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How can you prevent identity theft?
Identity theft is when someone takes enough of your personal information to pose as you in a financial, medical, or other transaction. Identity theft is rampant in the United States, where about 17 million people are victimized each year, according to the Bureau of Justice Statistics, for a total of over $900 million in losses.
What are the types of identity theft?
- medical identity theft, in which a person assumes someone’s identity to get medical treatment by stealing insurance benefits;
- Tax identity theft, in which a person files a tax return on another person’s account and collects a refund fraudulently;
- Social identity theft, in which a person sets up fake social media accounts using another person’s identity;
- Impersonation, in which an individual uses another’s birth certificate and other information to take on a new name (most commonly done as child identity theft);
- Financial identity theft is the most common form, in which a credit card or bank account number is stolen and used to withdraw funds or make purchases fraudulently.
Who is affected by identity theft?
The majority of cases involve unauthorized use of a credit card or other bank account, whether by stealing a credit card or account number, skimming, or stealing checks. These incidents accounted for more than 16 million of the 17 million cases reported in a recent year.
In one case, 143 million people were affected by a security breach at Equifax, a credit reporting agency where data including social security numbers, credit card accounts, addresses, and birthdates is stored. The data was meant to be safeguarded so when people apply for loans and mortgages an unbiased financial profile could be used to decide if they were qualified. It is not yet known how many of those identities were compromised and used fraudulently.
The good news, according to Consumer Reports, is that most cases of financial identity theft resulted in a very low amount of money stolen, and much of that is often covered by a bank’s insurance so it doesn’t result in a direct loss to the customer. That consumer protection organization says that many companies are trying to capitalize on the fear that identity theft reports create, but expensive identity security services don’t do anything more than individuals can do themselves.
How can identity theft be avoided?
The primary way to avoid identity theft is to safeguard personal information, experts say. Do not give out your Social Security number or copy of your Social Security card or birth certificate unless it’s to an official source. Keep these documents as well as bank statements and credit card bills in a safe place in your home where casual visitors aren’t likely to find them, such as a locked cabinet. Other basic security practices include not sharing your security PIN number and not writing it down and carrying it with a debit card, as well as not making purchases on websites that are not secure (signified by a padlock symbol next to the URL).
Cell phone security is a new focus of identity theft experts, who say your phone should have a high level of anti-hacking security on it, just like any computer that you may use for online banking or purchases. Using public wifi is also a way hackers may steal information from a phone or computer, because unsecured networks may allow computers to spread malware that steals personal information from devices.
Child identity theft is serious and growing but often goes undetected because a juvenile’s identity may be compromised for many years before it is discovered by common means such as credit reports and tax returns.
Getting a copy of your credit report from each of the three major reporting agencies each year is the primary way to check for identity theft. Asking each agency to freeze your credit is a good deterrent against theft as well, as that makes it almost impossible for a person to get a credit card or loan in your name.
Watching your bank statements or online account information for any signs of misuse is key, as this is the most frequent form of financial identity theft. Question any unfamiliar purchases, and if you suspect fraudulent activity, ask your bank to freeze use of your account until a new debit or credit card can be issued and activated.
Senior identity theft is another growing segment of the problem. Older people may have household help who have access to their personal documents; social security checks may be mailed instead of sent directly to a bank by wire transfer, and medicaid benefits may be stolen. These individuals may not catch the theft for a while due to challenges navigating online accounts. Seniors are also vulnerable to telephone and email scams that demand payment immediately under false pretenses such as a person posing as an IRS bill collector or a family member in distress.
Old fashioned dumpster diving and mail theft accounts for a lot of identity theft, say experts. These people are able to steal mail, such as credit card offers, and match it with trash like bank statements, to get a credit card in another person’s name. That makes shredding trash and buying a locking mailbox important steps. You may also opt out of credit card offers so fewer of them end up in your mailbox.
Online scams called phishing or pharming use email and websites to trick individuals into clicking on scam websites or turning over personal information that is later used in identity theft. Beware any unknown emailers with urgent messages to click on links that may launch malware on your computer or phone.
Important steps to take:
- Protect your personal information including bank statements, PIN numbers, and social security card. Do not carry unnecessary documents with you as a lost or stolen passport, bank card, or even medical insurance card can easily lead to fraud.
- Freeze your credit with the three major consumer reporting agencies to make it more difficult for thieves to open accounts in your name.
- Check your credit report annually for suspicious activity, and check bank and credit card statements thoroughly each month.
- Shred trash that includes credit card offers, bank statements, bills, and other information with your financially or personally identifying information on them.
- Think twice before responding to or clicking on emails with “too good to be true” offers or other urgent messages as these can launch programs that steal personal information.