In identity theft, personal information is fraudulently obtained and used to steal the assets of the victim or to defraud others. Bank accounts can be drained. Credit cards maxed out and new credit accounts established. And yes, it can happen to you.
According to the Federal Trade Commission, the total number of identity theft and fraud complaints in 2008 was more than 1.2 million, the highest level ever. Identity theft was the number one category for complaints, accounting for more than 26 percent of those filed. People who reported identity theft or identity fraud to the FTC reported costs of more than $1.8 billion in 2008 alone.
It can start with stolen mail, a computer virus that gives the bad guys access to information on your hard drive, a lost wallet, phishing, or even someone digging through trash to find your personal information.
How does identity theft happen? Here is one way: The bad guy goes through trash looking for bank statements, credit card statements, and records from financial institutions. If they find a bank statement they request a change of address for your bank account. Then he orders new checks for your account and has them sent to his address. The thief can then write checkswith your money. It’s even worse if you have overdraft protection that covers bad checks. You may not even know about the theft until you review your monthly statement.
If you throw away something that has personal information (e.g., bank account numbers, credit card numbers, Social Security number, birthdate, etc.) identity thieves can use that data to open new accounts in your name.
How can you protect yourself from identity theft?
Shred anything that has personal data on it. Don’t just throw it away or tear it in half. For more security, use a crosscut shredder, rather than one that only cuts papers into strips.
Review your credit reports. You may request one from each of the three major credit reporting agencies once per year at no charge. Request one from one agency now, another in four months, and the third four months after that. Then start over again a year from now.
Remove mail from your mailbox promptly so that thieves can not take incoming credit card statements or other important mail. Or receive mail at a post office box or private mailbox.
Do not put outgoing mail (such as envelopes containing checks) in your home mailbox. Drop them in a postal box.
Carry only one or two credit cards with youin case you lose your wallet. Keep card numbers and information on reporting a stolen card in a safe place, just in case cards or lost or stolen.
Know when you should receive statements for bank accounts and credit cards. If you do not receive a statement when expected, it could be that a thief has changed the address on your account.
Never enter personal information after clicking a link in an email. It could be a phishing scam. If you receive an email about an account needing attention, open your web browser, type in the URL of the bank or other organization (not the one in the email you received) and only then should you log in.
Don’t let yourself become the next identity theft victim. One good way to protect yourself is to subscribe to a service that will automatically request credit reports and set up fraud alerts for you. One of the best is LifeLock. For a small annual fee, they will take steps to help you prevent identity theft. And if your identity is stolen, they will spend up to $1 million dollars to hire the professionals needed to repair the damage.