In 2019, identity theft was the most common type of fraud in America, as reported by the FTC's Consumer Sentinel Network Data Book, with a 46% increase since 2018.
It's far too easy to not notice identity theft until you've already found a data breach or credit card charges. A thief that gets a hold of basic information -- your name, birth date, address, and Social Security number -- can not only wreak havoc on your personal credit and taxes, but can make it so that it can take years to resolve your financial issues. You may have to deal with stolen investment accounts and tax refunds, along with unauthorized credit lines, medical treatments, and more.
There's no 100% foolproof way to prevent identity theft from occurring, but there are plenty of steps you can take to protect yourself, catch early warning signs, and reverse the damage done.
Types of Identity Theft & Warning Signs
There are multiple different types of identity theft, but here are some of the most common ones:
- Credit identity theft: Credit identity theft occurs when your personal information (birthdate, Social Security number, etc) is used to apply for a credit line. You can spot credit fraud by looking for any major changes or unauthorized accounts on your credit report, or by receiving debt collection notices or court judgment.
- Criminal identity theft: This occurs when someone gives a different name to law enforcement during an arrest or investigation, usually with some type of fake ID. You could be denied employment due to a background check or even be detained by the police.
- Child identity theft: Child identity theft occurs when someone steals a child's personal information to apply for credit. If your child is receiving credit card offers or communication regarding late payments or debt collections, you'll have to follow up and potentially freeze their credit to combat this.
- Synthetic identity theft: Synthetic identity theft occurs when criminals use personal information to create a fake persona, with either a made-up Social Security number or a stolen one combined with a name and address. Eventually, after applying for credit and loans and maxing them out, the perpetrator disappears. Synthetic identity theft is not always preventable, since criminals can make up a Social Security number before it's assigned to an individual. You can usually find out if you're a victim of synthetic identity theft if you attempt to freeze your credit and find out it's already being used.
- Taxpayer identity theft: This occurs when identity thieves steal your Social Security number to file a tax return and steal your tax refund. Most consumers find out their tax refund has been stolen when they aren't able to file their taxes or receive an IRS notice with activity or information about unfamiliar activity. Filing your taxes early might help you avoid a stolen tax refund, but you should also make sure that you are filing on a secure website with additional protections if you choose to e-file.
- Medical identity theft: Medical identity theft occurs when someone else's identity is used to get healthcare services. This can be spotted if you find any unauthorized or unfamiliar claims or payments on your insurance. Any discrepancies you find should be reported immediately to your insurance company and doctors. It can also cause major issues due to the potential mixing of medical histories.
- Account takeover: Account takeovers are a result of criminals using your personal information to access your bank accounts, change your passwords, addresses, and other vital information, and make it so you no longer have access to it. Many financial institutions will send you an email, letter, or text notification if any important information, such as your password or contact information, has been changed. If you spot any transactions you haven't authorized, that is most likely an indication of account fraud.
How to Prevent Identity Theft
With so much happening online, it's easier than you think to find out your personal information has been compromised. While there's no guaranteed way to totally prevent identity theft, your goal is to make it harder for criminals to obtain your information.
Here are some of the best ways to protect yourself from having your identity stolen:
- Use a secure password: The more complex your password, the less likely it is that your identity will be stolen. Avoid using anything predictable or anything that includes personal information or a common word or number pattern. Accounts with sensitive information should have an additional authentication app. Choose different passwords for all of your accounts and create each one to have a random combination of capital and lowercase letters, numbers, and symbols. Pick a security question that is difficult for hackers to decode -- ie, not your mother's maiden name or the street you grew up on. If you're having trouble remembering your password, consider using a password manager (like 1Password, LastPass, Dashlane, KeePass, and others), which is a secure method of storing your sensitive information.
- Use a secure WiFi network: Be wary of signing onto personal accounts in public places or using wireless hotspots. Online banking, shopping, location sharing, and other personal logins can be hacked over public WiFi. You can check your browser for a lock icon or an "s" at the end of the "https" on your URL to ensure that your browser is encrypted. If you use public WiFi, be sure to protect yourself with a VPN (virtual private network), which gives you a secure connection.
- Use a secure WiFi password: Your personal WiFi should have a strong, secure password to avoid getting hacked.
- Avoid signing into sketchy or unfamiliar sites: Before you log into a site, do your best to gauge whether it's a reputable site. There are plenty of knockoff sites created by identity thieves that look similar to an existing one, except with the intent of stealing consumer information. Always double-check that the URL of the site you are on is the correct one.
- Don't click on suspicious links: Avoid clicking on any suspicious links on sketchy pop-up windows, emails, and messages. Many times, these links contain malware and viruses.
- Make sure you have an antivirus program installed on your devices: An antivirus program can help you isolate and remove malware and viruses on your computer that you may have gotten from visiting a sketchy website or opening an email attachment with malicious software such as a keylogger, which tracks your keystrokes and gives criminals your sensitive information. Additionally, you should always keep your software and browser up to date to protect you from data breaches and hacking.
