Protecting Yourself Against Identity Theft
One of the hot financial topic today is identity theft. And if you think it can never happen to you, you are wrong. Here are some examples of identity theft that I have first and second-hand experience with:
- I had two separate incidents of account takeover where the thieves used my credit card information to make unauthorized purchases.
- Ron at The Wisdom Journal had his identity stolen (application fraud)
- My dad had his identity stolen in Thailand
According to the Federal Trade Commission (FTC), there were over 670,000 complaints in 2006, of which almost 250,000 were regarding identity theft.
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Of these 250,000 identity theft complaints, about 25% were credit card fraud cases.
How Do Thieves Get Their Hands On Your Personal Information?
Thieves can be pretty creative when they want your information. And the worst kind of thieves are the one that you trust, such as your own family, service providers, businesses, etc. Here are a few common methods:
- “Dumpster diving” — they go through your trash and find the information they wanted
- Stealing mails from your mailbox
- Overlook your shoulder at various locations — i.e., at a bank, while processing your credit card, at a store, etc.
- Search for your personal information on the Internet — this one scares me the most, especially with some of the new personal information sites that are popping up.
How To Protect Yourself Against Identity Theft
There are several things that you can do immediate to reduce your chance of becoming an identity theft victim.
- Remove all unnecessary items from your wallet. For example, you should never carry around your Social Security card or your social security number in your wallet.
- Never give away your Social Security Number unless it’s absolutely necessary
- Carefully monitor your FICO credit score using service providers like MyFiCO
- Regularly review your credit report from each of the three credit bureaus. The easiest way is to order one free report from AnnualCreditReport.com every 4 months. You are eligible for 1 free credit report per bureaus per year, so you can stagger the requests as follow:
- Each February, order from Equifax,
- Each June, order from Experian, and
- Each October, TransUnion.
- Invest in a good document schredder (I have a cross-cut one), and destroy all sensitive documents before throwing them out. These documents include credit card solicitations, loan applications, tax forms, bills and invoices — anything that contains personal information.
- Keep a list of all your account numbers and contact information in a safe place.
- Invest in a mailbox that could be locked and only accessible by you.
- Avoid questionable online merchants
In addition, there are new identity theft protection services, such as LifeLock and IdentityTruth, that may be worth investigating.
Here are more articles on identity theft:
- Avoiding Identity Theft – Part 1 at Single Guy Money — An excellent three part series on identity theft.
- My Identity Was Stolen! at The Wisdom Journal — Ron also has a good outline of steps you should take immediately after your identity has been stolen.
- 25 Excellent Resources To Protect Against Identity Theft at My Super-Charged Life
- Six Ways to Make Internet Shopping Safer at Not Made of Money
- Identity Theft – Reducing the Risk – Part 1 at Save and Conquer
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Great tips and resources on this important topic. I can’t imagine diving in a dumpster to get people’s personal information. These people need to get a job and make an honest living!
Thanks for mentioning my article!
Pinyo-Great post. While I personally haven’t had my identity stolen, I know a lot of people who have. The amount of time and effort it took to get things right…
Your suggestions are great, but people will have to work for #2. So many people ask for your SSN and other privacy info that don’t need it. It legally can only be used for tax info, not for identification purposes. For example:
-IRS: they have the right, but I wish I didn’t have to give it to them!
-Employer: needs it to pay your taxes. Don’t need it on the application, wait until you have the job!
-Loans: need it to check your credit.
-Doctors: Ask it but probably don’t need it. I have never been denied service because I don’t provide it.
-Police: Not needed. I had a friend who was pulled over for speeding and the officer demanded it. When she inquired later, it was to make it easier for them to collect if you don’t pay the ticket. License, insurance, and registration-nothing more!
-Any where else: don’t give it. They should not be asking and you should say no.
Over the past week, we had to cancel two credit cards because of fraudulent charges. Apparently, the numbers were stolen when I did online transactions that were supposedly encrypted.
The good news: b/c of high awareness, credit card companies do believe you when you report a fraudulent charge. In one of the cases, the credit company alerted me to the charges.
Great post ! thank you for the information. I have a related question: We keep getting credit card solicitations. We are about to move and we are concerned that the solicitations will arrive to the next tenant.
