#42 How to Prevent Identity Theft

In 2012, there were 12.6 million cases of identity theft in the US alone, an increase of over one million people since 2009. And if that's not enough to worry you, the San Diego based Identity Theft Resource Center has calculated that it takes about 600 hours to restore your reputation after identity theft. While people are getting better at recognizing identity theft, and minimizing the damage, the best solution is to prevent it from happening in the first place by following these steps.

Method 1: Strengthening Your Digital Security

Step 1:

Choose good passwords and PINs. Choose words and numbers that no one would be able to guess even if they were privy to other parts of your personal information. Or, use words and numbers that are familiar to you, but disguise them in a hard-to-guess code, like the Vigènere Cipher. There are even randomly-generated password programs online that will provide virtually unbreakable, or uncrackable passwords. Other good habits to get into include:

• Don't use the same password for all of your accounts. Vary the passwords from account to account.

• Avoid easily guessed PINs like birth dates, common numerical sequences, phone number, the last four digits of your social security number, etc.

• Good passwords will include capital and small letters, numbers and characters, and be at least 8 characters long.

• Never store passwords or sensitive information on your computer. All computers are hackable. If you need to keep this information digitally, store it on a CD or in an external hard drive that is only attached to the computer for offline backups (turn off your internet connection when making backups).

• For more ideas, read How to Keep Your Debit Card Number (PIN) Safe.

Step 2:

Protect your computer. Many identity thieves now use complex software such as spyware and keyloggers to obtain sensitive information such as passwords and login details without the user's knowledge. Just because you can't see anything wrong with your computer doesn't mean that it is safe to use. Unlike viruses and adware, many spyware and keylogger programs are designed for stealth, so that they can gather as many passwords and sensitive data as possible. A strong and regularly updated firewall, anti-virus program and anti-spyware program will provide most of the protection an individual needs.

• If you're not sure what is best for your computer, contact your local computer retailer for advice.

Step 3:

Beware phishing scams. Phishing involves seemingly harmless emails being sent to you, asking you to verify certain things such as passwords, account numbers or credit/social security details. Any email seeking this sort of information should be an immediate red flag for you. The best response is to contact the service provider directly and ask what's up.

• If you get an e-mail claiming to be from your bank that tells you to check or update your information such as a password (for any reason), do not use the link in the e-mail, even if the e-mail letterhead/background looks like it came from your bank. If you think the email is real, log on directly to the company or bank's website and check your records there; if there are no changes, you just avoided being scammed. This type of scam is known as a phishing scam and there are several forms. (You can also call your bank to verify––use the bank's actual Yellow Page contact number, not any numbers provided in the email.)

• Other phishing scams include false lottery wins, requests for money to "help" people who have lost money/tickets/house, etc. and claims from Nigerian princes on-the-run.

• Check the website of your country's government department that is responsible for updating on regular scams (consumer affairs and security agencies usually); many even have regular emails with such updates to keep yourself forewarned. Some non-profit consumer watchdog agencies and consumer-safety oriented TV shows will also have similar information available online.

Step 4: 

Don't accidentally on-sell or give away your identity details. When you get rid of your computer, be sure to wipe out all of your information first. Ideally, restore it to the factory settings––this will usually be explained in the manual that came with your computer or can be found doing an online search. If you're not sure how, take it to a reputable retailer who specializes in computers and ask for help.

• A tech savvy person can even recover information that has been deleted from a hard drive. Free scrubbing programs can be downloaded online, or ask your trusted computer retailer or tech-savvy friend to help.

Step 5:

Take care when shopping online. Always check the security symbols when using an online site for shopping. If the lock icon encryption is not there, do not give out credit details. Also, check that the site is legitimate––never go to a site from a random email and start purchasing. Go to the site through a known URL or by searching for it on a search engine first.

• Keep a separate credit card just for online purchases. This will make it easier to cancel if something bad does happen and your other credit card for "in real life" can still be used unhindered.

• Don't store information on any store's website. It may be convenient, but it's also a possible loss to you if the site is hacked.

