Preventing Identity Theft

Identity theft isn’t a new crime by any stretch of the imagination.  With the use of electronic fund transactions, electronic tax filing, and the general increase of personal data being available online, identity theft is easy to perpetrate and has increased significantly in the last few years.

There are numerous expensive services and software offered by credit-reporting bureaus and private companies that will assist in keeping your data safe.  However, most of these safety measures can be done yourself – for free.

The first thing to do is actually a don’t.  Don’t panic.  When most people hear the words identity theft, the image that comes to mind is that of a mysterious shadow figure who has taken over our lives, uses our social security number, and name to commit crimes and steal money, while we are lost trying to convince the world that it’s not us.  This scenario is great for the movies, but in reality, it happens to less than one percent of households in the United States. Most identity theft is actually created with someone fraudulently accessing your credit card information.  In most cases, your liability is severely limited.  Most individuals suffer no out of pocket costs and are just affected by the time and hassle of shutting down the old card and opening a new one.

A few easy ways to prevent this are:

• Never give anyone your Social Security number or other highly personal data over the phone, or email.  Remember, the Internal Revenue Service will not email you, and any call will be followed up by or be preceded by an official notice.  It is your right to wait for the notice before answering anything.  And only ever write your Social Security number on a check being sent to the IRS, and never on noncredit applications or other forms.
• Never leave a wallet or purse unattended, carry your Social Security card, or write down PINs and passwords.
• Store important documents like bank statements, financial account statements, medical records and the like in a secure place at home.  When disposing of them, be sure to shred them prior to throwing them out.
• Don’t place your date of birth, maiden name, pet’s name or any other security question answer on social media.  Do not use your birthday or home address as a part of any password.
• Sign up for any online or mobile alert service provided by your financial institutes.
• Do not click on links in emails from unknown sources.

Another way to prevent identity theft is to place a security freeze on your credit reports.  This will prevent anyone from being able to look at your credit report unless they already have an established financial relationship with you.  While this won’t stop certain lenders from giving out funds without a credit check, it will provide some protection.  Another method is to attach a fraud alert to your account.  This will mean that a lender doing a credit report will see the alert and contact you to make sure you have requested the application they are trying to process.

Be sure to secure your devices if you have internet access on them.  Be sure to update anti-virus, anti-spyware and anti-phishing software regularly.  Utilize strong passwords that contain upper- and lower-case letters, as well as numbers and symbols.  Make sure your mobile devices and portable flash drives are all locked with passwords/codes in case they are lost or stolen.

Keep an identity theft file protected in your home.  It should contain copies of your important documents, along with copies of the items found in your wallet – such as the front and back of credit cards, etc.

Periodically review your accounts and credit reports.  You are entitled to one free copy of your credit report every year from each of the three credit bureaus.  You also qualify for an additional one if you place a fraud alert on your account.  Stop unsolicited credit card offers.  Many times, thieves utilize the preapproved cards you receive by mail.  You can stop credit bureaus from selling your name to lenders by opting out.  Review your bank accounts more often that at month end.  Don’t assume that any transaction on the account is valid, even checks.  Also review your phone bill to ensure that phony services and charges haven’t been added to your account.

Tax-related identity theft is usually committed by using stolen Social Security numbers and other personal information to prepare and file fraudulent tax returns with the Internal Revenue Service.  With the creation of the debit card method of refund receipt by the IRS, fraudulent returns claiming large refunds have been filed early in the tax season by thieves.  Once the refund has been transferred to a debit card, it is often impossible for the IRS to trace the money.

One of the ways that taxpayers can help prevent tax-related identify theft is to file early.  Often the victim of tax-related identify theft is not informed of the theft until they attempt to file.  They will then be notified by the IRS that they are attempting to file a return with a social security number that has already been utilized on another filed return.  The return is then rejected.  This can create major complications to straighten out which is the legitimate taxpayer and unwind the refund.  Additionally, the taxpayer is generally the one forced to provide proof.  But, if you file first, the thief will be the one that is sent the rejection notice and will be forced to move on.

Respond rapidly to any suspected theft.  Contact your financial institutions right away and place freezes on your accounts.  File a police report, as some creditors will want to see it in order to complete their claim records.  Chances are that doing these small and simple actions will solve the problem in relatively short order, with little to no cost.