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Identity Theft: Response Plan

rose steelIn this information age, identity theft is no longer something you merely hear about on the news in the evening. Most people know someone who has had either a credit card fraudulently opened in their name, checks stolen and used or a social security number compromised. Clearly identity theft is everywhere. I have a friend who had his 1040 stolen from his mailbox. Trust me, it did not make his tax season go any smoother. No one is safe.

As a CPA, you are a client’s trusted financial partner. Not only do you have a responsibility to protect all information a client gives you but you are also their consultant in many financial matters. Therefore it is likely that upon having their identity stolen a client will come to you asking what the next steps should be.

Step 1

Instruct your client to contact the companies or organizations where the fraud has occurred. As the thief used the identity to patronize these establishments already, putting the companies on high alert will disrupt the thief’s established patterns. This will also help stop the results of identity theft from growing systemically.

This step also involves changing passwords and PINS, refreshing cards and adjusting security measures.

Step 2

You will then need to contact, or have your client contact, the credit bureaus to activate a 90-day fraud alert. The three credit bureaus worth contacting are:

• Experian
www.Experian.com/fraudalert

• TransUnion
www.TransUnion.com/fraud

• Equifax
www.Equifax.com/CreditReport Assistance

A 90-day fraud alert is a free service offered by all of the credit bureaus. According to the Federal Trade Commission, once a 90-day fraud alert has been activated with one of the credit bureaus, protocol dictates that they contact the other two creating a web of caution.

Step 3

Your client will then want to go to www. IdentityTheft.gov to file a report with the Federal Trade Commission. Your client will be guided through several steps of creating an account and filling out the appropriate forms. Advise your client to provide as many details as possible.

Step 4

The next thing to do would be to file a police report. The police will need the following items to complete the report:

• A copy of the Federal Trade Commission Identity Theft Affidavit.

• A government-issued ID with that person’s picture on it.

• A proof of address. This can be an item such as a utility bill or mortgage statement.

• Any proof your client may have of the identity theft such as bills or notices.

• The Federal Trade Commission’s memo to law enforcement available at www.IdentityTheft.gov/steps.

Your client should also ask for a copy of the police report for their personal records.

Once the spread of financial damage has been stopped, you must then help your client pick up the pieces. This involves closing new accounts fraudulently opened in your client’s name, removing fraudulent charges and correcting the credit report. Steps detailing this process can be found at www.IdentityTheft.gov.

This information and more can be found at CPAMagazine.com as part of the Technology Minute. The Technology Minute is a video series produced by the staff of CPA Magazine covering technological issues CPAs encounter on a daily basis in their tax practices. The Technology Minute series also features interviews with some of the top minds in tax to elaborate on the current status of technology, where it is going and what it means for CPAs. If you would like to suggest topics for the Technology Minute or be featured in a video, contact CPA Magazine at This email address is being protected from spambots. You need JavaScript enabled to view it..