How to Protect Yourself From Identity Theft

You may not know it, but you are at risk. In recent months there have been major hacks in a variety of industries. Target had more than 40 million credit card and debit card numbers and related information stolen over the course of several months. Home Depot admitted hackers got access to over 60 million credit and debit card numbers (source).

In 2006, the VA lost a laptop that contained medical records, disability ratings, and social security numbers of over 26.5 million veterans (source). In 2014, hackers broke into a medical network’s computer system and stole over 4.5 million records, including names, birth dates, addresses, Social Security numbers, and phone numbers – everything thieves need to steal your identity (source).

Chances are high that your records or the records of someone you know were exposed at some point.

Military members and veterans at greater risk. You have also likely been exposed if you served in the military. The default form of identification used by the military is Social Security numbers. I remember having to sign in with my name and Social Security number when I ate in the chow hall. My name and Social Security number is probably floating around on hundreds or even thousands of documents. I am at risk. And so are you.

The High Cost of Identity Theft

Having a stolen credit card is an inconvenience. But you should be protected by your credit card company. Having your debit card stolen can be worse because thieves can empty your bank account in a matter of days or hours – causing you to bounce checks or overdraft your account. Talk about expensive and embarrassing!

But having your identity stolen can be far worse. It can decimate your credit score, cause legal issues, and cost you an untold number of hours as you try to clean up the mess. The cost has often been measured in thousands of dollars and hundreds of hours.

So what can you do?

How to Protect Yourself From Identity Theft

As our financial lives become increasingly digital, we have the freedom to manage money anywhere there’s an Internet connection. Digital money management allows you to get the job done in much less time and to track your cash flow and budget in clever new ways. But making the leap from paper to cyberspace can be dangerous if you don’t know how to protect yourself from identity theft and other cybercrimes.

You can’t protect against every data breach. Some things are out of your control. But you can try to limit who has access to your data, and you can take personal actions to limit your exposure. Let’s cover what you can do to protect yourself.

Here are 9 ways to stay safe from identity theft that don’t cost a dime and can save you a huge amount of headaches and stress:

Identity Theft Protection Tip #1: Guard Your Private Information

Safeguard all documents that can be used to steal your identity, including your checks, Social Security Card, birth certificates, marriage certificates, passports, and other personal documents, including military records. Keep these under lock and key in a fireproof safe or safety deposit box.

Identity Theft Protection Tip #2: Minimize What You Carry in Your Wallet

Everyone’s nightmare is having their wallet or purse stolen, but it happens. Be sure you never carry anything that you don’t absolutely, positively have to. That way, if you are robbed the thief won’t score every possible piece of your confidential information.

For starters, never carry your Social Security card or a copy with you. Leave it in a safe place at home or in a safe deposit box at the bank. You only need to present the physical card in a few instances, like when you accept a new job or open a bank account.

Identity Theft Protection Tip #3: Review Your Account Statements

You should review your bank and credit card statements on a weekly basis to make sure there are no fraudulent charges. Criminals can slip in small charges that they hope you’ll miss—don’t give them the satisfaction! Better yet, import your bank and credit account transactions into online or desktop financial software at least once a week so you can check amounts against your receipts and categorize them for budgeting purposes.

Identity Theft Protection Tip #4: Review Your Credit Reports

Don’t forget to review your credit report from each of the three credit bureaus (Equifax, Experian, and TransUnion) at least once a year. It’s free to view or print your entire file at annualcreditreport.com. A good strategy is to space out your requests so you can pull a different report every four months. Review it carefully to make sure all the accounts are yours and that the information is 100% correct.

Identity Theft Protection Tip #5: Send and Receive Less Confidential Mail

Identity thieves love to steal confidential documents from your mailbox and they don’t even have to live next door to do it. Having a locking mailbox isn’t enough protection; criminals can change your mailing address remotely so your mail goes to their address across the country without you knowing! Stay a step ahead of thieves by going paperless and get as many bills, account statements, and confidential documents as you can be sent to your email inbox instead of to your physical mailbox.

You can opt out of certain types of junk mail like preapproved credit card and insurance offers by going to OptOutPreScreen.comto have your name removed from direct marketing lists.

Identity Theft Protection Tip #6: Shred Documents with Confidential Information

I shred anything and everything someone could use against me. This includes personal documents, old medical or financial statements, duplicate checks, etc. Do the same.

Since not every financial institution is on the paperless bandwagon yet, be sure to shred any document with confidential information that you don’t need. Another pastime of identity thieves is dumpster-diving. Your pre-approved credit card offers, bills, and account statements can be used against you because they contain your name, address, account number, and sometimes even your Social Security number. That’s all a thief needs to open an account in your name and run up a line of credit, for instance. If you make confetti out of your documents, all a dumpster-diver will get is dirty.

Identity Theft Protection Tip #7: Don’t Browse Confidential Sites in Public

Never visit a confidential site, like your bank or investment account from an unsecured location like a coffee shop or library unless you have your own VPN service. Thieves hang out where there’s an open Internet connection so they can see where people are browsing and steal their login information.

It should also go without saying that you shouldn’t use public computers for confidential information, such as banking.

Identity Theft Protection Tip #8: Use Complex Account Passwords

Never use simple passwords that a thief could guess, like your birthday, address, or kid’s name. The best passwords are at least twelve digits (or more!) and have a combination of letters, numbers, and symbols. You should change passwords for your financial accounts every few months so a thief who gained access would get locked out.

Identity Theft Protection Tip #9: Be Suspicious When Approached

Be suspicious if you receive an email, letter, or phone call from someone who says they’re from a government agency, bank, credit card company, or any other financial institution.

Identity thieves will pose as trusted representatives so they can con you into giving up your confidential information. Always ask for their name, phone number, or email so you can call them back or contact them directly to verify their purpose for contacting you.

I never give my personal or account information over the phone or email, unless I initiate the action. No reputable company will call you and ask to confirm your credit card or account number.

Actively Monitor Your Credit Profile

The most proactive way to protect yourself is by monitoring your credit profile. Each of the three major credit bureaus will give you a free credit report once a year. You can stagger these and get one report every 4 months.

If you want to take things a step further, you can sign up for active monitoring and identity theft insurance. There is a monthly fee for this type of service, but it comes with active monitoring and insurance that will help you cover the cost of getting all fraudulent charges removed.

One of the longest-running and best companies in the industry is LifeLock, which monitors your credit profile and certain banking accounts and notifies you of any suspicious activity.

LifeLock Ultimate™ Protection offers:

• Alerts for checking and Savings account applications under your name and information
• 24/7 online access to your annual credit report and updated monthly score
• Expanded credit alerts for new account inquiries
• Alerts when contact information changes on existing checking and savings accounts
• And more

They back this up with a $1 Million Total Service Guarantee. The guarantee is a no-deductible insurance policy. If you become a victim of identity theft while a LifeLock member, they will spend up to $1 million to hire experts, lawyers, investigators, consultants and whoever else it takes to help your recovery.

Learn More About Identity Theft Prevention

In “6 Simple Tools to Protect Your Privacy” you can listen to an interview I did with an identity theft expert who had to learn about loss the hard way. It cost him a 40-year-old business, $300,000, and almost ruined his marriage and landed him in jail. You won’t want to miss John’s tips about how to avoid becoming the victim of an identity crime too.

If you believe you have been the victim of a cybercrime or just want to learn more, visit the Federal Trade Commission Web site. The government-sponsored site, OnGuardOnline.gov, also gives useful tips about how to secure your computer and your personal information. Knowing simple rules for staying safe and the protections you’re entitled to allow you to manage your finances without ever becoming a crime victim.