How to Protect Yourself from Identity Theft
Identity theft has become increasingly common as people spend more of their lives online. Unfortunately, simple day-to-day things like checking your credit card balance or logging into your favorite coffee shop’s Wi-Fi can make you vulnerable.
There are, however, ways to keep yourself safe. Read on to learn how to protect yourself from identity theft and what to do if your personal information ever gets stolen.
Table of Contents
What is identity theft?
Identity theft, also known as identity fraud, happens when someone gains access to your personal data — like your driver’s license, social security number, phone number, birthdate and bank statements.
The scammer can then use the information to drain your financial accounts, open new ones, file a tax return before you do and receive your refund, or submit health insurance claims, to name just a few examples.
Many people become victims after their identifying information or login credentials are exposed in a data breach. In data breaches, hackers illegally access a company’s database and steal sensitive information from employees or customers; they can then use the stolen information to commit ID theft or sell it to others on the dark web.
It’s also quite common for criminals to deceive people by sending phishing emails, text messages or phone calls while impersonating a legitimate company — such as a bank, online store, social media site or streaming service. They might tell you there’s an issue with one of your accounts, or push products and services, tricking you into clicking a malicious link or giving them personal information.
Types of identity theft
Identity thieves can use stolen information in several ways:
Financial identity theft
Financial identity theft refers to instances when a person gains illegal access to your data and uses it for financial gain. For example, a scammer might apply for a new credit card or loan, open a bank account or use your debit card to make an unauthorized purchase.
Employment identity theft
This happens when a person uses your Social Security number or other personal information in order to obtain employment. This can happen when that individual has a criminal record or a poor work history and is trying to pass a background check or meet the employment requirements.
Medical identity theft
In medical identity theft, an unauthorized person might use your information to obtain health care services or to fill out fraudulent insurance claims. A health care provider may also commit this type of fraud by submitting a claim through your insurance for procedures they never performed. In certain circumstances, this may lead to the criminal’s and the victim’s health records getting mixed up, leading to misdiagnosis or inadequate treatment.
Account takeover fraud
Account takeover fraud, or credential theft, happens when someone gains access to one of your financial, social media or other account. The person then makes unauthorized transactions like withdrawing money, opening a credit card or contacting your social media friends for money. They could also gather more information to access other accounts.
Tax identity theft
Tax identity theft happens when a someone uses your information to file a fraudulent tax return and collect the refund before you do. Most people realize they’re victims of this fraud when the Internal Revenue Service (IRS) notifies them that more than one tax return was filed using their Social Security number.
Synthetic identity theft
Synthetic identity theft involves criminals combining real and fake information to create an entirely new identity — for instance, someone’s real Social Security number but combined with a made-up name, date of birth and address. It’s also possible for identity thieves to fuse factual information from multiple people to create a new identity.
In most cases, victims of ID theft can spot scams early on by checking their credit report regularly for suspicious activity. However, with this type of fraud, credit reporting agencies could potentially generate a new credit report for the fake identity. Lenders then report accounts or loans applied for with the fraudulent identity to the new report, making it harder for victims to realize someone misused their information.
Child identity theft
Children are also at risk of ID theft. Scammers may obtain your child’s information from school or medical documents and use it to get a credit card or request government benefits, for instance. The individual often doesn’t realize they’ve been a victim of identity theft until they’re old enough to apply for a job or open a bank and get denied due to bad credit or employment history.
Criminal identity theft
Criminal identity theft involves a person providing your information (instead of their own) to law enforcement officials when being questioned or arrested. This is a rare circumstance, but it might lead to a warrant or a criminal record in your name.
How to prevent identity theft
Preventing identity theft may not be entirely possible since most people’s private and financial information is stored and shared digitally. Once you share your information with a company or government entity, it’s their responsibility to keep it safe from cybercriminals.
Although there aren’t any guaranteed ways to prevent identity theft, there are some steps you can take to minimize your risk or catch it early on:
Secure your Social Security card and other sensitive documents
Don’t carry your Social Security card, birth certificate and passport in your purse, wallet or car unless necessary. Whenever you do, don’t leave the documents unattended. At home, consider keeping the documents in a safe in case there’s a burglary.
Don’t share sensitive information unless absolutely necessary
Don’t share your Social Security number, debit card pins, driver’s license, birthdate and other sensitive information through phone calls, text messages, email or social media. If you receive a phone call or email from a bank or other financial institution, make sure their contact information is valid before sharing any details.
For example, check the sender’s full address if you receive an email from your bank requesting information under the pretext of updating your account. A scammer’s email will usually include an extra letter, number or word when compared to the email of the legitimate company. The body of the email might have typos and other grammatical errors as well.
If you receive this type of e-mail, even if it seems legitimate, it’s best to go directly to your account’s website yourself, instead of clicking on any links provided in the message.
