It's something many of us dread: the sudden realization that our purse or wallet has been lost or stolen. The biggest concern at this moment is identity theft - the Federal Trade Commission estimates that up to 9 million Americans are the victims of identity theft each year. (For a related reading, see Tips For Keeping Your Financial Data Safe Online.)

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It's important to act fast to minimize the risk. Here's a checklist of things you must do immediately:

  1. Clear Some Time in Your Schedule
    Trying to do damage control isn't easy - in its 2010 Identity Theft Fraud Survey Report, Javelin Strategy & Research found that consumers spent an average of 21 hours on fraud resolution. But the process often becomes more time-consuming the longer you wait, so moving quickly can save you valuable time.

  2. Contact the Police
    Unfortunately, arrests in purse-snatchings are rare, unless a thief tries to use one of your cards in a local store. But you may need the police report to avoid being held liable for fraudulent charges.
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  1. Alert Your Bank
    If your purse or wallet contained your ATM card or checkbook, you need to contact your bank right away to cancel your accounts. Several different types of state and federal laws come into play here, so your potential losses depend on your location and the exact type of tactic the thief uses - say, writing a bogus check versus initiating a fraudulent electronic transfer. (To learn more, check out 5 ATM Scams That Can Break The Bank.)

  2. Notify the DMV
    Not only will you need to get your driver's license replaced, but you'll also want to find out what you need to do to ensure that you won't pay the consequences if someone else gets pulled over with your stolen license.

  3. Cancel any Debit or Credit Cards
    With debit cards, federal law determines liability based on how quickly you report the theft or loss, says Barbara Stark, director of education and community development for American Debt Counseling. Reporting the incident before the card is used relieves you of responsibility for any unauthorized transfers. You will be responsible for $50 of unauthorized use if you report it within two business days, yet if you wait until after two days you can be liable for up to $500. With credit cards, under federal law, the most you will owe for unauthorized charges is $50 per card - and there is no charge if you report the loss before the card can be used. (To learn more, see Debit Card Fraud: Is Your Money At Risk?)

  4. Contact the Credit Bureaus
    Call Experian, TransUnion and Equifax and ask them to put a "fraud alert" on your files. You will then be contacted whenever someone tries to open credit in your name. Keep in mind, this will mean you will have to jump through a few extra hoops when opening new credit accounts yourself because creditors will need to verify your identity, but the protection is worth the hassle.

  5. Go Beyond the Obvious
    Think about what else is in your wallet that thieves may be able to use. What about your insurance card? Believe it or not, some scammers try to use other people's insurance coverage - this is known as medical identity theft. Also, if thieves have access to your phone number, they can run up charges on your cell phone or even open another account in your name.

  6. Monitor Your Situation
    One of the most frustrating things about identity theft is that it can often crop up long after you think you're in the clear. Keep watching your credit reports. You're allowed one free report per year from each of the three credit bureaus. You can get your free report at www.annualcreditreport.com but it might be worth paying the monthly fee for a credit monitoring service. (To learn more, read Consumer Credit Report: What's On It.)
One Final Tip
Preventative measures can help you save time if this happens to you. Make a photocopy of all credits cards and other contents of your wallet. Also, only carry what you absolutely need - and never keep your Social Security card in your wallet. (For more tips, see Identity Theft: Who To Call For Help.)

For the latest financial news, check out Water Cooler Finance: Google Shakes Things Up.
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