In today's fast moving world where everything is electronic and information is shared over the internet more and more, there is a high likelihood that most people will suffer some form of identity theft in their lifetime. Identity theft can range from an unauthorized party using your credit or debit card, using your social security number (SSN) to apply for credit, or even filing a fraudulent tax return under your name and SSN. The obvious way to prevent identity theft is to keep personal information locked away in a safe and never let anyone else have access. But, let's be honest, the majority of people are not willing to sacrifice the convenience of shopping online, paying for goods and services over the phone or through the mail, or e-filing tax returns in order to eliminate the risk of identity theft completely. When you heard Target lost info on 100 million customers last year, did you vow never to shop at Target again just to find yourself there a month later?
The question is, in the "real world", how can a person guard themselves against identity theft? Following are a few practical steps you can take to operate in our modern society while also protecting what's nearest and dearest - your identity.
- Be mindful of how you transmit personal information. Your personal information can include your SSN, bank account and credit card numbers, home address, and username/password information for email and financial websites. Information like this should never be shared over a free, global email service like Yahoo! or Gmail because the message can be stolen. If giving information over the phone, make sure you know who you're talking with and that they are a trusted source. This also applies to people that still use fax machines, because you never know who will be picking up the document on the other end.
- Research the security of your payments when online shopping. Usually online retailers provide information on how online payments are handled. For example, here is a link to how Amazon processes online transactions. If you are shopping online with a retailer for the first time, research how they handle transactions and the security they use.
- Save and shred. If you still receive paper statements for your bank accounts or credit cards, save the statements in a safe, secure place (like a locked file cabinet). If you're done with the document, get a small shredder for your home and shred the documents. Ever see a guy digging through a trash can on your street? Yeah, he's not looking for food - he's looking for your bank statement. If you receive your statements in electronic format (PDF), save them somewhere secure on your computer i.e. not on your desktop in a folder called "Money Stuff".
- Check your transactions weekly. Before iPhone's and iPad's this would be a hassle. But, if you have a bank account or a credit card, then chances are the provider now has an app you can download. Then, every Sunday while you are watching golf on TV, scroll through your transactions and make sure there is nothing that looks funny. You can also use a personal finance app like Mint which will accumulate all your accounts in one place for easy viewing and management.
- Run your credit report. You can run a credit report for free each year at a site like AnnualCreditReport.com. The report won't give you a credit score, but it will show you everything on your credit report. Look to make sure you recognize all the credit accounts on the report in case someone has opened up a credit card using your info that you don't know about.
- Use common sense. Reputable businesses will not ask for personal information over email or ask for information they don't need. Your plumber doesn't need your SSN and your Facebook friend doesn't need your credit card number for "verification purposes". So if someone is asking for something from you that you are not comfortable sharing, question why they need the information.
As mentioned above, with the advent of e-filing tax returns, criminals have found a new strategy of stealing money by filing fraudulent income tax returns. The thief e-files a return using someone else's name and SSN and false tax information, generates a large refund, and then disappears with the money. Then, when the real taxpayer files their actual return, it is rejected by the IRS because a return has already been filed for that SSN. Big headache for the taxpayer. The IRS has a website with resources for taxpayers that have been affected by identity theft.
In closing, use common sense when sharing personal information and take steps to keep your information safe. If you fall victim to identity theft, don't panic. Fortunately, as identity theft crime has evolved so have the safeguards put in place by banks, online retailers and credit card companies. In some cases, they know about the theft before you do. Although this is not a fail-safe, at least you are not battling alone.