False Identity Theft Charges Can Have Devastating Financial Consequences

With increasingly sophisticated methods of stealing identities, a growing number of people are potential victims of identity theft. In a typical instance of identity theft, someone obtains the personal information of another, such as a Social Security or bank account number, and assumes that person's identity to gain access to credit or other resources. Consequently, victims of identity theft can end up with financial problems that can be difficult to overcome.

A lesser known variation of identity theft is false identity theft. This can occur when a family member puts a utility bill in another's name and a squabble breaks out or when a bank makes an overprotective mistake.

In a recent example of this second type of identity theft, a husband and wife were in the late stages of purchasing their first home when they were alerted by their bank that the husband's identity was stolen. Executing preventative measures, the bank closed his account, then reopened it and duplicated his bank card number. It was a seamless process that on the surface did not appear to affect any of his finances.

As it turned out, the husband had inadvertently stolen his own identity. In preparation for his move, he made several large purchases online and across a handful of states. Fearing that his account was compromised, the bank reacted to those purchases by shutting down his account to protect it from additional risk.

The bank's expedited protection, however, carried a significant cost. Credit rating companies dropped his credit rating by 45 points when they saw that his bank account had been closed. Those companies did not see, care or accept any explanation that his account was closed due to a unique mistake of his own doing. As a result, he and his wife were locked into a more expensive mortgage at a higher rate that required additional insurance.

The fact that there is hardly anything this couple can do to reverse the damage created by their bank due to the false identity theft is almost worse than the higher mortgage costs they will have to pay on their new home. Although most people do not expect to steal their own identities, this can serve as a lesson that we should all be better aware of bank policies to ensure that if identity theft occurs, we do not find ourselves to be both victims and culprits.