Although it pales beside the loss of a loved one, today's complex financial system has created a new headache for grieving relatives to cope with: identity theft.

Risk of this disturbing crime, in which a thief poses as someone else to obtain credit or commit some other fraud, doesn't necessarily end when a person dies, as the family of Zal Chapgar discovered earlier this month.

Chapgar's death at age 23 devastated his close-knit Blue Bell family. Then, amid their grief, they suddenly faced a rash of phone calls from creditors seeking to verify that their son had applied for new credit cards.

American Express. Citibank. Best Buy. At least four calls, each bringing an extra measure of heartache.

"We thought it was a freak thing," said his mother, Kerban Chapgar. "It was only after the second call that we started to pay attention."

The calls to the Chapgars illustrate the risks faced by any potential victim of identity theft - which is everyone. The steps they took to stop them illustrate the methods people can use to avoid falling prey and spending money needlessly on identity-theft protections.

First, a few basics:

Last year, identity theft drew more than 258,000 complaints to the Federal Trade Commission, a third of all complaints. It led the list for the eighth straight year, eclipsing complaints about catalogue sales, Internet auctions and sweepstakes.

Formal complaints are the tip of an iceberg. In 2005, an FTC survey estimated that 8.3 million Americans fell victim to some form of identity theft. The most common involved misuse of a victim's existing accounts. The most serious frauds, including the opening of new accounts in a victim's name, affected an estimated 1.8 million people.

Identity theft can be a big hassle to any victim, and is quite costly to some. One in 10 victims put the cost of the crime at $1,200 or more. On the other hand, more than half reported no out-of-pocket costs, and among victims of new-account fraud, the median loss was $40, the FTC found.

The government is slowly pushing the credit industry to address what consumer advocates have long argued is a key cause of identity theft: the overly easy granting of "instant credit" both to consumers themselves and to thieves armed with their victims' personal data. In fact, the Chapgars were apparently spared additional hassle because of a new FTC rule designed to highlight "red flags" that may signal identity theft.

One of the new requirements, in effect since Nov. 1, requires creditors to take extra steps to verify applications when an address differs from the one in the applicant's main credit file.

But most of the changes, such as watching for activity on long-dormant accounts, were delayed until May, thanks to pressure from the business community.

Representatives of the credit-reporting agencies say what happened to the Chapgars is relatively rare. It was likely the work of an opportunistic thief who saw their son's name in the news and matched it with identifying information, such as his Social Security number, that thieves can often obtain.

"It's probably one of the last things you want to think about in a situation like that," said Tim Klein, a spokesman for Equifax, one of three major credit-reporting agencies.

Some consumer advocates say every consumer should consider taking a step the Chapgars took as soon as they realized what was happening: placing a "fraud alert" on their son's credit file.

"The fact of the matter is, there's a lot of identity theft that's in the pipeline that hasn't been discovered yet," said Paul Stephens, policy director of Privacy Rights Clearinghouse, a California nonprofit that monitors credit-reporting issues.

Stephens said a fraud alert puts an extra speed bump in the road that can slow down any attempts at identity theft.

To place a fraud alert for 90 days, or to renew an alert, contact any of the three main credit-reporting companies: Equifax, 1-800-525-6285 or www.equifax.com; Experian, 1-888-397-3742 or www.experian.com; or TransUnion, 1-800-680-7289 or www.transunion.com. The company is then responsible for alerting its two counterparts.

Stephens said it was unclear whether the incidence of identity theft is growing or declining. But he said consumers were at risk because of "the large numbers of credit-card numbers in stolen databases overseas."

With a fraud alert in place, any company that obtains credit information about an applicant would be alerted to the possibility of fraud.

For example, such an alert would be issued before a retailer granted "instant credit" in a checkout line. The business would then have to take extra steps, such as calling the phone number listed in the credit file, or requesting additional information to authenticate the identity of the applicant, before granting credit.

Stephens said some companies market identity-theft protections that go little beyond a fraud alert.

"I don't think it's a good value for the consumer to pay $10 a month to obtain services that for the most part they can obtain on their own at no cost," he said.

If a Relative Dies

Credit-reporting agencies say family members can take these steps to ensure that a person's credit file is marked "deceased":

Contact all the companies that the person did business with, and notify them of the death. Once you have a death certificate, forward a copy.

Notify the Social Security Administration of the death.

Send a copy of the death certificate to all three credit-reporting companies. If you don't have a death certificate, send a police report or a notarized letter.

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Contact staff writer Jeff Gelles at 215-854-2776 or jgelles@phillynews.com.