Also, keep in mind that government agencies like the IRS, for example, will never contact you by calling or texting to request personal information or threaten legal action against you.
Review your credit report regularly
You have the right to an annual credit report from each of the major credit bureaus — Equifax, Experian and TransUnion. However, due to the financial hardships the Covid-19 pandemic has brought for many people, free credit reports will be available weekly until April 20, 2022. You can request your free copy through AnnualCreditReport.com.
Take advantage of credit freezes and fraud alerts
A credit freeze prevents new accounts from being opened in your name until you lift the freeze. Credit bureaus will provide you with a unique PIN or password you can use to unfreeze your report as needed. If you’re interested in this option, make sure to read our step-by-step guide on how to freeze credit.
You should also consider setting up a fraud alert with each credit reporting agency. These alerts require creditors to contact you (usually by phone) and verify your identity before opening new credit lines or accounts in your name.
Both credit freeze and fraud alerts are free, and can be set up simultaneously.
Monitor monthly bills
Check your credit card and bank statements for unauthorized charges. If you do spot any suspicious activity, contact your bank or credit card company immediately. They may stop the fraudulent transaction, cancel the compromised account, and prevent damage to your credit.
Use strong passwords and a password manager
Avoid using sequential letters and numbers (“1234” or “abcd”) and personal information in your passwords. Instead, use a strong password that includes 12 characters or more and combines random numbers, symbols and letters (uppercase and lowercase).
Also, it’s crucial never to reuse passwords across your accounts. If hackers acquire a reused password in a data breach, it could give them access to all accounts sharing the same login credentials.
Most people find that coming up with dozens of unique passwords and remembering them can be a hassle. If that’s the case, a password manager software could help — these programs generate passwords for you and store them in encrypted formats that are almost impossible to decipher.
Set up an IRS PIN
An IRS PIN (also known as an Identity Protection PIN) is a six-digit number assigned to taxpayers that helps prevent someone from using your information to file a fraudulent tax return. The IRS won’t accept tax forms in your name unless the code is provided as well. You can request your PIN from the IRS website.
Enable two-step authentication
Two-step authentication (also called two-factor verification or 2FA) provides an extra security safeguard to your usual password. When enabled, it requires you to enter a code after you input your password. The code changes each time and you’ll receive it either through an email, call or text message. If someone tries to access your account, they won’t be able to without the one-time code.
Install an antivirus software
Identity thieves may try to breach your Wi-Fi network, computer or smartphone if they’re not secured. An antivirus software can detect and remove malicious software (malware) designed to to steal data. This software also scans emails attachments, apps and other downloaded files for potential viruses.
Consider using a virtual private network (VPN)
Public Wi-Fi networks can be risky as they generally offer little protection and hackers could intercept your online activity. A virtual private network (VPN) can protect your sensitive information as you surf the web in your favorite coffee shop or library, for example. When you connect to a VPN, the software encrypts and shields your mobile device’s online activity.
Shred important documents
Some identity thieves still rely on old-fashioned methods such as dumpster diving for credit card and loan offers, bank account statements, utility bills or medical bills. You should shred every document containing personal information before disposing of them. Consider buying a paper shredder since a scammer may reconstruct a manually ripped paper.
Collect your mail daily
Fraudsters may steal your mail to get your name, date of birth, email address, phone number and other identifying information. Collect your mail every day and if you’re going on vacation, contact your local post office to place up to a 30-day hold on your mail. You can make the request online at USPS.com.
What are the signs of identity theft?
Here are some warning signs that your identity might be compromised:
- You get calls or letters from debt collection agencies related to accounts you didn’t open.
- Your credit score suddenly drops even though you barely use your cards and pay your bills on time.
- There are unauthorized transactions in your bank or credit card statement.
- Your credit report has inaccurate information such as credit accounts that don’t belong, tax liens, bankruptcies or employment history that doesn’t match yours.
- You receive a notice from your health insurance listing prescriptions or procedures you didn’t receive.
- The IRS notifies you that it received your tax return, but you didn’t file it
- You receive tax documents from an unfamiliar employer.
How to check if someone is using your identity
In most cases, people discover they’re a victim of identity theft once scammers have already used their information to apply for services or benefits. To find out if fraudsters have used your data illegally, you can:
- Review your monthly bills for unauthorized withdrawals or purchases.
- Keep track of your credit score and report for unusual changes.
- Sign up for a monthly credit monitoring service.
- Subscribe to an identity theft protection service.
Identity theft protection
To protect yourself from ID theft, you should learn how to identify scams and how to protect yourself online. However, you may always be at risk of potential data breaches once you share identifying information online with third parties.
If you find it challenging to keep track of your online accounts and credit files, you should consider subscribing to an identity theft protection service.
What are identity theft protection services?
