Identity theft is a rising concern in the U.S. In fact, one 2020 survey of more than 8,500 adult American consumers found that nearly half of participants suffered from financial identity theft. Unfortunately, our increasing reliance on digital platforms and systems means that reports of identity theft are likely only going to grow.
As a consumer, what can you do to protect yourself from the devastating consequences of identity theft? Fortunately, taking some simple steps can increase your protection significantly. To help you prevent identity theft from happening to you, we’ve put together a comprehensive guide on how to avoid becoming a victim of identity theft.
What is Identity Theft?
Identity theft occurs when someone steals your personal identifying information (PII) and uses it to commit fraud. An identity thief may steal personal information such as your legal name, your birthdate, your address, your Social Security number or another identifying number, your credit card or bank account numbers, your physical checks, and more.
Once they have your PII, identity thieves use this information to take money from you, open credit cards, take out loans in your name, file false tax returns, make phony health insurance claims, and more — sometimes unbeknownst to you. They often don’t need all your PII to start devastating your finances, but the more they have, the more damage they can do.
Identity theft cases have risen alarmingly over the past two decades. In 2001, there were 330,000 reports of identity theft and fraud. In 2021, this number rose to 5,700,000. Furthermore, there has already been a 70% increase in reports of identity theft and fraud from 2020 to 2021.
Perhaps the worst part about identity theft is that it can take months before you even discover it’s happened to you. This lead time leaves plenty of time for identity thieves to wreak financial havoc on you. They can run up credit card balances, rack up medical bills, and even take out mortgages in your name.
Preventing identity theft is much easier than recovering from it, so keep reading to learn how to avoid becoming a victim in the first place.
Who Is at Risk of Identity Theft?
The truth is, anyone can become a victim of identity theft. However, some populations are more susceptible than others. Identity thieves often target vulnerable populations because they know they have a greater chance of successfully stealing personal information and money from them.
Among the most vulnerable groups are the elderly, who typically aren’t as technologically savvy as an identity thief. For this reason, elderly individuals may have a harder time recognizing a scam. Additionally, widow(er)s and divorcé(e)s are common targets for identity theft. Individuals experiencing grief and loneliness may be distracted or scared, and as a result more likely to share their information with an unknown perpetrator.
However, targeting certain age demographics certainly isn’t the only way identity thieves steal personal information. For instance, scholarship scams target college students and their parents by presenting them with phony scholarship applications. Unsuspecting applicants enter their names, addresses, Social Security numbers, and more in the hopes of receiving money for school, not realizing they’re handing over their information to a thief.
Likewise, recent changes to the workplace have provided identity thieves with opportunities to post fraudulent job applications for work-from-home positions. Like scholarship applicants, eager job searchers fill in personal information without realizing the ‘job’ they’re applying for doesn’t actually exist.
Furthermore, scam activity increases during certain times of the year. The holiday season in particular is a time of high scam activity. Social media gift exchanges, the explosion of online shopping, and increased charitable giving during this time of year make it especially easy for identity thieves to trick people into sharing their PII.
All this to say — identity theft is very common. While we often think of elderly people as being the most common victims of identity theft, they are not always the ones targeted. Identity thieves are shrewd and calculating and can steal personal information from even the savviest of consumers.
How Identity Thieves Steal Your Information
Understanding how identity thieves get your information is one of the best tools to avoid becoming a victim of identity theft.
Some identity thieves steal information in person. They may look over your shoulder as you’re entering your personal identification number (PIN) into the ATM. They may listen in on your phone conversation as you’re reading your credit card number to your daughter. They may take your wallet out of your jacket pocket. Or they may might even steal mail from your mailbox.
But more commonly, identity thieves trick people into sharing their personal information online. These are some of the most common ways identity thieves can get ahold of your information digitally:
- Phishing, smishing, and vishing
- Pharming and fake websites
- Impersonation scams
What is phishing?
Phishing happens when scammers send emails that trick their victims into responding with personal or financial information. Oftentimes, these emails will appear to come from a trusted source.
For example, a phisher may send an email to your work email address pretending to be your boss. Your ‘boss’ asks for your credit card number to help them out of a jam. If you look closely at the sender’s address, you’d see that the email was not actually from your boss, but from a thief trying to fool you into giving them your credit card number.
