, public postings, check-in locations and other information may be used to verify or disprove certain claims being made by applicants.

"We are investing a lot in how can we use unstructured data that is sitting out there in social media that can help us understand a little more about identity," Rajib Roy, president of Equifax Identity and Fraud Solutions, told the news agency.

Online retailers alone are losing some $3.5 billion annually on fraud, and the value of bogus lines of credit being opened likely eclipses that significantly every year, the report said. Moreover, it may not always be easy for these companies to determine certain information about consumers based solely on social networking posts, especially because there is little to prevent criminals from setting up fake profiles.

How can identity theft affect consumers?
Of course, while these companies are working to help stamp out certain types of fraud, many consumers may have difficulties dealing with the fallout of having their personal or financial information stolen. Those whose credit card or bank accounts are compromised will likely face numerous problems, as criminals can make large amounts of purchases in a short period of time that, if they are not discovered and reported to the necessary institutions within a certain amount of time, can end up costing them thousands of dollars or more.

However, those who have their personal information — such as their names, addresses, dates of birth, Social Security numbers, and the like — exposed are likely at far greater risk. This is because while it's relatively easy to cancel a credit card or bank account, there is very little they can do to alter or better protect their more sensitive data once it has been stolen. This means that even if a fraudulent account is caught once, it may not be possible to fully protect against similar incidents in the future.

Moreover, a stolen identity can wreak havoc on consumers' credit standings, which in turn will make it more difficult to obtain affordable credit, or any financing at all, in the future. This is because any consumers affected by this type of crime who do not know about fraudulent accounts opened in their names may quickly see those accounts fall into delinquency and default, and their "credit utilization ratios" could skyrocket. These two factors alone make up a combined 65 percent of one's score (35 percent for payment history, which takes late payments into account, and 30 percent for the percentage of available credit being used at any one time). Other factors may also arise as a result of this type of fraud, including repeated attempts to open new lines of credit in a short period of time, which makes up another 10 percent of one's score.

As such, consumers will likely need to keep a close eye on their credit reports and make sure there are no unfair markings which may be marring their standings. If this is the case, they should contact the companies that issued these documents quickly to remediate the issues, although it's important to note that in many cases these potential identity theft victims may have to provide proof that they are not responsible for the accounts in question. Moreover, this may also be the case for accounts that were added to their histories through simple reporting errors, which can also be somewhat common.

In either case, when dealing with unfair markings discovered on one's credit report, it may be wise for consumers to also work with a credit repair company to potentially help get the issues sorted out as soon as possible. Doing so may help them to more quickly sort out the problems than they otherwise might have been able to on their own, and return their credit standings to where they deserve to be.

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