Among experiences you sure don’t want, you open your credit card bill and find a long column of strange charges. Or you try to file your federal tax return and the Internal Revenue Service responds that you already filed and supposedly received your refund weeks ago. How can you protect your identity from falling into the wrong hands?
ID theft involves obtaining someone’s personal or financial information – without authorization – to commit fraud or other offenses, from everyday transactions to taking out loans. According to Javelin Strategy & Research, ID thieves stole more than $16 billion from 12.7 million American consumers in 2014.
Anyone with a Social Security number (SSN) can become a victim; the crime continues to top the Federal Trade Commission’s consumer complaints. A data breach precedes many cases, where unauthorized or illegal access of data opens the door to stealing and using that data (for example, your card number at a retail store such as Target or your policy details at an insurer such an Anthem). The Identity Theft Resource Center (ITRC) reports that some 540 occurred this year through early September.
The news isn’t all bad: The ITRC also reported that exposure of SSNs and information about credit and debit cards declined over the past five years.
No matter the increased security to help mitigate this crime, ID theft remains a big threat to you because of the potentially disastrous financial harm. Here are a few steps you can take:
Secure your personal information. Never carry essential documents, such as your Social Security card, birth certificate or passport, with you. Store such information in a safe place at home. Avoid carrying more credit cards than you actually need, in case your wallet is lost or stolen.
Shred receipts, bank statements, credit offers and expired cards to prevent dumpster divers from getting your personal information.
Strengthen your digital security. Do not respond to unsolicited emails requesting personal information. These messages may lead to your information falling into the wrong hands. Contact the company in question if the request seems suspicious.
Create complex passwords and avoid such easily guessed information as birthdays and phone numbers. Create a unique password for each of your accounts.
Install (and regularly update) protective firewalls and antivirus software on your home computer.
Use secure payment methods when possible. If you need to send documents that include your account number, SSN or other identification, password-protect the document or send it via a secure portal.
Beware of phishing scams designed to collect your online information, such as email promoting false lottery wins, money requests from unverified charities and information updates from businesses claiming to be banks. Avoid clicking on any suspicious links in the email as well.
Use available credit resources. Consider placing a fraud alert on your credit file to instruct prospective creditors to keep identity thieves from opening new credit accounts in your name. Request a free credit report from each of the three major credit agencies (TransUnion, Equifax and Experian).
Place a security freeze on your credit report, which prevents credit agencies from releasing your information without your consent. Keep in mind that this can also delay or interfere with the approval of your outstanding loan applications.
Visit USA.gov for additional steps to keep your ID safe.
Even after you safeguard your information, prepare for the worst case. Our next article looks at recovering from ID theft.
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Sheila Handrick, CFP, CRPC, is a consultant with Wipfli Hewins Investment Advisors LLC in Madison, Wis.
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