What is identity theft and how can we prevent it?
You get a call from your bank asking you to verify a purchase made at a Walmart in Wisconsin for $217. The only problem? You’re sitting on your couch in Texas. It sounds like you’ve been a victim of financial identity theft. Someone has obtained your personal banking or credit card information and attempted to make a purchase in your name. Thankfully, your bank thought a one-off purchase in Wisconsin when all your other transactions were made in Texas seemed fishy and alerted you to the problem before any real damage was done. But that isn’t always the case.
The 2021 Identity Fraud Study reported that identity fraud cost consumers $56 billion in 2020.
What exactly is identity theft?
Identity theft is when someone other than you uses your personal information like your name, credit card number, or social security number to commit fraud. They can obtain your information in a variety of ways, including:
- Physical theft: The act of physically stealing your wallet or purse containing a credit card, driver’s license, or social security card.
- Credit card skimming: A thief can place a device known as a card skimmer over any card reader to collect your credit card information. This is especially common at gas stations.
- Phishing: An email that appears to be from a legitimate source that attempts to capture personal information.
- Data breach: When someone accesses stored information without permission. Risk Based Security determined that 36 billion records were compromised by data breaches from January through September of 2020.
Once someone has your personal information, they can, depending on what information they have, access your bank account, open new credit cards, claim your tax refund, and use your health insurance, among other things.
What is the most common type of identity theft?
Financial identity theft is the most common type of identity theft. This is when someone fraudulently uses your personal information for financial gain. They could make a purchase using your existing debit or credit card information or use your social security number to open new credit card accounts.
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Medical identity theft
Medical identity theft occurs when someone pretends to be you to get free medical care or medical care that’s covered by your health insurance. It’s the fastest-growing type of identity theft. Beyond the financial implications, medical identity theft can be particularly dangerous because inaccurate information could be added to your medical records. You run the risk of being mistreated or misdiagnosed based on someone else’s information.
Criminal identity theft
Criminal identity theft is when someone pretends to be you when they are arrested or given a ticket. They will often present a driver’s license with your name but their picture on it. Criminal identity theft isn’t very common, but it can result in wrongful criminal records. If you ever believe you are a victim of criminal identity theft, immediately get in touch with law enforcement and provide fingerprints and any identifying documentation to certify that you are not the person who committed the crimes in question.
Tax identity theft
Tax identity theft occurs when someone uses your personal information to file a tax return, often for the purpose of receiving your refund. People usually become aware that this has occurred when they go to file their own tax returns and are unable to do so. If you have been a victim of tax identity theft, you will likely be issued a PIN that you will need to use to file your taxes moving forward. Anyone who does not have this PIN will not be able to file taxes using your social security number.
Fortunately, the incidence of tax identity fraud is on the decline. The Security Summit, a coalition including the IRS that’s designed to fight identity thieves, reported an 80% decline in the number of taxpayers who identified they were victims of identity theft between 2015 and 2019.
Child identity theft
Child identity theft is when someone uses a child’s personal information to commit fraud. It can often go unnoticed because children aren’t regularly checking things like credit reports. Children are at a higher risk of identity theft by someone who knows them and already has access to their personal information such as their parents. Just like adults, children have access to one free yearly credit report from each of the major credit bureaus – TransUnion, Experian, and Equifax. Running these annual credit reports is an easy way to stay on top of potential identity theft.
How can we prevent identity theft?
When you think about it, you use your personal information in a lot of different ways every single day. And every single time you make that information available, you increase the risk of identity theft. Fortunately, there are some easy things everyone can do to minimize the likelihood of identity theft.
1. Sign up for an identity protection service
An identity protection service is a great way to help keep your identity safe. While they are usually subscription-based, they offer features like credit monitoring and username and password monitoring, and they can even scan the dark web for instances of your personal information. These services will alert you of any issues and often cover funds lost.
