Fraud hits too close to home

Here’s an economic indicator we could all live without: Incidents of identity theft and credit card fraud are apparently on the rise as bad economic times bring out the worst in some people.

And you can add me to the list of folk who’ve been victimized. All my cash and credit cards and my driver’s license were stolen last week. Within an hour of the theft, bogus purchases were being made or attempted at Best Buy, Target and Toys R Us locations throughout the area.

I’ll offer some tips in a moment about what you can do to protect yourself. But first, it’s instructive to see how fast you can lose control of your finances.

I went to the gym last Sunday. The gym records say I checked in at 1 p.m. I put all my gear in a locker and locked it, as I always do, with my own combination lock.

About a half-hour later -- it was a short workout -- I retrieved my stuff and walked to a nearby restaurant. That’s where I discovered that my cash, plastic and license were gone.

Right around the same time, I later learned, somebody was using my Chase MasterCard to purchase $432.99 worth of goodies at the Toys R Us branch in West Los Angeles, about a 10-minute drive from my gym.

The thief then jumped into his car and high-tailed it to Glendale, where, shortly after 2:30 p.m., he used my American Express card for a $1,350.80 purchase at Best Buy.

Tim Fisher, Best Buy’s director of loss prevention, said the thief bought an Apple laptop. He said security tapes showed a tall, white man who was “large in frame, athletic in nature.”

The thief next drove to a Toys R Us in Glendale, where this time he used my Bank of America debit card to buy $497.98 worth of stuff. Then, with considerable moxie, he returned to the same Best Buy where he’d been a half-hour earlier and used my Chase card to buy a Canon digital camera for $1,298.97.

He then drove to a nearby Target and tried to use my AmEx, Chase and BofA cards for a $575.40 purchase. This time, each bank’s computer system sensed something was amiss and declined the transaction. The spending spree ended there.

The thief clearly knew what he was doing. He took what he needed for a little economic stimulus but left everything else in my locker as he’d found it, rightly guessing this would prevent me from immediately spotting that I’d been ripped off.

The police officer who took my report said it could have been a gym employee who’d spotted my combination on an earlier visit and was simply waiting for an opportunity to strike.

It could just as easily have been another gym member who either had seen my combination or knew how to open a cheap lock like mine. It’s worth noting that when I reported the theft to the gym’s assistant manager, another member was at a nearby table reporting a separate theft on the same day.

Statistics for 2008 won’t be released by the Federal Trade Commission until next month. But officials say they expect the number of fraud and ID theft cases to have gone up as the economy went down.

“Anecdotally, the number of cases has risen astronomically,” said Jay Foley, executive director of the nonprofit Identity Theft Resource Center in San Diego. “The economy is making people increasingly desperate.”

I’m no fan of banks and credit card companies, but I’ll be the first to acknowledge that their fraud-prevention systems work.

Chase’s, AmEx’s and BofA’s computers figured out fairly quickly that it wasn’t me making all of those purchases and put the kibosh on further transactions. That’s reassuring.

What’s not reassuring is the ease with which the thief was able to pass himself off as me at major retailers.

Shouldn’t the salespeople and cashiers have spotted that he didn’t match the face on my driver’s license?

It turns out that no photo ID is required for most credit card purchases. Cashiers are instructed to simply check the signature for any purchase against the signature on the back of the card -- a scrawl any identity thief probably could master within minutes.

“This isn’t our rule,” Best Buy’s Fisher said. “It’s in the contracts from the credit card companies.”

Foley at the Identity Theft Resource Center said card companies had determined that ID checks would be seen by some people as an inconvenience. He said the companies were willing to eat a certain amount of fraud in return for getting plastic into as many hands as possible.

According to industry estimates, U.S. consumers made more than $3 trillion in purchases last year with credit and debit cards.

Tristan Jordan, a MasterCard spokesman, emphasized that customers weren’t liable for fraudulent purchases, so there’s no need for an ID check. “You’re protected,” he said.

But that’s like saying you don’t need to worry about your house burning down because you won’t have to pay to rebuild it. Wouldn’t it be better to prevent the house from catching fire in the first place?

I’m no stranger to identity theft. About seven years ago, I discovered that a guy in Connecticut had been using my Social Security number to run up bills on nine credit cards.

Working with an investigator for the U.S. Postal Service, I managed to track the guy down and amass enough evidence to have him arrested and convicted for Social Security fraud.

If, God forbid, you find yourself in a similar situation, immediately contact the three main credit-reporting agencies -- Experian, Equifax and TransUnion -- and have them place free fraud alerts on your credit files.

This isn’t foolproof, but it should discourage most lenders from issuing new plastic in your name without your approval.

Some fraud victims also may find peace of mind in signing up for a credit-monitoring service, which can cost more than $100 a year.

This isn’t a bad idea, but you can save yourself some money by taking advantage of a federal law that allows you to order a free report from each credit agency once a year. Space out your request to each agency by four months and you have a full year of coverage.

If you find any problems or errors, contact all three agencies with necessary corrections.

Also, ask your credit card issuer if it offers a few months of free credit monitoring in the event of fraud or ID theft. Some do and some don’t.

And buy a decent lock for the gym. If nothing else, do that.

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David Lazarus’ column runs Wednesdays and Sundays. Send your tips or feedback to david.lazarus@latimes.com.