Ask anyone who has experienced identity theft and they’ll tell you it was a grueling, time-consuming, and often expensive experience. One source that tracks privacy issues pegged the average cost to the victim for each incident of identity theft at $1,100, and called it “a massive headache” that cost the U.S. economy a staggering $56 billion in 2020. Once scammed, you can expect to spend an average of six months and 200 hours of your time recovering your good name.
Yet in spite of such gloomy statistics, many of us still don’t seem to take the threat seriously enough, which is why we’re starting the New Year with this important and helpful article from Motley Fool giving us six relatively simple ways to protect ourselves from the scourge of identity theft. Written by freelance writer Lyle Daly, this article is a good place to start in order to make 2023 a more secure year for your personal finances.
Identity Theft Complaints More Than Double in Two Years
Writing in Motley Fool, Daly begins his article with a sobering warning. “The latest numbers on identity theft paint a concerning picture,” he writes. “Identity theft complaints received by the Federal Trade Commission (FTC) more than doubled from 2019 to 2020. They increased by another 22 percent in 2021, when there were nearly 1.7 million cases.”
These numbers are frightening in and of themselves, especially because many victims don’t realize they’ve been victimized until the injury to their finances has been done. By then, trying to repair damaged credit and restore your good name is a complicated, time-consuming, and expensive process.
“This is a situation where time matters,” Daly writes. “The best-case scenario is proactively preventing identity theft. If it does happen to you, then the sooner you catch it, the better.”
With that in mind, here are Daly’s six top tips to help consumers avoid becoming victims of identity theft.
Tip #1: Protect Sensitive Information Over the Phone
One of the ways scammers fool their victims is by pretending to be in a position of authority, like someone who works in a financial institution or government agency. They then ask for information that they can use against you, like your Social Security or credit card numbers.
Daly warns, “If you get a call that’s supposedly from your bank, credit card company, or the IRS, don’t provide any sensitive information. Nobody legitimate is going to call you and ask you to read your credit card number to them.” Our advice: screen all calls and ignore any that seem remotely suspicious.
He adds, “If you’re not sure, pull up the official number to the company the person claims to represent, and call it. For example, if the caller says they’re from Chase and calling about your credit card, hang up and call Chase at the number on the back of your card.” You’ll quickly learn whether or not the call was legitimate.
Tip #2: Use Strong and Unique Passwords
As Daly puts it: “‘Password1234’ just doesn’t cut it.” Yet millions still rely on passwords that are dangerously simplistic and easy for a crook to decipher.
Strong passwords use a mix of letters, numbers, and special characters, and it’s crucial to have a unique password for every account. “If all your passwords are similar and one gets compromised in a data breach, it could jeopardize all your accounts,” Daly explains.
But how do you remember all of those passwords? Daly suggests, “To avoid needing to reset passwords all the time, use a password manager to conveniently store your login information.” There are several on the market, some available for free and some with a fee. Search “password manager” in your browser for suggestions.
Tip #3: Monitor Your Credit File
Many of us probably think that the biggest threat to our credit card data is that someone will misuse our existing card. But according to Daly, the theft of actual credit card info only accounted for less than 10 percent of overall credit card fraud in 2021.
“Far more common is new account fraud,” he writes, “when an identity thief uses your personal information to open an entirely new credit card. This is one of the reasons why it’s so important to review the activity on your credit file regularly. If you see an account you don’t recognize, you can report it as fraud right away.”
He adds, “You can see activity on your credit file and get alerts about new activity with a credit monitoring service. There are several credit card companies with free identity theft protection, so check if yours offers this. Make sure you also get a free credit report at least once per year to see all the data the credit bureaus have on file for you.” We also recommend freezing your credit bureau accounts (see below).
Tip #4: Never Open Those Suspicious Email Links
“Another popular way bad actors steal information is URL phishing,” Daly writes. “Here’s how this works: Scammers create a website impersonating a major company, such as a bank or online store. Next, they send you a link to that website, normally in an email or text message from an unfamiliar number. The message might say, for example, that you need to click the link to confirm information in your bank account or to take advantage of a limited-time sale.”
A common variation on this is the so-called FedEx tracking link, alerting you to a shipment the email claims you were expecting. When you click the link to find out what’s up, the cycle of identity theft begins.
What happens if you click the link? You guessed it: the scammers may ask you to fill out a form or talk to “customer service,” then steal any information you’ve provided. “For this reason,” Daly warns, “don’t visit any links if you’re not completely sure of the sender.”
Tip #5: Safeguard Your Important Documents
Where you store your important papers matters, especially ones that contain sensitive information. “Ideally, these should go in a locked cabinet or safe,” Daly writes. “Although no form of protection is 100 percent secure, keeping documents locked away makes them much harder to steal.”
One of the most important documents is your Social Security card. Daly advises, “Don’t make the mistake of carrying it around in your wallet, since this could be lost or stolen. Your Social Security number is a key piece of information, and if anyone gets access to it, they could open accounts in your name.”
Tip #6: Freeze Your Credit and Set Up a Fraud Alert
“There are a couple of anti-fraud measures consumers can take with their credit reports,” Daly writes. “You could place a fraud alert at the three major credit bureaus. When a creditor checks your credit, it will see this alert. It instructs the creditor to take additional steps to verify your identity, such as calling you at a phone number you provide in the alert.”
Another thing you can do is set up a credit freeze with the credit bureaus. “Once a credit freeze is in place, the credit bureau won’t share your information with anyone,” Daly explains. “This prevents anyone from opening a new account in your name. Note that you will need to at least temporarily lift the freeze if you want to open any new credit cards or loans yourself.”
In the end, Daly’s message is clear: “Taking the right preventative measures, like protecting sensitive information and using strong passwords, is often enough to avoid identity theft entirely.”
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(originally reported at www.fool.com)