Written by: Corey Janoff
Identity theft is a relevant topic for all of us, especially this time of year during the peak holiday shopping season. A component of financial planning includes protecting our financial assets. As we transition into tax season in a couple of months, we also have to be vigilant of people stealing our identity to file tax returns on our behalf. We all know people who have identity theft stories, and they are never fun. Some of you have even experienced identity theft. Today we will look at ways to prevent identity theft so you can keep your personal information safe and away from the bad guys.
Before we dive into prevention methods, let’s look at some identity theft statistics (graphic below) to get an idea of the most common ways identity theft is used.
Based on a 2017 report by the Federal Trade Commission, we can see that credit card fraud is the most common. However, tax-related theft is second. Watch out for fraudsters filing for your tax refund!
Signs of Identity Theft
Knowing where to look for signs of identity theft can help you be prepared and remain vigilant. Some of the most common symptoms that you may be subject to identity theft include:
- Not receiving typical monthly bills in the mail (or electronic delivery) – could indicate someone has changed your billing address.
- You notice small charges on your credit card or bank account statement. Smaller transactions are less likely to raise red flags.
- You notice charges for things you certainly didn’t purchase. Probably one of the most obvious signs.
- You receive debt collection calls for accounts you didn’t open. This could be an attempt to steal your identity, so don’t give out any personal information. However, it could be a legitimate debt collector chasing after an unpaid debt opened using your information.
- You are rejected for a credit card or loan, despite having a good credit history. Someone may have recently damaged your good reputation via fraud.
- Your tax return is rejected. Someone else may have already filed a tax return under your tax ID.
Ways to Prevent Identity Theft
Now that we know what to look for, below are some ways to hopefully prevent someone from stealing your identity in the first place.
1. Check Your Accounts Regularly
If you can spot signs of fraudulent activity early, you can nip it in the bud and hopefully put an end to it. Most banks are pretty good about freezing accounts/credit cards and issuing new ones at the sign of suspicious activity. Many mobile banking apps can freeze your accounts from your phone even. If you notice anything suspicious, freeze your accounts, contact your bank and get to the bottom of it.
2. Use Strong Passwords And Change Up Passwords
We all know we shouldn’t use the same password for everything, but many of us still do. Password protect everything. Put a password on your computer, email, and home WiFi. Use two-factor authentication whenever possible. Change your passwords periodically. The more layers of protection you can add, the less likely someone will be able to steal your information.
3. Don’t Click Links From Sources You Don’t Recognize!
Everyone gets phishing emails regularly, attempting to get you to click on a link. You may get an email that has a link to a fax, for example. Don’t click it! If you get an email at work with a link to a voicemail, unless it is from your registered phone provider and you recognize the source, don’t click it! If you get an email asking you to update your information online via this link, don’t click it! Check the source. Go directly to the website yourself, rather than through the link in the email. If you don’t recognize the source, it’s probably not legit.
4. Keep Personal Information…Personal. Don’t Give it Out!
There are obviously scenarios where you need to give out your personal information, such as opening a financial account, applying for a loan, etc. However, no legitimate organization is going to call or email you out of the blue, saying something along the lines of, “We believe your information was compromised. We need to verify/update your info – what is your social, bank account routing #, etc.” Additionally, the IRS never calls you over the phone. They will mail you a letter if something is needed.
Don’t leave sensitive information in your email – delete it and empty the trash after you gather what you need.
5. Check Your Credit Reports Regularly
All three credit bureaus, Experian, Transunion, and Equifax, allow you a free credit report annually. You can obtain them from the company website or AnnualCreditReport.com. You could check a different bureau’s report every four months to get regular reviews from each bureau annually.
6. Freeze Your Credit
If you don’t need to open any new accounts or apply for a mortgage or car loan anytime soon, you can freeze your credit report with all three bureaus as well. This will prevent people from opening a new account or line of credit in your name because the institution they apply to won’t be able to run a credit report! This will create some hassles for you if you need to open a new account or apply for a loan. Still, you can temporarily unfreeze your credit or allow a designated institution temporary access.
7. Shred Documents with Personal Information
If your place of work has a shredder, you may be able to shred your personal documents that are no longer needed. Otherwise, purchase a personal shredding device at home. Shred any bills, account statements, etc., rather than throwing them in the recycling bin. Dumpster divers will have a much harder time stealing your information if it is ripped into hundreds of tiny little pieces.
8. Minimize the Personal Documents You Carry On You
Never carry your Social Security card on you. Minimize the number of credit and debit cards you have in your wallet. Leave the rest at home in a safe. That way, if your wallet is ever stolen, they can’t steal all of your accounts.
9. Purchase Identity Theft Protection
Many identity theft protection services, such as LifeLock, will keep an eye out for compromised information. Some of them also carry insurance to help pay for legal fees if you have to deal with a stolen identity.
10. Use a Virus Protection Software On Your Computer
This should be a no-brainer, but you would be surprised at the number of people who have personal computers without any virus protection. There are free services to help clean up unnecessary files and web cookies on your computer and scan for possible threats, but get a paid service that scans your computer regularly for threats and blocks malicious websites and viruses from getting to you.
Having a heightened awareness of possible identity theft is probably your best way to prevent identity theft. An ounce of prevention is worth a pound of cure. Stop it before it happens. Take the necessary measures to protect your information as best as possible.
Have a happy and safe holiday season!