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How to Avoid Identity Theft
In the electronic age, identity theft has become a real threat to the average adult and even children. Once victimized, identity theft can cause people to be strapped with unpaid bills, large purchases and even criminal records without their knowledge. The results can be devastating from both a personal and financial perspective.
Identity theft statistics show that an estimated 9 million Americans have their identities stolen each year. As more personal information floods the Internet, this number is likely to increase without the proper precautionary measures. By learning what identity theft is and how it occurs, you will understand what you can do to protect your personal information and prevent identity theft.
How Identity Theft is Committed
Identity theft is the fraudulent use of another person's identifying information, including another's:
- credit card number
- date of birth
- name
- social security number.
Before your identity can be stolen, however, this information has to be obtained. Thieves can get sensitive, personal information through:
- dumpster diving: By digging through your garbage, thieves can get a hold of discarded bills or other paperwork containing your personal information.
- mail theft: By looking through your mailbox for incoming and outgoing mail, thieves can steal checks, credit card bills or other pieces of your mail that contain your personal info.
- phishing: Phishing refers to the practice of using deception to get people to divulge their personal info.In some cases, thieves will practice phishing by sending out emails pretending to be financial institutions and asking you to confirm or re-enter your personal information.
- pretexting: Similar to phishing, pretexting is a method of tricking people into freely submitting their personal information. In pretexting, thieves pretend to be telemarketers and ask for seemingly benign personal information. They then use this information to contact your account holders and ask for checks, get new credit cards and perform other damaging scams.
- shoulder surfing: Also referred to as skimming, shoulder surfing is the act of literally looking over someone's shoulder to get sensitive information. For instance, thieves may record your personal identification number and credit or debit card number by looking over your shoulder at automated teller machines or recording it with scanning technology.
- stealing: Old-fashioned thievery, such as wallet stealing and purse snatching, can supply thieves with your credit cards and other personal information.
How Thieves Use Your Personal Info
Once thieves have your credit card number or other personal information, they can use it to:
- Obtain documents, such ascounterfeit checks and fake identification (IDs with your name and their picture and information). With checks and identification under your name, thieves can then buy goods, obtain services or commit other crimes.
- Open accounts, includinglines of credit, phone accounts or utility services that will all be under your name. This is how thieves can rack up massive bills with your stolen information.
- Perform other fraud acts, including gaining employment, registering for government benefits or renting a home. In some cases, thieves will even sell your personal information to other thieves once they are done using it.
Identity Theft Protection
While thieves can acquire personal information through a number of outlets, here are some things you can do to prevent identity theft:
- Automate credit monitoring: Pay a company or a credit agency to regularly monitor your credit report and notify you of any changes, including modifications to your personal and contact information. The cost runs around $24 to $60 per year for one credit agency or $100 to $155 per year for regular monitoring of all three agencies (Experian, Equifax and TransUnion).
- Check your credit reports: You are entitled to one free credit report per year from each of the major credit agencies (noted above) and free fraud alerts on an ongoing basis. If you stagger these reports, you can monitor your credit yourself every four months for free.
- Get identity theft insurance: While this service won't typically cover you for stolen money or any fraud committed by a family member, it will pay for expenses, such as lost wages or legal fees, for about $25 to $70 per year. If you have a homeowner's policy, identity theft insurance is often included free or for a much smaller fee.
- Shred documents that contain personal info: Reduce your risk significantly by shredding personal documents, getting a locked mailbox, reviewing your accounts and opting out of prescreened credit offers by calling 888-5-OPTOUT. Likewise, if you think you're a victim of identity theft, you are entitled to a free 90-day fraud alert against anyone trying to open a line of credit in your name.
Don't be fooled by offers from credit card companies peddling credit protection or legal services for identity theft. You are not liable for fraudulent Visa or MasterCard charges, and most identity theft issues will not likely require a lawyer. Not to mention, these plans can have limited protection or conditional benefits that make them difficult to use.
While identity theft is scary, keeping track of your finances can minimize the your risk. The extra time costs little up front and can save you money and headaches in the long run.