- Avoid giving out your personal information: Whether it's your Social Security number or an email address, try to keep your personal information private. This includes your social media accounts. Oversharing your personal details can make it easier for hackers to break into your account by figuring out the answer to your security questions and taking control. Your Social Security number should be kept confidential unless it's for your bank, employer, or other government agency (and in this case, you should definitely ask how it will be used and protected). Keep your card stored in a safe place and be sure to shred any paperwork containing your Social Security number. If you have to give out your email to businesses, create a non-essential email address that's not linked to any of your important financial or personal accounts. You can also encrypt your email to protect your sensitive information, which prevents hackers from potentially having access to any personal communication.
- Shred any personal documents: Financial statements (such as preapproved credit card offers and your bank, credit card, or investment statements) should be shredded instead of being thrown into the trash to avoid anyone getting ahold of your sensitive information.
- Watch out for skimming devices: If you're using a debit card or credit card at a gas station or ATM, check to make sure that a skimming device hasn't been placed in the card reader by gently pulling on it to see if any plastic comes out.
- Use digital wallet for payments: Instead of using your credit card, use a digital wallet online, which is a digital version of your credit and debit cards that encrypts your transactions and keeps your information secure online and at checkout counters.
- Keep an eye out for phishing and spoofing: You might receive phone calls from scammers (who are spoofing a number from a reputable company or government agency) and/or receive official-looking emails in your inbox (with links and attachments that contain malware), but be aware that these are really just attempting to "phish" for your personal information. Avoid giving out any personal information in a phone call or email, even if you feel pressured to. Remember, there are fairly common scams where criminals will impersonate the IRS and demand information -- something the IRS would never do.
- Keep your mobile devices secure: Always use a complex password or PIN on your cellular account or mobile devices and make it difficult to unlock. Be sure to install antivirus software if your devices are prone to malware. If you have to access personal accounts on your phone (such as banking), use an app instead of a browser.
- Don't carry around your personal information: If you lose your wallet, it could be easy for someone to have access to your personal information. Important information -- like your passwords, Social Security number, etc -- should be kept in a secure location. If your credit cards are lost or stolen, call the issuer immediately to report it missing (and cancel it if necessary). If you have a zero liability card, you won't be held responsible for unauthorized charges.
- Check your mailbox promptly: Mail theft is a federal offense, but is a fairly common way for criminals to get a hold of your personal information. One way to protect yourself from mail theft is to sign up for USPS Informed Delivery, which emails you images of the delivered items and allows you to find if anything is missing, or a US Postal Service-approved lockable mailbox. If you're out of town, you can have your mail held temporarily or ask a trusted family member or friend to pick it up for you. Additionally, you should make sure that you change your address when you move so that your mail reaches you and not a stranger.
- Use paperless bills: Paperless billing can prevent criminals from stealing your sensitive information from your mail -- and it reduces paper waste!
- Check your financial and medical statements: Checking your bills, credit card statements, and other records will make it easier to catch any unauthorized transactions and prevent someone from running up bills in your name. With medical bills in particular, you should review the explanation of benefits to avoid healthcare fraud.
- Use alerts: Put alerts in place with your bank, credit union, or other financial institution to let you know when transactions (such as withdrawals and deposits) are made on your accounts.
- Cover your credit and debit card information when you're in public: Whether it's your credit card information or the PIN that you use for the ATM, you should shield that sensitive information in public.
- Check your credit reports: Due to data breaches (such as the Equifax data breach in 2017), there's a chance your personal information is already out there. Whether you know your information has been put out in the world or not, you should take precautions by periodically checking your credit reports and scores for unexpected changes and unauthorized added accounts. You can receive a copy of your credit reports from the three bureaus (Experian, Equifax, and TransUnion) once a year at AnnualCreditReport.com.
- Sign up for credit monitoring: Many homeowners insurance companies and credit card companies (such as Capital One and Discover) offer their customers free credit reports and alerts for any suspicious activity. You can also sign up for a credit monitoring or identity theft protection service, which can reimburse stolen funds and even offer legal help.
What To Do If Your Identity Is Stolen
If you believe that your information has been compromised, you'll want to freeze your credit to prevent any more damage and stop any potential thieves from opening credit in your name.
Freezing your credit stops access to your credit so new files can't be opened. You can also unfreeze your credit just as easily. The process is simple, free, and only takes around 15 minutes.
It's also essential that you report identity theft to the Federal Trade Commission to figure out your next steps, which may require police help or assistance from the credit bureaus. In some cases, you may be entitled to identity restoration services.
Due to the damage done to your credit, you may also have to work on your credit after your identity has been stolen. You can either do this on your own or turn to a reputable credit repair service.
What are the different types of identity theft?
There are many different types of identity theft, including:
- Child idenitity theft
- Senior identity theft
- Criminal idenitity theft
- Financial idenitity theft
- Medical idenitity theft
- Synthetic identity theft
What are the signs of identity theft?
These are the early signs that your information has been stolen:
- Unfamiliar withdrawals from your bank account
- Your checks are declined or bounce
- You don't receive your bills or other mail, or you receive unfamiliar bills
- You receive calls from debt collectors regarding debts that aren't yours
- You see unauthorized acitity on your credit card and credit report
- You lose utility or cell phone services
What should I do if someone steals my identity?
- File an FTC Identity Theft Report
- Freeze your credit
- Place an extended fraud alert on your credit report
- Get free copies of your credit report
- Dispute and remove fraudulent information from your credit report
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