Step 6:

Never answer unsolicited or unwanted emails. Even if you're joking, the return email verifies your existence to the would-be scammer and it's just better off that they think their attempt to get to you disappeared into the ether.

• Avoid opening emails that don't make sense to you or that come from people or organizations that you don't recognize. Viruses or worms can be hidden in emails. Be doubly suspicious if the email ends up in your spam folder. And always have your virus protection updated and turned on.

Method 2: Staying Alert When Out and About

Step 1:

Watch out for "shoulder surfers." That person behind you in line at the ATM or the supermarket may just be another shopper, or they could be paying close attention to you in hopes of seeing your account balance or PIN. Shade the monitor area with your hand when typing in your PIN and try to block others’ view of the screen. It's even a good idea to do this when no one is around; some thieves use binoculars or install cameras so they can watch you from far away.

• More automatic cash dispensers are now adding shields to assist you. Use the shield as one defense, while still cupping your hand over the keypad as you key in the numbers.

• You may feel silly shielding your numbers. But think of this––you'll feel even sillier if someone swipes your PIN.

Step 2:

Watch what you carry. We often carry a lot of identifying information in our wallet or purse. And if that should get stolen, it is easy for someone to use that information to their advantage, and quickly. Here are some precautions to take:

• Don't carry credit cards (or anything that can be used like a credit card, such as a debit card with a VISA logo). Not only will this severely limit the damage that a thief can do, but it is also a useful budgeting practice. If you must carry credit cards, try to carry only one, and write "SEE ID" next to your signature on the back.

• Change all your credit cards with a PIN only option, if possible. That way, if anyone does steal your credit card, they'll need to know the PIN to operate it if purchasing anything in stores. To avoid online usage, never carry address identification in your wallet. You can use an email or cell phone number for "return to owner" requests.

• Don’t carry extra check (cheque) blanks, your passport, or any other ID that you are not planning to use that day. If you must carry such identification, consider placing it in a security bag worn on the body if there is any likelihood of someone swiping it.

• If in the USA, never carry your Social Security card (or any cards that have your social security number on them) with you unless you are going somewhere where it will be absolutely necessary.

Step 3:

Carry your wallet or bag safely. Even if you live in a safe area, opportunism can cause you lose your wallet or bag. There are ways to help discourage theft of your wallet or bag, wherever you are.

• Never leave your bag or purse unattended. If you grocery shop, never get into the habit of placing your bag in the shopping cart or trolley. Even if you stay with the cart, a thief can snatch the bag when you reach up or bend down to get a product and take your eye off the bag. Trust isn't about testing your entire community's willpower!

• Never leave your wallet or purse in a jacket or coat pocket that is hanging on the back of a cafe or restaurant chair. This unattended item is all too easy to swipe.

• If you use a purse or a single strap bag, wear it across your body, so it can't easily be yanked right off your shoulder.

• If you carry a wallet, you might consider attaching it to your body with a chain or bungee cord. You can also Make a Mugger's Wallet, which is a decoy wallet that you can give to a thief if you should get mugged. This is an extreme measure, suitable if you live or travel to areas where there are known theft problems.

• Be prepared for if your wallet should get stolen. Read How to Deal With Losing Your Wallet so you know what to do, and can do it quickly. The sooner you can cancel the cards, the less damage there will be.

Method 3: At-Home Security

Step 1:

Shred any documents with identifying information on them. Don’t just throw your old billing statements and other documents containing important information into your garbage. There are "Dumpster divers" who are willing to wade through old coffee grounds and rotten orange peels to get their hands on your data. Invest in a crosscut paper shredder and completely destroy any piece of paper that has your credit card number, your social security number, or your bank account number on it.

• If you get a shredder, make sure it’s one which doesn’t just create strips of paper which can be pieced back together. If you don’t get a shredder, at least tear the materials into small pieces. When using this strategy, some believe in a two-bag approach. They will place half of the remains of a torn document in one rubbish bag and the other half in a different trash container in the home (or, if you have a compost bin, mix part of it in with your compost).