Any idea what we can do about this?
For credit cards, I would recommend the use of ‘virtual’ cards when purchasing online. Set one up for the amount of your purchase (I usually set a few dollars more just to be safe) and/or an expiration date, and even if it gets taken, it is basically useless to the thief because it will either show up as expired or over the limit when they try to use it. And I’m pretty sure with virtual numbers they’ll enforce the limit and not let you go over ‘as a convenience’ as some cards do. Again, not sure if this is standard for all cards, but I have a Citi MC and I’ve had that available for at least a year.
I’ve used Lifelock for the last year or so and have been pleased. No incidents were blocked, but it automated a lot of the things we should do (credit reports, fraud alerts, etc). The biggest thing is peace of mind as I know we are doing everything we can, we have a way to detect problems, and we have experts to back us up. Note: My wife and I both have family members we can’t trust (our parents). Since they have our SSN we need to be especially alert.
@Michael-How much time does it take to set up a virtual card? I’ve considered doing it, but haven’t taken that step.
Apparently we had very similar posts today Pinyo!
But yes, they’re certainly out to get you and you have to be aware!
Thanks for the mention of my post.
After having our credit card info swiped two times, and then the cards maxed out, I was glad we did not have them tied to our debit account. Many people say using a debit Visa or Mastercard is the way to avoid running up debt, but it would not be good if that info is stolen and your account is drained. (I know, most states require the money is put back by the banks, but that takes time, and in the mean time, you may have no spending money.) We don’t have the problem of running up debt on our credit cards because we never use them for credit.
I don’t bother with virtual card numbers for on-line purchases, because I am not out any money if there are fraudulent charges. Sure, the accounts that got stolen had to be closed, and there was a little hassle re-setting automatic payments for some monthly bills, but my records are good enough that it only took a few minutes. Since it takes a minute or two each time to generate a virtual account number, it just isn’t worth the time. If there was a better incentive from the card issuer, I would use virtual card numbers.
@Jeff – My pleasure.
@B Smith – Great add. I appreciate your contribution.
@Vered – I am sorry to hear. Same thing happened to me when I bought from Walmart online. It turned out one of their employees used my info to buy over $1,000 in electronics so Citibank alerted me before they approve the transaction — kudos to Citi.
@CG – At the least, you can put in change of address so that the post office forward your mail.
As for stopping it, I did a quick search and found this Motley Fool’s article: http://www.fool.com/foolu/askf.....011228.htm
@Michael – Great recommendation. I noticed that Citi recently made this feature very visible on their online account manager. I just need to be more proactive about using it.
@B Smith – I’m sorry about your parents. It’s tough when you can’t trust a family member. I am glad you had positive experience with LifeLock. I haven’t used it myself, so it’s good to hear positive feedback.
@Hank – That’s some timing. I’ve seen a very convincing IRS email before as well. The thing is…IRS don’t send emails. And unless I know the source of the email, I never click on the link. It’s safer to go to the browser, type in the address and log in.
Even when someone call to ask for information, I don’t give them anything. I ask what company they are calling from (not the number), then I call back using the number that I have.
@Bryce – No problem. I know a couple of people who swear by debit cards, but I’ll never use them for this one reason alone — not to mention the rewards.
Excellent advice Pinyo, these can definitely help reduce instances of ID theft. I think we also have to accept that with the convenience of the internet comes the great risk of fraud.
I work in the Information Security Industry and have a couple of things to add to your list on “How To Protect Yourself Against Identity Theft”.
1) Make sure the site you login to is secured. There are two ways to know this. Look for the “s” in https and look for the lock on your browser. For instance, http://www.discovercard.com is not a secured site but they offer a login on that page. If you type in your account ID and password on their main page that information is traveling in clear text and can be stolen. Always look for the “s” and lock.
2) Using unencrypted wireless networks to conduct sensitive transactions. My brother had his identity stolen twice this way. He was using a wireless connection for all of his banking but the connection wasn’t encrypted so whatever he typed was being sent over the air to anyone with an antenna/wireless card.
I’m scare with the growing numbers of identity theft. I know for a fact that this can be avoided I’m glad that there are preventive solutions for these problems. Thanks for writing you did a great job.