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There's no fail-safe way to prevent identity theft.
“We can’t stop data breaches, and we can’t stop cyber attacks,” says James Lee, president of the Identity Theft Resource Center. “But what we can do is make our information less useful.”
There are some things you can do to reduce chances you’ll be a target, spot warning signs and take quick action to minimize damage.
Freeze your credit
Freezing your credit with all three major credit bureaus — Equifax, Experian and TransUnion — restricts access to your records so new credit files cannot be opened. It’s also a way to prevent identity theft online.
It’s free to freeze your credit and unfreeze it when you want to open an account. A credit freeze provides the best protection against an identity thief using your data to open a new account.
Your Social Security number is the master key to your personal data. Guard it as best you can. When you are asked for your number, ask why it is needed and how it will be protected. Don’t carry your card with you. Securely store or shred paperwork containing your Social Security number.
» Learn more about how to protect your Social Security number
Be alert to phishing and spoofing
Scammers can make phone calls appear to come from government entities or businesses, and emails that appear to be legitimate may be attempts to steal your information.
Initiate a callback or return email yourself, working from a known entity such as the official website, rather than responding to a call or email. And be wary of links and attachments — many contain malware.
» Learn how to to stay safe from financial scams
Use strong passwords and add an authentication step
Use a password manager to create and store complex, unique passwords for your accounts. Don’t reuse passwords. Adding an authenticator app can reduce your risk, too.
Don’t rely on security questions to keep your accounts safe. Scammers can easily find out things like your pet's name or your local high school mascot by perusing your social media accounts. It's worth thinking carefully about what you disclose on social media so you don't give away key data or clues about how you answer security questions.
Set alerts
Many financial institutions will text or email when transactions are made on your accounts. Sign up so that you know when and where your credit or debit cards are used, when there are withdrawals or deposits to financial accounts and more.
Watch your mailbox
Stolen mail is one of the easiest paths to a stolen identity. Have your mail held if you’re out of town. Consider a U.S. Postal Service-approved lockable mailbox. You can also sign up for Informed Delivery through the USPS, which gives you a preview of your mail so you can tell if anything is missing.
Shred, shred, shred
Any credit card, bank or investment statements that someone could fish out of your garbage shouldn’t be there in the first place. Shred junk mail, too, especially preapproved credit offers.
Use a digital wallet
If you’re paying online or in a store, use a digital wallet, which is an app containing secure, digital versions of credit and debit cards on your smartphone. You can use it to shop online or at a compatible checkout terminal. Transactions are tokenized and encrypted, which makes them safer.
Protect your mobile devices
Use passwords on your electronic devices. Use a banking app rather than a mobile browser for banking.
Check your credit reports regularly
The three major credit reporting bureaus give consumers access to free credit reports weekly, accessible by using AnnualCreditReport.com. Check to be sure that accounts are being reported properly and watch for signs of fraud, like accounts you don't recognize. You can also sign up for a free credit report and score to receive alerts when there are changes.
» Get your free credit report from NerdWallet
Monitor financial and medical statements
Read financial statements. Make sure you recognize every transaction. Know due dates and call to investigate if you do not receive an expected bill. Review “explanation of benefits” statements to make sure you recognize the services provided to guard against health care fraud.
Types of identity theft and warning signs
Here are common ways a criminal may exploit your information:
Credit identity theft
Credit identity theft happens when a criminal uses your personal information, such as birthdate and Social Security number, to apply for a new credit line.
Warning signs of credit identity theft
You might see an unexpected change in your credit scores or an account you don’t recognize on your credit reports. You may get debt collection notices or a court judgment against you. The best way to prevent it is to freeze your credit.
Child identity theft
Criminals steal a child’s identity and apply for credit in that child’s name. Often it is not discovered until the victim applies for college loans or other credit.
Warning signs of child identity theft
If your child is getting offers of credit cards or phone calls about late payments or debt collections, investigate. You can freeze your child's credit to prevent it.
Synthetic identity theft
Criminals use a patchwork of identity details to construct a fictitious consumer, using a Social Security number — often one of a minor child or one that is simply made up — that is not found in the credit bureaus databases. Then they combine it with a name and address and apply for loans and credit cards, often making payments for years as the credit limits grow. Once the credit cards are maxed out, the criminals disappear, leaving you with the unpaid balance.
Warning signs of synthetic identity theft
If you try to freeze your child’s credit and discover their Social Security number is already in use, they are likely the victim of child identity theft. Often child identity theft is not discovered until the child is applying for credit cards or student loans.
Taxpayer identity theft
Fraudsters use a Social Security number to file a tax return and steal your tax refund or tax credit.