Smishing and vishing are similar to phishing. While phishing refers to email fraud, smishing refers to text message (or SMS) fraud. Vishing refers to verification fraud, which means that scammers will pose as a trusted source—such as your credit union—calling to verify your identity or information through the phone.
What is pharming?
Pharming is similar to phishing, but it targets a large number of victims rather than one individual. This method tricks unsuspecting email or text message recipients into clicking on a link that resembles a familiar website, such as your credit union website.
Once you reach the website, you’re invited to log in to your account. But when you input your credentials, you’ve just given the ‘pharmer’ your user ID and password. Now they can use them to log in to your account.
If you’re one of the 68% of Americans who use the same password across accounts, you’ve just potentially compromised dozens of your online accounts — bank accounts, credit card accounts, social media accounts, email accounts, you name it.
How do impersonation scams work?
Impersonation scams occur when identity thieves pose as a person you know, trust, or recognize to get personal or financial information from you.
Recognize the Signs of Identity Theft Before It’s Too Late
If you want to know how to avoid becoming a victim of identity theft, recognizing the signs is one of the most important steps you can take. The longer identity theft goes undetected, the more difficult it can be to recover from. Spotting identity theft early on can save you time, money, and stress.
Below are 11 common signs of identity theft. Catching these signs early may help you avoid the worst effects of identity theft scams.
- You notice unfamiliar transactions on your checking account or credit card statement
- You’re receiving medical bills from an unfamiliar doctor
- You’re wrongfully denied health insurance claims due to exhausting your benefits
- You’re missing mail — especially statements from your bank or credit card company
- You receive a notice from the USPS that your mail is being forwarded
- You’re receiving calls from collections agencies on debts that aren’t yours
- You receive a notice from the IRS that your tax return has already been filed or that you’ve filed multiple returns
- You receive a notification from a company you do business with that your information has been affected by a data breach
- There are unexplained changes in your credit score
- You’re denied an application for a credit card or loan
- You notice unfamiliar accounts on your credit report
By staying alert to the signs of identity theft, you make an identity thief’s job that much harder. Being aware of the signs early on prevents them from doing too much damage to your financial situation and helps you get a hard start on fixing any problems they’ve caused.
Tips to Prevent Identity Theft: Take the Proper Precautions
The best way to avoid identity theft scams is to take precautions against them before a thief has the chance to target you. Identity thieves target a huge number of people for their crimes, in hopes of an increased chance of success. If you’re not an easy target, they’ll likely move on to the next victim.
Here are our top 8 tips for how to avoid identity theft scams:
- Use strong passwords and personal identification numbers (PINs)
- Set up 2-factor authentication
- Protect important card numbers and PINs
- Review your credit reports often
- Review your transaction history at least once per month
- Shred important papers before disposing of them
- Be cautious about providing personal information over the phone
- Set up Identity Theft Protection
1. Use strong passwords and personal identification numbers (PINs)
More than half of the internet-using population uses the same passwords across accounts. This is very dangerous. If an identity thief is able to get your login information for one account—through a phishing scam or a data breach, for example—they can input your user ID and password into whatever websites they want thereafter. More often than not, they’ll find a match.
The same goes for personal identification numbers. You should plan to use different PINs for every card or device you own. Additionally, use PINs that aren’t easily guessable. For example, avoid using birthdays, anniversaries, and the last four digits of your Social Security number.
Because it can be difficult to keep track of different passwords and PINs for every internet account you have—you probably have hundreds—plan to use an online password manager or secure storage device to keep track of your login information and passwords.
2. Set up two-factor authentication
Two-factor authentication (TFA) offers an extra layer of security to your online accounts. When you log in to an account with your username and password, you are required to provide an additional piece of evidence to prove that you are who you say you are. For example, you may need to answer security questions about yourself or receive a one-time login code that’s sent to you by text or email.
TFA is especially important for high-value accounts like online banking, credit card accounts, and social media profiles. To set up TFA on your accounts, go to your account settings and search for two-factor authentication options under the privacy and security settings.
