This is a serious post about a very serious problem – identity theft.
You can be great at managing your budget, saving money, staying out of debt and so on and still have your finances ruined by identity theft. It is estimated that annual financial losses from identity theft exceed $50 billion. Identity theft occurs when a criminal obtains someone’s identifying information uses it to commit fraud or theft or sells it to another criminal. With the right information, a criminal can assume your identity and commit various crimes. They can apply for loans or credit cards, open store charge accounts, withdraw money from your bank accounts, write checks, obtain cell phones or run up other large debts. Victims of identity theft can spend months or years cleaning up the mess and repairing their credit record. Financial damage from identity theft is estimated to be about $3500 per occurrence.
Identity thieves usually go after the following information:
- Name, address & phone numbers
- Bank statements and account numbers
- Credit card numbers
- Social Security number
- Income (paychecks)
How Criminals Obtain Your Identifying Information
Identity thieves may use a variety of methods to obtain your identifying information and take over your identity. These methods include:
Stealing your wallet or purse and with it obtaining your identification, credit and bank cards.
Stealing your mail from your home mailbox, therefore, obtaining credit cards statements, bank statements, pre-approved credit offers, new checks, new credit cards, tax information and more. By obtaining your mail, they can change your address and divert your mail to another location.
Sifting through your trash cans (this is known as “dumpster diving”) at your home or business looking for personal data, such as copies of checks, credit card or bank statements, or other records.
Spam emails and some websites can install malicious software on your computer that gives thieves access to your personal information including passwords you might type into financial websites.
Protect Your Identifying Information
There are several things you can do to protect yourself from being an identity theft victim. If you take these steps you can greatly reduce your risk of identity theft.
Use good passwords on your computer, credit card, bank and phone accounts. Do not use your mother’s maiden name, your birth date, the last four digits of your Social Security number or your street address as passwords. Whenever possible use passwords that contain lower case letters, upper case letters, numbers and punctuation. You have to be able to remember it easily as well. Alternate spellings of words can be useful in creating passwords. For example, let’s say you wanted to use some variation of “go home” as a password. You could change it around to g0*HoM3. It would also be prudent to change your passwords every few months.
Avoid carrying excess credit cards in your wallet, in case it’s stolen. Keep any credit cards you don’t carry with you in a safe deposit box or a safe in your home.
Safeguard your mail. Never place outgoing mail containing any financial information (such as bill payments) in your mailbox at home. Instead, use the post office collection boxes located in your community or the local post office. Try to have your mail removed promptly on a daily basis. If you go on vacation, call the post office and ask for a “vacation hold” on your mail.
Do not throw any personal information in the trash or recycling. Invest in a cross-cut shredder. This is the type of shredder that turns your documents into little pieces of confetti. If you use a shredder that cuts paper into long strips, it can be pieced back together. Always shred papers that contain identifying or financial information such as charge receipts, copies of credit applications or offers, insurance forms, medical statements, checks, bank statements, utility bills and anything that has your identifying information printed on it.
Beware of people who call your home. Some identity thieves will call you and claim to be representatives from your bank, the IRS, or even a government official. They are hoping to gain your trust and persuade you to give them your identifying information. If someone really is calling from any of those institutions they already have your information. They don’t need you to give it to them on the phone. If you are asked for personal information by someone who calls you on the phone, tell the person you’ll call back with the information a little later. Don’t call the number the caller gives you. Instead call the published number for the bank’s customer service department.
Since identity thieves obtain personal information from companies as well as homes, it’s important that you know that your company has adequate security procedures. You should speak to your employer and find out who in the company has access to your identifying information. You also should know if your personal records are kept in a secure place like a locked filing cabinet. Do they shred personal records or do they just tear them up and throw them into the trash? These are questions that you should ask and be concerned about.
You can secure personal information at home using a locking file cabinet and or fireproof safe as I recommended in my last post. This is particularly important if you have roommates, or employ outside help in your home such as babysitters, housekeepers or service people.
Secure Your Computer
It’s vital that you keep your computer secure. Since so many people manage their personal and financial lives by computer these days, identity thieves are constantly trying to find ways to access that information. Follow the following steps to keep your computer secure:
Use anti-virus and anti-spyware programs on your computer and keep them up to date. Criminals are constantly evolving new threats to your computer security. No one security program can detect and prevent all of these threats.
Do not download files sent to you by someone you don’t know or click on links. Opening a file could expose your system to a virus or spyware that can give thieves access to your information.
You need to be aware of an identity theft method called phishing. Identity thieves send emails purporting to be from your bank. They often falsely claim that you need to go to their website and update your information. These emails look very official and if you click the link in the email it will take you to a website that looks very similar to your bank’s website, except it isn’t your banks website. Any information you enter there will go straight to identity thieves. Instead of clicking on links in emails supposedly from your bank, open your browser and type the address for the bank’s website instead. If there really is something that needs to be updated, you’ll see a message to that effect when you log in.
A firewall is an important part of your computer security. They guard against hackers accessing your computer over the Internet. There are several options where firewalls are concerned. Many home routers these days have firewalls built in. If yours doesn’t or if you don’t use a router, you should use a personal firewall program on your computer. There are several specialized firewall programs available for you to install. Windows also comes with a built in firewall. You just have to make sure it’s activated.
Keep Windows and your favorite browser updated so any security flaws are fixed as they are discovered.
Don’t store identifying information on a laptop if you can avoid it. If your laptop gets stolen so does your information.
If you dispose of a computer or replace your hard disk, make sure that you delete all your identifying information. You should get a program that wipes the disk completely. You could also make the data on your disk unrecoverable by drilling holes in the disk so it can’t be accessed at all.
Do you take any other steps to protect yourself from identity theft?