Warning signs of taxpayer identity theft
You may be unable to e-file because someone else has already filed under that Social Security number. Or, you get an IRS notice or letter referencing some activity you knew nothing about. Another warning sign? IRS records suggest you worked for an employer that you did not. Filing early, or requesting an IRS identity protection PIN, can help you prevent criminals from filing in your name.
Medical identity theft
Using someone else’s identity to get health care services is medical identity theft. It’s particularly dangerous because it can result in medical histories being mixed, giving doctors and hospitals wrong information as they are making health care decisions.
Warning signs of medical identity theft
Claims or payments on your insurance explanation of benefits that you do not recognize can suggest that someone is using your health care benefits. If you’ve fallen victim, you’ll need to report it to your insurance company, and inform your health care team to be sure information in your health care records is actually yours.
Account takeover
Criminals use personal data to access your financial accounts, then change passwords or addresses so that you no longer have access.
Warning signs of an account takeover
You received an email, letter or text from your financial institution that refers to an action (like a password or email change) or transaction you don't recognize.
Criminal identity theft
Criminal identity theft occurs when someone gives law enforcement authorities someone else’s name and address during an arrest or investigation. This is often done with false identification, such as a fake driver’s license.
Warning signs of criminal identity theft
You may be detained by a police officer for reasons that are unclear to you, or be denied employment or a promotion because of something found in a background check.
How identity theft happens
Here are some of the ways your personal information can be compromised and tips to avoid ID theft:
| Situation | Risk | What to do |
|---|---|---|
| Lost wallet | Someone can use your cards or personal info | Carry only what you need, lock or cancel cards fast |
| Mailbox theft | Someone steals your mail | Sign up for USPS Informed Delivery, hold mail when traveling |
| Public Wi-Fi | Hackers may see your activity | Avoid banking or shopping in public, use VPN, turn off file sharing |
| Data breach | Your personal info is exposed online | Check credit reports and scores often, freeze credit, watch for unusual activity |
| SIM card swap | Criminal takes over your phone number | Add a PIN to your phone account, use an authentication app |
| Phishing or spoofing | Scammers trick you into sharing info | Don’t share personal info by phone or mail, contact companies directly |
| Skimming | Credit card info stolen at ATMs or gas pumps | Use chip cards, pay inside, set up transaction alerts |
| Phone scams | Scammers pressure you for money or info | Hang up, be cautious of urgent or threatening calls |
| Shoulder surfing | Someone watches or records your info | Cover screen or keypad, stay aware |
| Malware | Data stolen by harmful software | Don’t click suspicious links, use password manager |
» Learn how to protect your credit after a data breach
How to report identity theft
Reporting identity theft starts an investigation and the process of restoring your good name. While some steps might vary depending on the type of identity theft, here are some basic steps to take to protect yourself:
- File a report with the FTC by visiting IdentityTheft.gov. This website is a one-stop shop for information and reporting identity theft. Follow the recommended steps to make a recovery plan that you can put into action.
- Place a fraud alert on your credit reports. It’s free for one year, and you’ll only need to contact one of the three major credit bureaus — Experian, Equifax or TransUnion — and they must notify the others.
- Call the companies where you suspect fraudulent activity occurred. Explain your circumstances and ask them to freeze or close the accounts to prevent further action. Take this time to change your login and password information. Credit and debit card issuers generally replace the cards with new ones with a different number, and you're back in business.
- Get your free credit reports from Annualcreditreport.com and note any suspicious activity that you will need to dispute.
- You might want to file a police report. Take your FTC identity theft report, photo ID and any proof of theft with you to your local station.
For tax ID theft: The IRS has a phone line for identity theft, at 800-908-4490, and a taxpayer guide to identity theft on its website. As a warning, taxpayer identity theft or theft of benefits are typically resolved more slowly than other kinds of identity theft.
For medical ID theft: If it appears someone else used your health benefit, contact your health insurer and consider contacting any involved providers to make sure someone else’s health history is not mixed with yours.
No matter which type of identity theft you experience, keep extensive notes about phone conversations and retain related emails.
Identity theft protection services
Identity theft protection services let you know that your identifying information has been used, or that it is at risk because it was exposed in a data breach. If you are a victim of identity theft, they may also guide you through the process of cleaning up the mess and restoring your identity — and reimburse you for costs.
If you’re already doing all you can do to protect your identity or feel you don't have time to do it, you may want to consider an identity theft protection service. Protections vary, and most offer additional ways to protect your privacy and other services.
The best choice among the paid services is one that fits your budget and offers you the coverage you care about.
Before you pay for one, though, check to be sure you don’t have a free identity theft benefit or discount you’re not using. This free protection might be offered through an existing credit card, as an employer benefit or through your bank or credit union.