3. Protect important cards and PINs
This might go without saying, but it’s important to keep your cards with personal identifying information safe. This goes for debit cards, credit cards, and even Social Security cards. It is recommend to only keep one or two debit/credit cards in your wallet at a time—whichever cards you use most often. If your wallet gets stolen, only one or two of your accounts will be at risk.
Most financial institutions offer security features on debit and cards that send you alerts when your card is used to make purchases over a set amount, a transaction is attempted overseas, and more. Check to ensure you’re signed up for card alerts.
Likewise, protect your PINs. Cover the keypad when you’re entering your PIN in public to prevent prying eyes from stealing your information. Use different PINs for different accounts and logins. And, avoid using easily guessable PINs, such as birth dates, anniversary dates, addresses, or the last four digits of your Social Security number.
Finally, don’t make a habit of carrying your Social Security card in your wallet. There are few times in your life when you’ll actually need your physical Social Security card, so it doesn’t make sense to keep it in a wallet that might get lost or stolen. Ideally, you should keep your Social Security card locked in a safe at home with other important documents.
4. Review your credit reports often
Your credit reports show your open credit accounts — as well as closed accounts — for up to 10 years. Checking your credit reports often can ensure that you know if someone has opened a credit account illegally on your behalf.
You can request your credit reports from each of the three U.S. credit reporting agencies annually at no charge. Although you can request all three of your credit reports at the same time, it is recommended to request one at a time every four months or so. This allows you to monitor your credit activity more frequently throughout the year (for free).
If you notice any errors or inaccurate information, you can dispute them with the credit reporting agency. Get started by requesting your free credit reports from AnnualCreditReport.com.
5. Review your transaction history at least once a month
Reviewing your transaction history is another good way to spot identity theft early on. By reviewing your account and credit card statements frequently, you’ll catch unfamiliar activity before the identity thief can steal too much from you.
The moment you notice fraudulent transactions, contact your bank or credit card company to dispute the transactions. If you wait too long to report fraudulent activity, they may not be able to help.
Note — thieves will often start with a few small transactions to test whether or not you’ll notice if they’re using your information fraudulently. This means you’ll want to review your statements with in a detailed manner.
6. Shred important papers before disposing of them
Identity theft commonly occurs when thieves steal physical documents — and there’s no better place to get personal identifying information than from the garbage can. Make sure to shred important documents before you throw them away. Documents you’ll want to shred include:
Savings/checking account statementsCredit card statementsMortgage statementsOffers for new credit cardsUtility billsExpired identification cards such as passports and driver’s licensesMedical bills
This list isn’t exhaustive. Any documents that contain personal identifying information should go through the shredder before they end up in the garbage can.
7. Be cautious about providing personal information over the phone
Never provide personal, financial, or verification information over the phone to someone who has called you. (Remember, this is called vishing.) Only provide this information if you’re the one who initiated the call.
8. Set up identity theft protection
Identity theft protection can streamline your prevention efforts. While not all identity theft protection services are created equal, many of them provide similar features. Some of these features include monitoring your accounts on your behalf and placing freezes or fraud alerts on your credit reports.
At Lafayette Federal, we offer two tiers of Identity Theft Protection to our members for as little as $1.99 per month. Our identity theft protection services provide access to expert Certified Resolution Specialists, internet and credit monitoring, full restoration services if you become a victim of identity theft, and more.
Practice Caution to Avoid Becoming a Victim of Identity Theft
The best way to prevent identity theft is to be vigilant and take simple steps to secure your information before it gets stolen. Monitoring your credit reports and account statements, enrolling in two-factor authentication, and subscribing to an Identity Theft Protection service are fast and simple ways to protect yourself from identity theft.
Don’t wait for the worst to happen. Take action to prevent yourself from becoming a victim of identity theft today.
Partner With a Trusted Financial Advocate Like Lafayette Federal
At Lafayette Federal Credit Union, we know that the rise of identity theft puts more and more people at risk of financial fraud every day. We care about our members’ financial safety, and our team members are trained to help you spot potential scams or abuse that could harm your financial wellbeing.
If you have concerns or believe you may be a victim, don’t be afraid to ask questions. Come into a branch or learn more about protecting your identity online at Lafayette Federal.