Identity theft affects millions, costs billions, and is a nightmare to sort out. But you can get protection – and it's free.
Earlier this year, I was a victim of identity theft. Nearly $500 was sucked out of my bank account by a Chinese business I had never heard of.
My bank restored the money, but I still don’t know how it happened. Many aren’t even that lucky. The Federal Trade Commission estimates there are as many as nine million victims every year. A quarter million of them complain to the FTC every year – it’s been the top consumer complaint for 12 years running. And it can take a long time to sort out.
For instance, the U.S. Treasury says 641,052 taxpayers were defrauded in 2011, and it concluded, “The IRS is not effectively providing assistance to victims of identity theft… Cases are not worked timely and can take more than a year to resolve.” (Can you imagine waiting more than a year for your tax refund?)
So what can you do? A lot. In the video below, Money Talks News founder Stacy Johnson explains a free, five-minute way to protect yourself from identity theft. Check it out, then read on for more details…
As you heard Stacy explain, there are many companies looking to help consumers protect their identities – for a price. You could pay some heavily advertised service $10 to $25 a month, or you can do what Stacy recommended in the video and use these strategies…
1. Add a fraud alert
A fraud alert placed on your credit file lasts 90 days. It requires potential creditors to use what the law refers to as “reasonable policies and procedures” to verify your identity before issuing credit in your name.
You sign up by filling out a quick form online. Your request is then sent to all three credit reporting agencies: Equifax, Experian, and TransUnion.
You’re only supposed to use a fraud alert if you think your information may have been compromised. According to the FTC…
You may ask that an initial fraud alert be placed on your credit report if you suspect you have been, or are about to be, a victim of identity theft. An initial alert is appropriate if your wallet has been stolen or if you’ve been taken in by a “phishing” scam.
But with the ongoing theft of millions of credit card numbers, every American should feel justified in feeling they have been – or could become – a victim of identity theft. For example, in just one instance beginning in 2007, hackers stole more than 130 million credit card numbers.
As Stacy mentioned in the video, establishing a fraud alert is quick and easy, but it needs to be renewed every 90 days. Worried you’ll forget? Money Talks News will remind you for free. Sign up for our newsletter (also free), and we’ll send you an automatic reminder every three months with a link to the form.
If you’ve already been a victim of identity theft, you can get an extended fraud alert by mailing a form, along with several identifying documents and a police report.
While fraud alerts are useful, they’re not ironclad. While they’ll protect you from someone opening new credit in your name, they won’t help if a crook has your existing credit card. They also can’t prevent someone from opening accounts that don’t require a credit check – like a bank account.
2. Get a credit freeze
More secure than a fraud alert is a freeze on your credit altogether. This prevents anyone – including you – from opening a new line of credit until you remove it, a process that can take several days.
It’s not for everyone, and in some cases, it may not be free. It’s generally free for ID theft victims, but policies and fees vary by state. You can learn more about state credit freeze rules at the Consumers Union site. And take note that the freeze won’t protect your file from people who already have access to it – just new requesters.
3. Watch your credit
Identity theft protection packages often add a “credit monitoring service.” But you can already check your credit report for free once a year from each of the big three credit reporting agencies – just go to AnnualCreditReport.com.
Although reports are different from each company, they’ll mostly contain the same info. So check throughout the year by staggering them. You could space them out evenly at four months apart, or align them with your three-month fraud alert renewals so you remember to do both.
4. Guard your privacy
Many people put way too much personal information online, and criminals can often find ways to use it to their advantage (including to help “recover” your passwords). Understand the privacy settings on all your accounts, don’t use the same password for everything, and don’t browse sensitive sites on public Wi-Fi.
Offline, shred mail with personal identifiers, especially anything with an account number. Opt out of junk mail by going to OptOutPreScreen.com or calling 1-888-5-OPTOUT (1-888-567-8688) to have your name removed from direct marketing lists. That won’t get rid of everything, but it’ll make a serious dent.
Lastly, don’t give out or “confirm” personal information through unsolicited contact. Scammers pretend to be people you do business with. If you’re contacted about a supposed problem with an account, independently look up contact information for that company to avoid fake email addresses and phone numbers.
5. Spend securely
Online shopping is convenient and gives a lot of independent retailers the chance to be competitive. But make sure they’re taking the precautions you’d expect with your financial details. Research companies you’re not familiar with, and look for the “https://” (note the s, for secure) protocol in front of a website address in your browser. It will often appear with a lock symbol next to it. If the merchant doesn’t use HTTPS, see if they have a secure checkout option such as Paypal.
6. Study statements
Along with your credit report, you should take a regular look at your bank and credit card accounts to spot any unusual transactions. It used to be that this was only possible monthly. Now the Internet and smartphones make it easy to do as often as you want.
I do it every other day – in fact, that’s how I discovered someone in China was raiding my checking account.