Destroy all documents containing sensitive information such as account numbers or social security numbers. Do not throw them away entirely or leave them lying at home.
Identity theft is a modern problem, a crime fueled by the use of checking accounts, credit cards, identification numbers and computerized banking systems. Identity theft has grown exponentially since the 1990s. A FTC poll found that 3.7 percent of all Americans learned they were victims of identity theft in 2005. It works with over eight million Americans in one year - and these are only those people who realize they are victims of identity theft.
The consequences of identity theft can also be devastating. Victims can directly lose hundreds or thousands of dollars from their pockets, spend hours fixing the situation, and suffer from tainted credit ratings. Even worse, some people suffer from the consequences of identity theft for years without realizing it, lose job offers, loans and other opportunities because someone bills them in their name.
Unfortunately, there is no one easy way to protect yourself from identity theft. There are many ways thieves gather your information and they come up with new methods all the time. To truly secure your identity (and your financial future), you need a holistic plan and a paranoid mindset when it comes to personal information.
In this article, we will explore how attackers steal or trick your financial life and outline the best ways to prevent it.
CONTENT
- What is identity theft?
- Know your credit
- Identity Thief Den
- A scam to watch out for
- How to report identity theft
What is identity theft?
Identity theft is a crime, in particular fraud. The perpetrator uses the personal information of another person to create a fake identity or to deceive the identity of the victim. In most cases, the thief's goal is financial. He can use the victim's social security number to apply for a credit card and then spend the money freely and never worry about the bills because they are related to the victim. Sometimes stolen information is used to create fake documents for illegal immigrants, allowing them to live and work somewhere even if they are not legally allowed to do so.
The simplest form of identity theft is credit card or checkbook theft. The thief then uses the card or writes checks to your account to make purchases, hoping the clerk doesn't carefully check the signature and ask for photo ID. This is the oldest form of identity theft and requires a thief to physically steal an item from you.
Other thieves use the information to make fraudulent credit card purchases without actually stealing your card. The waiter at the restaurant can write down your credit card number and your name. Later, he looks for your address, then goes online and makes several purchases in your account. Or a thief could use your information to subscribe to cellular services.
The most vile identity thieves can completely infiltrate a victim's financial life. The thief obtains a fake birth certificate, uses the victim's social security number to open new credit accounts in the victim's name, and even obtains loans and mortgages using the stolen identity. The thief may even use the victim's identity if arrested, resulting in an innocent person with a long criminal record.
Next: the basics of protecting your identity.
Money Laundering
The term “money laundering” generally refers to the practice of transferring money illegally obtained in a manner that makes it impossible to trace the original crime. However, identity thieves have come up with a more literal look. This is called a receipt wash.... The fraudster takes the check you used to pay for something in the store, sticks duct tape to your signature, then flushes the check in solvent, which removes any ink written on it. The result is a blank check with your signature that a thief can charge himself for any amount.
Know your credit
Some risks are difficult to avoid. Every time you give your credit card to a clerk or waitress, there is a chance that he or she could steal information.
The first thing you need to do to protect your credit is to be vigilant about it. Carefully review all bank and credit card statements and look for any suspicious payments. Track even small payments that you don't remember, because sometimes the thief makes small purchases first to check if the account is active. Be careful if the bill doesn't show up when it should appear - someone might steal your mail to read your account numbers.
It is also very important to regularly check your credit rating with all three major rating companies (Equifax, Experian and TransUnion). Some experts suggest checking them every three months. The FTC requires each of these companies to provide you with one free credit report every 12 months.
Viewing your credit report is not the same as understanding it. Credit rating companies do not want this information to be viewed by consumers - their business provides credit reports to banks, merchants and employers. The information contained in the report can be a little difficult to understand. The first part contains your personal information such as your address, social security number, and so on.
The second part shows your credit history. Every credit account you have is known as a trading line and it can be represented by a string of numbers or a recognizable name. The same account may appear multiple times if you have changed addresses. The invoice will also be accompanied by an R number which looks like this: “R3”. The number basically means the number of months you are usually late to pay this bill. R1 is on time, R2 is sometimes late, and anything above is a black mark on your credit score (R0 means they don't have enough information about your account yet). The bottom line is that this is the part that you should pay the most attention to. Make sure there are no lines of credit listed that you are not aware of.
The last part shows all the cases where your credit report was checked either because you applied for a loan or because the merchant or employer initiated the check. Review this section for any anomalous patterns that might indicate that someone other than you has applied for a loan in your name.
In the next section, we'll show you how to maintain your online identity.
Identity Thief Den
Review all of your bank and credit card statements to make sure there are no unusual payments.
The internet is a great place to steal identity. It offers them ways to obtain personal information that were never thought possible before the advent of the Internet. Fraudsters and hackers are constantly developing new methods of obtaining the information they need. But the first step to avoiding their pitfalls is simple: don't divulge your information.
