How to Prevent Identity Theft

We have all heard the reports on the news. Whether it was Marriot, Yahoo, Equifax, or even The United States Customs and Border Protection, data breaches are affecting millions of people in the USA and around the world. Knowing how to prevent identity theft is a necessity if you want to avoid major headaches!

I have had my identity stolen twice. The first time somebody bought $3,000 worth of electronics with my credit card. This was back in the day when I used a credit card. The second time the thieve must have had the munchies because he or she used my debit card to pay for $23 worth of food at a Sonic restaurant in Arizona. I was living in Texas!

When somebody steals your identity, you are not responsible for the purchases they make. However, you are responsible for proving to the bank or credit card company, that you did not make those purchases.

There are police reports you need to file, affidavits you need to sign, and disputes you need to submit to the credit bureaus. Not to mention the inconvenience of waiting for new cards to arrive in the mail and the work of updating all your electronic payments with the new bank or card information.

Most common types of identity theft

According to the non-profit Identity Theft Resource Center, the number of consumer records exposed containing sensitive personally identifiable information jumped 126 percent from 2017 to 2018.

The most common types of identity theft, according to this compilation of data by Experian are credit card fraud and employment or tax-related fraud.

5 ways to prevent identity theft

Identity theft can happen to anyone. So, let’s be proactive and learn our options to avoid becoming the victims of fraud. These are five ways you can take action now:

1. Sign up for identity theft protection
2. Monitor your credit activity
3. Place a fraud alert on your credit
4. Lock your credit report
5. Freeze your credit report

1. Sign up for an identity theft protection service

Many services offer identity theft protection. However, according to the Federal Trade Commission, no service can protect you from having your personal information stolen. What they can do is help you monitor for it and recover after identity theft.

Identity theft protection includes services like:

• Monitoring of credit reports on the three major credit reporting agencies: Equifax, TransUnion, and Experian
• The ability to lock and unlock credit reports
• Identity theft insurance
• Internet scanning for social security numbers

 2. Monitor your credit activity

Stay on top of your bank account statements, credit card accounts, and credit reports. Notify your bank immediately of any unauthorized activity. If you are not enrolled in an identity theft protection service, you can still have free access to your credit report once a year.

Take into consideration that free access to your credit report activity does not include access to your credit score. That service is usually available at a charge. Just be aware of that and don’t think you have to pay for your credit report.

3. Place a fraud alert

Consider placing a fraud alert on your credit report. A fraud alert is like a “warning flag.” It lets creditors know that you may be a victim of identity theft. However, you will need to take additional steps to verify your identity when trying to open a line of credit on your name. That might be an inconvenience for you, but it will keep your identity safer.

Placing a fraud alert will still allow creditors access to your report. Consumers can set a fraud alert for free through any of the three bureaus. The other two will be automatically notified of the fraud alert.

4. Lock your credit report

Another option available to consumers is a credit report lock. This feature locks access to your credit report at the particular bureau where you activate it. As a result, an Equifax credit file lock will only limit what creditors can see on your Equifax credit report. The same is true for TransUnion or Experian.

According to Equifax, you can have either a security lock on your credit file or a credit freeze. You cannot have both at the same time. A credit security freeze appears to be a more comprehensive option to protect against identity theft.

5. Freeze your credit report

A security freeze is like a tighter level of protection since it prevents new creditors from accessing your credit report. You have the option to lift or remove the freeze temporarily or permanently.

Victims of identity theft can receive this service at no cost. However, other consumers could pay anywhere from $2 to $10, depending on several factors. Among those, the state that you live in, your age, and military status.

For instance, in Texas, victims of I.D. theft can add, lift, or remove a security freeze for free. On the contrary, those who are NOT victims of I.D. theft would have to pay a $10 fee to add or lift the freeze.

To receive the free service you might have to provide proof of eligibility by mail. TransUnion has a great state-by-state breakdown chart of security freeze fees.

According to the Federal Trade Commission, placing a credit freeze:

Makes it harder for someone to open a new account in your name… But it does not prevent a thief from making charges to your existing accounts.

FEDERAL TRADE COMMISSION

To learn more about fraud alerts and security freezes, visit www.ftc.gov/idtheft.

In Conclusion: How to Prevent Identity Theft

I don’t want to sound like a pessimist, but if you haven’t had your identity stolen yet, I am afraid that it is just a matter of time. Avoid the headaches of dealing with the aftermath and take precautions now.

At a minimum, you should be taking advantage of the free access to your credit reports to monitor your activity. If you are very concerned about somebody stealing your personal information or if you have been affected by a security data breach, definitely look into signing up for identity theft protection.

Finally, get familiar with the difference between placing a fraud alert, a lock or a freeze on your credit. These are options you should definitely be considering if your identity is stolen.

Additional resources:

Listen to my podcast episode on The Equifax Data Breach and the six steps to protect yourself from identity theft.

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