How to Prevent Identity Theft - What You Must Know

Identity theft and identity fraud are both terms used to describe a crime where one person wrongfully uses another person's personal information for illicit gain.

The identity thief may be interested in gaining access to financial accounts, setting up fraudulent credit accounts using another person's credit information, using an individual's information to skirt employment background checks or commit medical fraud, to make purchases or use services, and in some cases, to assume another person's identity completely.

Identity theft is one of the fastest growing white collar crimes. In fact, ten percent of all American consumers have already been victimized by identity theft---43% of those crimes resulting from stolen wallets, purses, and paperwork. According to a 2009 study conducted by the Javelin Strategy and Research Group:

• 11% were victims of online identity theft
• 38% of identity theft victims had a debit or credit card number stolen
• 37% were victims of social security number identity theft
• 36% of Identity theft victims had their name and phone number compromised
• 24% of identity theft victims had their financial account numbers compromised
• 7% of identity theft victims had their medical information stolen
• 59% of 2008 new account fraud involved opening up a new credit card account

The best tool for stopping identity theft is to first understand the methods that an identity thief uses to obtain the information needed to commit identity fraud.

Once you know how they do it, then you can take practical steps to prevent identity theft.

• Many identity thieves use a technique known as "shoulder surfing." As the name implies, this is an observational crime that is most often committed in crowded places. The thief will loiter near areas where individuals are filling out forms, entering pin numbers, account numbers, or credit card numbers over the phone or on keypads. They look over shoulders, eavesdrop and observe the victim in order to obtain information to commit all manner of crimes.
• Another technique used by the identity thief is known as "dumpster diving." The identity thief is looking for all manner of documents including checks, bank statements, credit card statements, insurance forms, tax returns, etc. They pick through trash cans outside of homes at night and some will pick through personal waste bins in an office environment.
• Many identity thieves use a variation on dumpster diving known as "mail theft". Sometimes, they will even attempt to re-route mail to another address. They are either attempting to steal information or cover up a the fact that they have already committed a crime, IE: setting up a false credit account. Part of their success depends on keeping the crime hidden while they use the accounts.
• The technique used by the identity thief to commit online identity theft is known as "phishing". In this type of crime, the identity thief will attempt to trick the victim into entering sensitive information into a website which they route the victim to through deceptive emails or instant messages.

Here are some identity theft precautions you can use to protect from identity theft:

1. Don't give out personal information unless you absolutely trust the individual or institution that is requesting it. The sad reality is that 43% of identity theft victims knew the person that perpetrated the crime. If, for example, you receive a phone call from a person claiming to work at your bank requesting that you verify information, ask them for their name and their branch, then hang up and call the bank and ask for that individual.

2. Never answer questions or provide personal information as a response to any email requests---even if it appears to come from a source that you trust like your bank or credit card company. This technique is known as phishing, and this kind of identity thief is very computer savvy. At first glance, the email will appear very realistic, but take a look at the sample phishing email I've created for you in the box above. These emails are usually pretty sophisticated in that the logo will look much like your bank's logo and the email will always contain a link that the email will claim is secure. If you click the link, you will be redirected to a website that will also look astonishingly similar to that of your bank. Upon closer scrutiny however, you will notice that the website is not secure (the web address will begin with http instead of https) and the bank or credit card name will be slightly misspelled in the link. Also notice that they don't contain any specific information about your account. That's because they don't have it---they want you to give it to them. Don't ever respond to one of these. Instead, pick up the phone and call your bank or credit card company directly and ask them if they sent the email.

3. Shred all documents before putting them in the trash. This will include credit card solicitations, medical bills, insurance documents, utility bills, bank statements, expired credit cards, old tax returns, cancelled checks, checks for defunct bank accounts. Shred everything. It is surprising the ways an identity thief can find to use these bits of information. So, while a person intent on committing identity fraud might be resourceful, they are also lazy or they would get a real job. If they are faced with piecing together zillions of little pieces of paper, they will most likely move on to another trash can.

4. You are entitled to one free copy of your credit report every year. You should request a copy at least once a year, and review it carefully to find out if someone has opened new accounts or taken out loans using your credit. To request a copy of your free credit report, you can contact one of the three major credit bureaus by calling the phone numbers below:

• Equifax 1-800-685-1111
• Experian 1-888-397-3742
• Trans Union 1-800-916-8800

5. Install a locking mailbox like the one in the picture. Do not leave your mail in the mailbox overnight or while away on vacation. Instead, have it placed on hold at the post office.

6. Do not write your PIN#s on your debit/credit cards, and do not carry PIN#s in your wallet or purse.

7. Limit the number of credit and debit cards you carry in your wallet and purse.

8. Be conscious of people around you when you are filling out forms, entering information on a keypad or phone, or discussing accounts via phone. Move to an isolated spot when possible. Block your information with your hand if you are standing at a fixed location like an ATM.

9. Reconcile your credit cards and bank statements every month to be sure that the only activity on them is yours. Many banks and credit card companies offer security features that notify you if activity occurs that fall outside of established parameters, IE: transactions that exceed a certain amount, or transactions that occur out of the country. You should definitely take the time to establish these parameters.

10. Don't be gullible. Here is a small sampling of the identity theft activity that occurred in 2009. Don't assume that your information is safe.

• Ohio State University, 350 victims, Email exposure of Student Soc.Sec.#'s
• Maine Department of Labor, 600 victims, Mail exposure
• Beneficial/HSBC, More than 80 victims, Loan documents in trash
• Aetna, 65,000 victims, Web site breach

11. Don't enter sensitive information into non-secured websites. One way to tell if a site is secure is by checking the web address. It will have an "s" following the http. If you are following a link to a website, pay attention to the bottom left of side of your screen. Most Internet service providers will provide the actual address you are being routed to.

If you believe you are the victim of identity theft, then you will want to act immediately. Your ability to stop and repair the damage decreases with every day. Statistically, between 38 and 48% of victims discover that someone has stolen their identity within the first three months. Between 9 and 18% of victims don't learn that their identity has been stolen for four or more years.

In addition to notifying the 3 major credit agencies I listed for you above, you will also want to contact the Federal Trade Commission by calling this toll free number: 1-877-ID THEFT (877-438-4338) or TDD at 202-326-2502.

You will want to contact all of your credit account and banks immediately.

If you suspect you are the victim of social security number fraud, contact the Social Security Administration by calling 800-269-0271.

If you suspect someone is using your Tax ID number or social security number in connection with tax violations, call the Internal Revenue Service at 800-829-0433.