How to Protect Yourself from Identity Theft
Tips to help protect yourself from financial fraud and identity theft.
Corporate data breach and its impact
It seems like every week there is another report of personal information being stolen or made available online via the dark web. Nefarious actors may be able to use this information to open fraudulent lines of credit, purchase items, or steal assets. When we experience financial fraud or when companies we work with announce data breaches, as AT&T did recently, how can we protect ourselves? Here are some tips.
A personal story
A couple years ago, I spent a few weeks at my family’s cabin in northwestern Wisconsin. While there, my credit card was denied while I was making a purchase at the grocery store. I used another card and didn’t think much of it. When I attempted to fill up my car with gas at the local gas station, and my credit card was denied again, I knew there was an issue.
I called my credit card company and found out that while I was attempting purchases in northern Wisconsin, multiple Chicago-area purchases were being made on my card. The credit card company could tell that I wasn’t making purchases in two locations at the same time, so they naturally denied the ones in Wisconsin since those were out of the ordinary for my typical Chicago area purchases.
With the help of the credit card company, I reviewed transactions and found over $1,500 in fraudulent transactions that occurred within about a week’s time. My credit card company had me verbally attest to an affidavit stating these transactions were fraudulent and I was not liable for any of the purchases. They cancelled my card and issued me a new credit card number. For a relatively large amount of fraud, it was a surprisingly easy process to work with the credit card company. But if I hadn’t caught it early, who knows what might have happened.
So how can you protect yourself? First, let’s look at warning signs and then examine some things you can do to protect yourself.
Warning signs
Just because your personal data may have been included in a data breach, that doesn’t mean you have been a victim of identity theft. Identity theft is when someone uses your personal or financial information without your permission. A few warning signs of identity theft:
Receiving bills for items you didn’t buy
Receiving debt collection notices or credit card bills for accounts you did not open
Information on your credit report that is unfamiliar to you
Mail stops coming to your mailbox
Identity theft can happen in several ways. They can physically steal your wallet or purse. They can go through your trash to find bank statements or tax documents. They can install equipment that steals information from your bank card when you make a transaction at an ATM machine, cash register or fuel pump. They can use phishing schemes such as fraudulent emails, phone calls, or social media correspondence to capture personal information.
Report immediately
When you notice suspicious activity, contact the bank or financial institution where you noticed the transaction. If you report the activity as soon as you see it, and you still have the credit or debit card in your hands, typically you aren’t financially responsible for the transactions. You’ll work with their fraud department to resolve the situation.
To report identity theft, contact the following:
The Federal Trade Commission online or call 1-877-438-4338.
The three credit reporting agencies, Experian, Equifax, and TransUnion. Request them to place a fraud alert and credit freeze on your accounts.
The fraud department at your financial institutions like credit card companies, bank, or other places where you have accounts.
You may also want to file a report with your local police department. This can sometimes be necessary if you are filing an insurance claim.
Protection from identity theft
If your personal data was involved in a company’s data breach, typically they will notify you of the event and offer some type of remediation such as identity theft monitoring services for a period of time. Sign up for this free service if it is offered. In addition to this, there are some things you can do to protect against identity theft.
Review your credit card and bank statements. Watch for unauthorized and suspicious transactions and report them to the financial institution.
Place a credit freeze on your credit report. A credit freeze limits access to your credit report. It’s available to anyone and lasts until you lift or remove it. You must contact each of the three credit bureaus to request it.
Credit freezes can also be placed on children’s records.
This service makes it more cumbersome for you to get a legitimate line of credit, such as a mortgage or home equity line of credit, so keep this in mind if you plan to apply for credit.
If you’ve been a victim of identity theft, place an extended fraud alert on your credit report. Companies must contact you before granting new credit in your name. An extended fraud alert lasts for 7 years.
Review your credit report regularly. You can check your report weekly for free.
Some credit card companies and banks also offer FICO score reporting for free. If your FICO score changes dramatically, investigate.
Enroll in a credit monitoring service. These services are not cheap but they will do the work for you of monitoring your credit regularly. I don’t typically recommend these services to clients because you can do it yourself fairly easily by following the steps above.
Check your homeowners or renters insurance policy to see whether your policy includes credit protection such as covering identity fraud expenses or cyber protection coverage with resolution services.
Have you been a victim of identity theft? How were you able to resolve it?