Identity theft protection services monitor your personal and financial information across the internet and notify you if it’s exposed in a data breach or used suspiciously.
If you become a victim of ID theft, these companies may help you restore your identity or fix your credit history. They’ll contact credit bureaus and creditors on your behalf to dispute inaccurate information and notify law enforcement. Their services sometimes also include fraud insurance which can help you cover out-of-pocket expenses such as legal fees related to the process of recovering your identity.
Here’s Money’s list of the best identity theft protection services if you’d like to learn more about their features and benefits.
How to report identity theft
ID theft victims should report the incident to the Federal Trade Commission (FTC) online at IdentityTheft.gov or by phone at 1-877-438-4338. We recommend filing the report online as you’ll get a step-by-step recovery plan and access to pre-written dispute letters for lenders and credit bureaus. You’ll also get to track your ID recovery progress.
Filing a police report is also advisable since some lenders might ask for it before closing fraudulent accounts. If your information was stolen online, file an additional complaint with the FBI’s Internet Crime Complaint Center (IC3).
To prevent further damage to your credit history, contact Transunion, Experian and Equifax to notify them of the crime through phone or mail at:
Fraud Victim Assistance Department
P.O. Box 2000 Chester, PA 19016-2000
Equifax Credit Information Services
Fraud Victim Assistance Department
Consumer Fraud Division P.O. Box 740256
Atlanta, GA 30374
National Consumer Assistance
P.O. Box 9554
Allen, TX 75013
How to recover from identity theft
If a criminal used your personal and financial information to make purchases, get benefits, file taxes, or commit fraud, these are the steps you should take:
- Report the fraud to the Federal Trade Commission (FTC) at IdentityTheft.gov and file a police report with your local law enforcement agency.
- Contact banks or creditors to inform them of the fraud and close compromised accounts.
- Request a copy of your credit report from Transunion, Experian and Equifax through AnnualCreditReport.com.
- Review your credit report routinely to make sure new accounts aren’t opened in your name.
- Place a security freeze and fraud alert on your credit report.
- Write letters to the credit bureaus explaining the situation and include a copy of your ID theft report and proof of your identity.
- Update passwords on all your accounts and consider getting a password manager.
- Consider an identity theft protection service or credit monitoring plan.
- Read up on cybersecurity safety and how to protect yourself from becoming a victim of other scams.
How to Protect Yourself from Identity Theft FAQ
How does identity theft happen?
Scammers may steal your personal or information through a data breach, phishing email, phone scams or by hacking your mobile device using an unsecured wireless network. Others might steal your wallet or purse or dig through your mail and trash for documents that include your name, phone number, home and email address or account numbers.
Phishing scams trick people into sharing private information or clicking malicious links with emails or text messages that look like they’re from legitimate companies such as banks, online stores, social media sites or streaming services.
The messages usually urge people to download an attachment or take action regarding a blocked account or outdated payment information. Once you click on the link or attachment provided, you’ll download malware or get redirected to a website designed to steal your information.
How do I know if my identity has been stolen?
Check your monthly bills for unauthorized transactions and your credit report for new accounts you don’t recognize. Be wary of unexpected changes in your credit score and missing mail. Another warning sign is receiving a notice from the Internal Revenue Service (IRS) or the Social Security Agency (SSA) regarding tax returns or government benefits you didn’t request.
What do you do if someone steals your identity?
If someone steals your identity, report it to the Federal Trade Commission (FTC) online at IdentityTheft.gov or by phone at 1-877-438-4338. You should also file a police report with local law enforcement and notify your bank, credit card issuers and the main credit bureaus — Transunion, Experian and Equifax.
What can you do to protect yourself from identity theft?
There isn’t a fail-safe way to prevent identity theft. However, you can reduce your risk by reviewing your bank account statement, monthly credit card bills and credit report frequently. You can also set up a credit freeze and fraud alert, install antivirus software on computers and smartphones and use strong, unique passwords for each of your accounts. Don’t forget to shred sensitive documents before tossing them and to leave your Social Security card and passport at home, preferably in a safe.
Summary of How to Protect Yourself from Identity Theft
- Identity theft is a crime that involves someone stealing and using your information (such as your name, date of birth, or Social Security number) to commit fraud.
- Some signs of identity theft include sudden credit score drops, bills for accounts you don’t recognize, notices from your health insurance mentioning procedures you didn’t receive, among others.
- There isn’t a foolproof way to prevent identity theft. However, reviewing your credit report and bank statements regularly, using strong passwords and storing your Social Security card safely are some steps that may minimize your risk.
- Other measures to consider include investing in a password manager, security freezes and/or fraud alerts on your credit report and hiring an identity theft protection company.
- If you’ve already been a victim of identity theft, you should report the crime to the Federal Trade Commission (FTC), file a police report, and contact lenders and the credit bureaus to report any fraudulent accounts.