Identity theft is a broad term that refers to the use of someone’s personal information, without permission, to commit fraud or a crime. That fraud often involves impersonating you to open accounts in your name, take control of your financial accounts, or access other information that should only be available to you. The consequences for you can range from fraudulent credit card charges, to stolen tax returns, to loans taken out in your name. It’s become a fact of life for pretty much everyone; no one is immune. So what can you do about it? We recommend a dual approach.
1. Protect your personal information to make identity theft more difficult.
In most cases you aren’t being targeted specifically. The harder you can make it to steal your identity, the more likely you are to be passed over for an easy target. You should protect yourself with strong, unique passwords and always be on the lookout for phishing attempts. You should also stay aware of, and try to limit, the distribution of your personal information. Don’t give out your social security number unless you have to, shred your old financial statements, medical bills, etc., and be wary of putting personal information on social media. The same details those Facebook quizzes ask for (old addresses, birthdate, pets’ names, mother’s maiden name, etc.) are often confirmation details to verify your identity when you apply for credit or open a new account.
2. Monitor your information to identify suspicious activity quickly and report it.
You should check your credit report several times a year to make sure everything is accurate. Fraudulent credit accounts opened in your name will show up here – report anything you see that you don’t recognize. Also keep an eye on your credit card and bank statements for charges you don’t recognize. Don’t skip the small ones. Identity thieves will often try a small “test” charge to see if they can get away with it before really piling up the purchases. Review monthly to make sure everything is as it should be. Finally consider freezing, locking, or placing a fraud alert on your credit. Those won’t be a foolproof solution, but making it harder to access your credit report makes it much harder to open new credit in your name.
One thing we don’t recommend for everyone is an identity theft protection or identity theft monitoring service.
These paid services essentially take the responsibility for the steps recommended above for you. Some also offer limited insurance that covers losses and legal assistance in case your identity is stolen. Unless you’re at particularly high risk (i.e. your identity has been stolen before, you know your information has been leaked in a recent breach, etc) you can do this yourself. Freezing your credit is particularly effective.
Finally, if you see something suspicious on a credit card statement, credit report, etc. you should report it as soon as you can. It’s best to do so in writing in addition to over the phone, you want to establish a trail that documents your objection to any fraudulent activity. Notify the Federal Trade Commission (FTC) at https://www.identitytheft.gov/ and work through their action plan, which usually involves notifying the police as well.