Protecting yourself from identity theft starts with a solid understanding of what identity theft actually is. It ultimately means coming up with a plan that protects your personal data. Unfortunately, too many Americans don’t take the steps necessary to effectively guard against identity theft.
According to a study by Experian, only 18 percent of U.S. adults use a paid credit monitoring product to protect their identities and 13 percent use one to monitor their credit and finances. Additionally, 81 percent stated they rely on their banks and credit card companies to take responsibility for thwarting identity theft.
Identity thieves are only too happy for fraud targets to be dependent on others to protect their identity. The first step in protecting yourself from identity theft is awareness.
Identity theft, also referred to as identity fraud by law enforcement officials, is defined as all crimes against individuals where personal and financial data is illegally obtained by fraud or deception, usually for financial gain.
Once identity thieves steal your identity, some things they can do include:
- Apply for credit cards or loans in your name.
- Withdraw funds from your bank account.
- Use your health insurance to obtain medical care.
- Use your Social Security number to steal your tax refund.
- Sell your information on the dark web to other criminals.
The issue of identity theft has become so prevalent that the U.S. government has made identity theft a federal crime, punishable by imprisonment of up to two years for general identity theft crimes and up to five years for terrorism-based identity theft crimes.
There are many types of identity theft that impact consumers, the most common being credit card fraud, employment or tax-related fraud, phone/utility fraud and bank fraud, according to the Federal Trade Commission.
To better prevent identity theft, know the warning signs that fraud is developing or has happened already. Some of these signs are:
- An absence of bills in the mail could mean your personal data has been compromised and the identity thief has changed your billing address.
- If you’re rejected for credit but have a history of good credit health, you might have been targeted by an identity thief. Another sign you may have been victimized by identity theft is if you’re approved for a loan or credit but at higher interest rates.
- If you receive invoices for purchases you don’t recognize, or if you’re being billed for overdue payments for credit accounts you don’t own, you may have been victimized by I.D. fraud.
- If your bank, credit card or other financial account show unauthorized transactions, those accounts may have been breached.
- If you filed your tax returns and received a rejection notice from the Internal Revenue Service, that could indicate a return has been fraudulently filed in your name.
- Another sign of identity theft is test charges appear on your credit card statement. It’s common practice for identity thieves to “test” that a stolen card is still active by making low-cost purchases of under $5.00. If the credit card is approved, the fraudster knows that the path is clear for larger transactions.
To better protect your personal data against identity thieves, it is essential to take some steps that minimize your odds of being victimized. The goal is to build as many effective obstacles and tripwires as you can with your personal data. That strategy will frustrate and discourage identity thieves and drive them toward other targets whose data is easier to fraudulently obtain.
For starters, you do need passwords to protect your data. According to an Experian study, 50 percent of Americans don’t have all their digital devices password-protected. Thirty percent of that group says setting up passwords are a “hassle” while 25 percent say “it’s not necessary.”
The fact is, not having a password on your computer or smartphone, and on all financial accounts, is like to leaving your home with the door wide open. Consequently, always use passwords. The stronger the password, the better.
Don’t use the same password for all of your electronic devices and for your key financial accounts. Once a fraudster obtains a single password, access to the rest of your accounts is easy to accomplish if every password is the same.
Don’t include your name in any passwords or your birthday. Change your password anytime you suspect an account is compromised.
Avoid clicking on any suspicious-looking links in emails or text messages. Identity thieves routinely use emails and websites that look similar to your bank, credit card company, mortgage lender or other financial institution. If you suspect a link isn’t legitimate, don’t click on it. Never type in your username or password on an unfamiliar login screen.
Fraudsters may also regularly pose as a bank or credit card company employee over the phone but doing so should be a dead giveaway. The fact is that no legitimate organization will call and ask you for personal information like a bank or credit card PIN number or Social Security number.
If you suspect a call is illegitimate, ask for the caller’s credentials, hang up and contact the organization using the phone number listed on your financial institution’s bank statements. Also note that the IRS will never call you on the phone. It always sends taxpayer requests and information via U.S. mail.
Regularly check your credit reports. Credit reports will include any suspicious activity on your financial accounts. A free credit report from each of the credit bureaus is available every 12 months on AnnualCreditReport.com.
If you suspect your identity has been stolen, you can set up a fraud alert. With fraud alerts, financial services or data security companies can text or place a phone call to consumers if there is a suspected security breach. They may also contact you if spending on a card or account doesn’t match up with your habits or recent location.
It’s also a good idea to destroy any physical private records and statements that include any personal and/or financial data. Don’t leave mail in your mailbox as identity thieves may still steal from mailboxes or trash to get your information.
Additionally, avoid leaving ATM, credit card or retail receipts behind. Identity thieves can use receipts to help piece together your personal data. Hold on to receipts and throw them away or shred them when you get home.
Limit the number of credit cards you carry in your wallet so if it’s stolen you can minimize the impact. Additionally, don’t carry your Social Security card on your person—the theft of a Social Security number is an ID theft’s gateway to more financial accounts. This number must be protected at all costs.
Never take the security of your personal data lightly. Be prepared, be aware, be protected!