Preventing Identity Theft

Scott Cole/Cole Financial Planning
Published: December 19, 2008

One of the questions that I get asked surprisingly often concerns identity theft. It is a symptom of our times. Cyber thiefs are becoming more and more prevalent and sophisticated. An entire industry has cropped up and exploits our fear for their own economic gain. People are obviously wondering how to maneuver in this new world without being the victim of an identity crime. There is a real threat, but there are also some simple and common sense ways to protect yourself and your identity.

• Practice safe computing- For most of us these days, there is just no way around using a computer. E-mail is a staple in business life and now days it is almost a need to get plugged in, not just a luxury. That said there are some basic things you should do to protect you while computing. First, you need to have three programs on all your computers. Anti-virus, Firewall and anti-spyware. All of these are essentials in today’s environment. Make sure that you software stays up to date. Second, avoid responding to sites by clicking on links in an e-mail. It is almost always better to type the URL address. Also remember that reputable businesses will never ask for your social security information via the internet. Finally, remember that if you use social networking sites, it is not required that you give out every personal detail. The more information available, the easier it is for a thief to put together enough of the puzzle to impersonate you.

• Be prudent at home and travel lightly- A small investment in a home shredder is a wise for anyone. You should destroy all documents that contain, bank account information, credit card numbers or your social security number. Don’t forget those checks that credit card companies like to include in your bill. Don’t leave mail in your mailbox and make sure bills arrive on time and when they do arrive reviews them thoroughly for any suspicious activity. Report questionable charges immediately. When you are on the go, there is no need to carry every card that you own. Limit your cards to one or two and unless you know that you will specifically have to have it, never carry your Social Security card.

• Be your own credit monitor- There are plenty of services out there that will monitor your credit report for a handsome fee, but no one can do it better than yourself. You can get a copy of your credit report from each of the credit bureaus for free once a year at http://www.annualcreditreport.com . You can get them all at once or you could stagger them and create a more robust self monitoring system by getting one every four months. Often times, your identity may be stolen but not compromised for many years, so reviewing your credit frequently is a great habit to form. If you think there is something suspicious going on, you can place a fraud alert on the account. This forces lenders to take extra steps to verify your identity. If you still don’t feel safe, for a small fee, you could request a credit freeze. This prohibits potential lenders from accessing your credit without your authorization. If you choose this route, you need to request the freeze at each of the bureaus.

Identity theft is a reality of today’s world. While it doesn’t threaten you financially, in most cases, the time to clean up a violated credit can be substantial. However, some common sense and a little diligence will make the identity crooks lives a little harder and give you a peace of mind.

It’s everywhere these days it seems. If you read the paper, watch the news, peruse the internet, you finding warnings about identity theft. It is not all fluff either. A while back, I was working in my office, when my phone rang. It was my credit card company asking me if I was purchasing a thousand dollars of scuba equipment. I wasn’t and the charge was refused, but the call was sobering to say the least.Paranoia, however, does not have to be the end result of a sobering phone call. The booming security industry has recognized the profitable niche of so-called “identity theft protection.” There is no shortage of companies, including your credit card companies themselves that have discovered that people will pay money because they have been scared senseless by media reports. I started thinking about this after I received the fourth or fifth offer from my credit card company to monitor my credit for me. It wasn’t an outrageous fee, less than ten dollars a month, but why should I pay the credit card company to monitor something that hurts them more than it hurts me? After all, I am not responsible for fraudulent charges to my credit card company. Sure it would be a hassle to straighten out, but the industry realizes the truth of the old adage that “little and often fill the pot.” If they can get enough people to drop an extra ten dollars to them a month, it adds up to quite a profitable business venture for them, and it becomes just another financial leak in the consumer’s personal finances.

While identity theft insurance or protection services are not all that they are presented to be, there are some sensible things that each of us should do in this data-filled world. As with most things in life, protecting your identity requires some good old common sense and a little bit a diligence. First of all, watch what you share. While I personally believe that we are too private about money in general, that doesn’t mean we shouldn’t have some safeguards. For instance, there is no reason for you to carry your social security card. Put it in a locked firebox at home or keep it at a safety deposit box at your financial institution. Never give it out except for tax, employment or credit purposes. Shred financial documents that are not longer needed, and never reply to e-mails asking for such information, even if they look official.

Secondly, monitor you situation yourself. Federal law allows you to access your credit report once a year for free from the three big credit reporting bureaus. You can choose to get them all at once or one every four months, or any other interval you choose. You can request a copy at www.annualcreditreport.com. This is a good way to make sure that your report is accurate. You can report any discrepancies you find. One caveat, beware of other similarly named websites. You should also review your bank, credit card, and brokerage statements at least weekly and definitely look over the monthly statements to make sure it is correct and nothing nefarious is happening.

Third, if you are like me, you get tired of the parade of offers that come through the mail. I get “pre-approved” offers all the time, even though I have never sought them. I just don’t like all those offers sitting around in my mailbox. The simple solution is to opt out of the offers. You can visit http://www.optoutprescreen.com to take care of this. I’ll also be happy to e-mail you a copy of the federal trade commission’s brochure about consumer protection and opt out procedures if you are interested.

The truth of the matter is there is no full proof way of protecting you identity. The use of firewalls on your computer, destroying documents, monitoring the situation can all help, but nothing is 100%. My advice is to be diligent, use some common sense, and don’t become a victim of scare tactics from those who claim they can do a better job of protecting you than you can yourself. It is your identity after all and no one knows you (or how to protect you) than you do yourself. Heck, I may save the money my credit card company wanted me to pay and buy some real scuba equipment someday.