Whether you're posting on a message board or blogging on your personal website, don't post your address, phone number, or most importantly, your social security number. This may sound obvious, but it doesn't end there. Identity thieves can use any personal information, such as your mother's maiden name, where you went to school, or your pet's name.
Beware of phishing. Phishingis a scam in which you receive a fake email that appears to come from your bank, seller, or auction website. For example, a message will inform you that your bank's website has been updated and they need you to update your information, with a link leading to a web form. Here you can enter your name, account numbers and other important information. The information is collected by scammers and used or sold. Phishing emails can look so authentic that they trick even advanced Internet users. Watch out for misspelled words and poor grammar, as well as blocks of text that are actually images that can be used to mask links.
Use your credit card when shopping online. A debit card does not provide protection against theft and use of your account number. Credit card companies limit your liability for fraudulent purchases and you can challenge false charges. Also, make sure whatever website you use to shop is secure - most web browsers have an icon that lets you know if the site is using encryption to keep your information secure. Never shop or check online accounts on a public computer or public wireless network. And shop on reputable sites.
While phishing is somewhat of a passive scam (scammers try to trick you into providing them with your personal information), there are more aggressive attacks. Many computer viruses, worms and Trojans are designed to install malicious software on your computer. Some include key loggers that can record your bank password as you enter it. Keep your antivirus software up to date and use a web browser that blocks the execution of code such as JavaScript on websites. If you have a wireless home network, use a secure encryption method such as WPA2. Perhaps most importantly, use strong passwords for sensitive accounts.
Next, we'll look at some other types of identity theft scams to watch out for.
A scam to watch out for
Mail is a serious identity theft vulnerability. Bills, account statements, and (especially) credit card offers are some of the identity thief's favorites. Make sure your home mailbox is safe. Use secure, opaque envelopes when sending mail so that no one can read account numbers or selective checks by simply holding them up to the light. Pay attention to any sudden drop in the amount of mail you receive — a thief could have tricked the address at the post office.
ATM introduces other opportunities for identity theft. Use ATMs only in safe, well-lit areas and do not use ATMs if someone is standing too close or looking over your shoulder. Look for changes to your regular ATM or signs pointing to another nearby ATM. Scammers have been known to use fake card scanners or even fake ATM machines that collect your account information when you swipe your card. Take a look at the car too. Identity theft has been known to install card readers in the card slot and cameras above the keyboard to record your personal ID number as you enter it.
Home burglaries are a particularly nasty source of identity theft. Not only do you have to deal with the break-in on its own, but if sensitive financial information has been left for a thief, your trouble is just beginning. Use a paper shredder to shred old documents. Keep old bills, tax information, and other financial documents in a safe place. Treat them as if they are more valuable than money - for a thief they are.
Don't ignore unusual phone calls or email notifications. If you suspect a call or letter is fraudulent, contact the FTC. Don't give them any information. If you have been contacted by a seller or collection agency about an unpaid bill that you know you shouldn't pay for, don't hang up. This could be your first sign that someone has already stolen your identity. You can get all the information about a fraudulent purchase and challenge it formally.
In the next section, we'll talk about what to do if you find yourself the victim of identity theft.
Use a savings account
A savings account is a good idea for several reasons, but you may not have thought about it: It helps protect your money from identity theft. If you keep a large amount of money in your main checking account, then all that money will be vulnerable if someone steals your debit card or writes checks in your name. A savings account that is unchecked and not tied to any debit card will make it much more difficult for a thief to access.
How to report identity theft
If you find yourself the victim of an identity thief, the process of dealing with it can seem overwhelming. Take heart: The average identity theft incident, the FTC reports, results in as little as $ 500 fraudulent charges, and the victim usually doesn't have to pay for anything. The average time spent reviewing the situation was four hours. There have been several cases where victims stayed on the hook for tens of thousands of dollars and tried for years to recover their credit, but these are exceptional cases.
Your first step should be to call one of the credit bureaus and put a fraud alert on your loan. The bureau then has to call the other two main bureaus. The fraud warning prevents anyone from opening a new credit account in your name. You will also receive a free copy of your credit report - check it and stay in touch with the credit bureaus until they fix any fraudulent payments or bills you find there.
Then close your accounts. For many, this is a huge inconvenience, but it is the only sure way to stop a thief from taking on a debt on your behalf.
File a complaint with the FTC using the online complaint form at ftccomplaintassistant.gov. Then file a complaint with your local police station. Write down everything that happens in your case. Keep copies of every invoice, phone record, statement, and credit report in a safe place in case anyone needs to see them.
For more information on identity theft and related topics, see the next page.
Cancel or not cancel
Every few months, it seems like another company is announcing a major data theft: someone stole a laptop with bank details, or hackers have broken into a credit card company's database. If you receive a notification in the mail that your information may have been stolen, should you cancel all of your accounts? The simple answer is yes. This is the only way to be 100% safe. On the other hand, these notifications are becoming too common for practical use (this happened to the author twice a year). If the account in question is a credit card, just keep a close eye on your statements. If this was your checking account, change it. And next time, use your credit card.