2. Run your credit reports
You are entitled to one free credit report every year from each of the three major credit reporting bureaus – Equifax, TransUnion, and Experian. You should make running your credit report a regular habit so you can catch anything unusual that may indicate identity theft. Stagger your reports throughout the year so you are always within a few months of having run a report.
3. Don’t reuse your passwords
Each password you use for an online account should be unique. They should also be difficult to guess by containing letters, numbers, and special characters and be longer than 10-15 characters. Avoid using real words or personally identifiable information. Never write your passwords down. A password manager is a helpful tool that can track all of your passwords for you as well as suggest complex passwords when you need to create a new password.
4. Be wary of uninitiated phone calls
Don’t give out personal information over the phone. Even if you’re fairly certain it’s your bank on the other line, it’s always a good idea to tell the person you’ll contact the bank directly from a number you have. Don’t fall for threats, no matter how persistent the person is. The IRS will never call you, and no one needs access to your computer.
5. Shred those documents
Shred any documents with personally identifiable information on them. Credit card statements, explanation of benefits, utility bills. Identity thieves will go through the trash looking for information they can use to steal your identity. If you don’t have a personal shredder, check whether your community has a regular shred day so you can safely dispose of your documents.
6. Don’t overshare on social media
We’ve all seen the fun challenges on Facebook – your first car plus your dog’s name is your rockstar name. Jeep Sprinkles? Or are those two potential security question answers I just shared with everyone? Be vigilant for anything that encourages you to share personal information. No one needs to know your grandmother’s name, the street you grew up on, or what the first concert you went to was.
7. Freeze your credit
Freezing your credit essentially prevents anyone from accessing your credit information. This prevents new accounts from being opened in your name because creditors cannot verify your credit. To freeze your credit, you need to contact each of the three credit bureaus and request a credit freeze. You will be given a PIN should you need to unfreeze your credit when applying for a legitimate loan or line of credit. You can also freeze a child’s credit, which helps prevent child identity theft.
8. Don’t click that link
Never click on a link from an unknown source. It could download malicious software that captures personal information. And be extra cautious of phishing attempts. An email may appear to come from a known source, but the link you need to click has something slightly off about it. Hover over any links before clicking them to determine where they lead. Is there an extra letter in the URL? Are they using a .co instead of a .com? If you’re ever unsure about a URL, go to the website in question directly by typing a known URL into the address bar.
What do you do if someone steals your identity?
If you notice any unusual activity on your credit cards or a credit report indicates a new account was opened in your name that you know you did not open, you have likely been a victim of identity theft. There are several steps you need to take to help stop the theft and potentially remedy the situation.
- Call the company at which the theft took place and notify them that you believe your identity was stolen.
- Freeze the account in question.
- File a police report. Some organizations may require a police report for restitution of funds.
- Contact one of the three major credit bureaus and place a fraud alert. Each bureau is required to notify the other two bureaus of such an alert.
- Place a credit freeze with all three major credit bureaus. You must do this individually for each bureau.
- Run your credit report and take note of any fraudulent activity or attempted fraudulent activity.
- Close any fraudulent accounts and notify the company the accounts were opened fraudulently.
- File a complaint with the FTC.
- Change any online passwords related to the theft.
- Set up ongoing monitoring of your identity, preferably with a service that monitors not only your credit, but also your social security number, driver’s license number, health insurance ID number, and online passwords. Repercussions from identity theft can pop up years after the initial occurrence.
If your identity theft was tax related, contact the IRS. If it was medical, contact your health insurance company and any medical providers. If you believe your social security number was compromised, contact the Social Security Administration.
Stay vigilant in the fight against identity theft
Identity theft is one of the fastest-growing crimes in the U.S., and it can happen to anyone. The results can be devastating, including bankruptcy, loss of employment, and even jail time. But by staying vigilant, we can reduce the risk. It’s also important that we help those who might be more vulnerable to identity theft stay alert, such as seniors, college students, and children. If you think you or a loved one might be a victim of identity theft, take immediate action. The sooner you notice and stop the fraud, the less damaging the consequences.
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