Identity theft is using someone else’s personal information without their consent, usually for financial gain.
About 1 in 7 U.S. residents 16 or older was a victim in 2014, the latest statistics available, according to the U.S. Department of Justice. That’s more than 17 million people.
Misusing someone’s credit card account is the most common kind of identity theft, and it’s the easiest to resolve because most credit cards have zero-liability policies. You call your credit card company, dispute the charges that aren’t yours, get a new account number and all is well. The bank is the victim, not you or your credit reputation.
A more damaging form of identity theft occurs when someone has enough personal information about you to open credit accounts in your name. A study by Javelin Strategy & Research says new account fraud now makes up 20% of losses resulting from fraud.
An identity thief using your information (particularly your Social Security number, name and birthdate) could conceivably apply for credit in your name using a “new” address and begin racking up bills that you know nothing about. Those bills will eventually show up on your credit report, first as late payments — if you have a great score, late payments alone can shave 100 points off of it — and then possibly as collections accounts or even judgments against you.
Your Social Security number, in the wrong hands, can also lead to taxpayer identity theft. People typically find out they’ve been victimized when their tax return is rejected because an identity thief filed first, using their stolen ID. It is a growing problem, and the Internal Revenue Service now has tips to help you reduce your risk.
Reduce your risk of identity theft
Unfortunately, it’s impossible to eliminate the risk of identity theft entirely. But here are nine ways you can reduce the risk:
1. Store your Social Security card in a safe place and safeguard your number. Don’t carry your card with you. Your Social Security number is a master key to your personal data. Guard it as best you can. When you are asked for your number, it’s smart to ask why it is needed and how it will be protected.
2. Strengthen passwords. Random combinations of letters, numbers and special characters, different for each account, work best. Your mother’s maiden name or your pet’s name aren’t hard to find.
3. Watch how much information you give away. Can strangers see your full name, birthdate and family members’ names on Facebook? Would you give any of that information to a caller asking the right questions? (ProPublica found many people are willing to trade that kind of information for a free cookie.) Don’t click on email links if you don’t recognize the sender.
4. Watch the mail. 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.
5. Make liberal use of a shredder. Any credit card or bank statements that someone could fish out of your garbage shouldn’t be there in the first place. Shred junk mail, too, especially pre-approved offers of credit.
6. Use caution when shopping in stores. The Federal Trade Commission suggests:
- Know where your wallet is at all times.
- Be careful with your debit or credit card (no putting it in a coat pocket “just for a second”).
- Don’t tell anyone your PIN (and don’t keep it with your card in case you forget).
7. Protect your mobile devices with passwords. Mobile devices can be a real risk, particularly if you don’t password-protect them. Keep software updated and use hard-to-guess passwords and two-factor identification when available. Turn off Bluetooth unless you are using it. You should also know that when you use public Wi-Fi, others may be able to see your data. Lastly, be cautious in downloading free apps, which can contain malware.
8. Check your credit reports frequently. You’re entitled to one free credit report every year from each of the three major credit reporting bureaus. Consider requesting one report every four months, so you can check for suspicious or incorrect information throughout the year. If you watch your credit scores, be alert for any large, unexplained change.
9. Monitor your financial statements. Read credit card and bank statements. Make sure you recognize every charge, no matter how small. Know due dates and call to investigate if you do not receive an expected bill. Read health insurance claims and make sure you actually received the care your insurance paid for. (If someone else’s health records are mixed in with yours, the results could be life-threatening.)
No matter how careful you are, you could become a victim. A restaurant employee could snap a photo of your card with a smartphone. You could hear on the news about a data breach that involves a credit card you have used or a store that you frequent. (Having your data compromised does not mean that your identity will be stolen, but it is a reason to be extra vigilant.)
The sooner you detect a problem, the sooner you can fix it. Regularly checking your credit also avoids the possibility of discovering you have a problem at exactly the moment you had planned to use it.
Image via iStock.