• Be sure to shred pre-approved and other credit offers (like when they send you blank checks) - don't just toss in the trash. Many thieves will use offers to apply for credit in your name at a different address, and will try to use any checks. Better yet, call your credit card companies and request that they not send cash advance checks in the first place. Phone the opt-out number to stop receiving credit card offers.

Step 2: 

Protect your snail mail. The mail transports millions of pieces of personal information every day and is one of the most common sites for identity theft activity. A study found that the most frequently used non-technological method of identity theft was the rerouting of mail through change of address cards! So pay attention to your mail.

• Make sure you get all of your billing statements on time. If you have a mailbox that others can access easily, consider getting a high security locking mailbox or consider getting a post office box instead. Also check your mail frequently so no one gets to it before you do.

• Most banks offer "paperless" statements via email or smartphone. If your bank offers this service, consider signing up to lessen your risk.

• If you are expecting a new credit card in the mail and it hasn't turned up within the time the bank has specified, contact the bank immediately. Better still, ask the bank to require you to collect the card in person instead of having it mailed out.

Method 4: Freezing Credit as a Safety Precaution

Step 1:

Get a security freeze on your credit. In the United States, you can contact each of the three major credit agencies (Transunion, Equifax and Experian) and have them freeze your credit. There is a small fee depending on your circumstances and/or location. This action will keep anyone (including you) from opening new lines of credit, or viewing your credit. This is probably best done when you know you won't be needing to open new lines of credit or getting credit reports anytime soon.

• You can lift the credit freeze anytime using the Personal Identification Number given to you by each of the three credit agencies involved, and again, possibly having to pay a small fee.

Method 5: If You're a Victim

Step 1: 

Act quickly. Do what you can to minimize the damage to your reputation and funds. To this end:

• Contact all credit providers immediately and have your cards and any lines of credit cancelled. Follow the credit agency's advice and be sure to keep a record of the conversations, including names of people you speak to, their rank and the time and date.

• Contact the police. File a police report. This is important as a record, and may also be required by your insurance company. It can also enable the police to start looking for potential suspects. Most of all, it helps you as it will be essential to show documented police activity to the credit agencies and others affected.

• In the United States, contact one of the three credit agencies to explain what has happened and to ask for a fraud alert on all your credit accounts. Follow their advice for your particular case. (Similar agencies may exist in your jurisdiction if you live outside of the USA.)

Step 2:

Be prepared for a lot of footwork and effort to restore your reputation. Additional help can be found in the Federal Trade Commission's Identity Theft Clearinghouse at http://www.consumer.ftc.gov/features/feature-0014-identity-theft. Although this is only applicable for US residents, it may contain some useful general information for people in other countries.

Tips

• Check your credit report on a regular basis. The identity thief will most likely try to obtain credit or store cards in the name of a victim. Many of these cards are used normally for a time with the aim of increasing the credit limit attached to the card. This means that by checking your credit file once or twice each year, it may be possible to spot credit that was not applied for by you. If you do see such a card, it is vital that you report it to the company involved, the police and the credit referencing agencies as soon as possible. Make sure to keep copies of all letters sent as they may be required at a later date to help you prove your story.

• Ensure that all of your children know how important it is not to leave personal information trails online. Talk to them about safe computer usage, as well as how to stay safe when out and about and when making purchases.

Warnings

• Don't be complacent about anything you've applied for, including credit cards, mortgages, jobs and rental properties. Ask for the organization's policy about application files and ask that this information be shredded or returned to you for disposal.

• In the USA, do not give out your social security/national insurance number. This number is used to identify you by a government for taxation, health care and retirement benefits. It is also a number used by credit referencing agencies for identification. Should an identity thief discover a social security number, the process of credit and loan applications becomes much easier. Before you do give out the number, ask "How it's going to be used?" and "How are they going to safeguard it?".

• Identity thieves are now making almost anyone a target. It is even possible to use the identity of young children and the recently deceased. The only group of people who are genuinely unlikely to be targeted are those who already have poor credit or have been bankrupt. Applications for credit on behalf of these people are often very difficult.