Identity theft can have devastating personal and financial consequences. The best way to avoid getting into this situation is to understand how to prevent identity theft before it happens. Here we will talk about what it is and ways to prevent identity theft from happening to you.
What Is Identity Theft?
Identity theft happens when someone steals your personal information to impersonate you. An identity thief can then exploit your information to commit several different types of fraud. They can use it to apply for a credit card or loan, withdraw money from your bank and investment accounts, or go on a big-ticket shopping spree. A thief can also use your insurance information to get medical services. They can then charge the bill to your name, apply for utility services, give police your name and address when arrested or steal your tax refund. Any of these can damage your credit status and hurt you financially because the bills and payments are your responsibility. Trying to get it resolved and restore your credit and your good name can cost you a huge amount of time and money.
The types of information that identity thieves steal may be your name, Social Security number, bank account, credit card numbers, birthdate, or address.
Types Of Identity Theft & The Warning Signs of Each
After stealing your information, a criminal may commit any one of these types of identify thefts. Each one has a few distinctive cues that act as warning signals that you may be the victim of identity theft.
1. Credit identity theft
When a fraudster uses your personal information – mainly your Social Security number and birthdate – to apply for a new credit card or loan in your name.
Warning Sign: Unexpected debt collection notices or a sudden drop in credit scores.
2. Taxpayer identity theft
When someone uses your information to file a tax return and steal your tax refund or tax credit.
Warning Sign: You are unable to e-file a tax return because â€˜you’ve already filed your returns’. Or you receive an unexpected IRS letter or notice about activity you know nothing about.
3. Medical identity theft
When a criminal uses your health insurance member number or Medicare ID to get medical services or send fraudulent bills to your health insurance company.
Warning Sign: You receive notices about insurance claims or payments that you don’t recognize.
4. Account takeover
A fraudster gets access to your financial accounts such as your bank accounts or investments. Then, they change the passwords and other account details so you no longer have access to these accounts.
Warning Signs: Inability to access your account. Text or email notification from your financial institution informing you about a recent change in your password or email. Or transactions that you don’t recognize.
5. Criminal identity theft
When the identity thief gives cops or other legal authorities your name and address during an investigation or when they’re arrested.
Warning Signs: Being detained by police or receiving legal notice for reasons that are unclear to you. Or, being denied employment or promotion on the grounds that your background check turned up something unsavory.
How To Prevent Identity Theft
It’s far easier to understand and put in place preventive measures than to try and resolve the problem after the event. Below you’ll find some of the most effective things you can do to protect yourself from identity theft.
1. Secure Your Personal Records
Sometimes, it’s the small things that can be most effective. Securing your personal records involves making sure your credit cards, financial documents, check books, and other bank and investment papers are all locked away in a safe place. This is especially important if you live with roommates or use outside help.
Shred documents you no longer need. Things like insurance forms, credit applications, medical statements, expired credit or debit cards, or charge receipts.
2. Protect Your Personal Information Online
The internet has become such a huge part of our everyday lives that scamming can be a threat. And, unfortunately, it happens all too often. Online fraudsters are getting increasingly more inventive in their scams to unsuspecting victims.
As a rule, you should never post any personal or financial information online. This includes social media and other sites that are easily accessible by everyone. And definitely never ever enter any personal or financial information on any site unless it secured. Even then, only provide your details if you’re applying for a line of credit or you’re dealing with a known and reputed financial platform.
3. Use alerts
Most people don’t realize that they are victims of identity theft until well after they receive their credit card bill or a collection notice. Or they can’t access their financial accounts, or they receive legal notice about some unrecognizable activity. By this time, they would have incurred immeasurable personal and financial damage.
Using alerts allows you to keep track of your recognizable and unrecognizable transactions. Most financial institutions give you the option to receive notifications on any transactions made on your account. These alerts may be sent by text or email or both. When you sign up, you’ll receive a notification whenever your credit or debit card is used or when any withdrawal is made from your bank account.
If you receive notification about an activity you don’t recognize, you can report it to the bank or credit card company. The bank can freeze your account or card immediately. Not only will this halt the damage at the very first sign but it will also be easier to resolve at this stage.
4. Protect Your Social Security Number
If there is one piece of information that can do the most damage it’s your Social Security number. This number is the master key that can unlock all your personal data and leave you vulnerable to all sorts of financial scams.
Never carry your card around with you. If you lose your wallet, your card could fall in the wrong hands. Instead, keep your card in a secure location. Don’t provide your Social Security number to anyone unless it’s absolutely required. And even then, confirm the credentials of the company before giving them your Social Security number. Ask them why they need it and how they will protect it.
5. Use Strong Passwords & Change Them Regularly
Using strong passwords and not repeating them is one of the most important ways to avoid being hacked, but they can be hard to remember.
As a rule, complex passwords contain a unique combination of letters, numbers, and symbols for all your accounts and emails. It’s also important to use a different password for each account/email. Never reuse your passwords.
Having many different passwords can be hard to remember, so consider using a password manager. A password manager, like LastPass, stores all your passwords in one place. Instead of having to remember ALL your passwords, you just need to remember one master password.
6. Protect Your Electronic Devices
Electronic devices such as laptops, tablets, and cell phones provide easy gateways for hackers. They find ingenious ways to access the personal information stored on these devices.
These are some things you should put in place to protect the information stores on your electronic devices:
- Use a secure browser and firewall
- Use a reputed antivirus protection
- Update your antivirus often
- Never click links in emails from unknown senders
- Do not download files from unknown senders
- Never set up automatic log-in processes to your financial accounts
- Delete all personal information, clear all data, and overwrite the hard drive completely before disposing of any electronic device
7. Be Alert to Phishing and Spoofing
A common tactic scammers use is to send emails or make phone calls on behalf of your bank or a government entity asking for some personal details. Never respond to such emails or phone calls and definitely never click links or download attachments from unknown senders. Links in emails may lead to spurious websites that can install a tracker on your computer and attachments may contain malware.
If you do receive a suspicious call or email, initiate a call back or request some sort of confirmation before proceeding with any discussion. Don’t engage unless you’re absolutely sure who you’re dealing with.
8. Monitor Financial Statements
Make it a habit to go through your bank and credit card statements as and when you receive them. If you see a transaction you don’t recognize, call your bank or credit card company immediately and alert them of the fraudulent transaction. They will freeze your account to limit the damage and tell you about what to do next.
9. Check Your Credit Reports Regularly
Your credit reports contain records of all your credit activity. From your loan and credit card payments to any new loan and credit card applications. If anyone has applied for a loan or credit card using your information, it will show up on your credit report. This is alerting you to the possibility of identity theft.
You are entitled to receive one free credit report once a year from all three major credit reporting bureaus. It is advisable to get your free credit report every year and make sure that all records are accurate. In addition to pointing to identity theft, inaccurate entries also damage your credit score. If you come across any erroneous entries, you can file a dispute with the concerned credit bureau and get it corrected. This will help restore your credentials and your credit score.
10. Keep an eye on your mailbox
It’s the last place you’d think about identity theft, but stolen mail is an easy way to get another person’s information. Mail from your bank, credit card company, insurance company, or mortgage lender includes some personal information. Some mail may contain more information than others. Identity thieves can use this information in a number of ways.
Checking your mailbox and retrieving your mail every day is one way to prevent any third party from accessing your mail. If you’re going to be away from home for a while, consider getting a lockable mailbox that’s approved by the U.S. Postal Service. Or ask a friend or neighbor to check your mailbox every day.
Identity theft is a growing problem all over the world. Knowing the warning signs and staying diligent are the best ways to prevent identity theft.