Identity thieves are out to steal your personal information so they can borrow in your name, access your benefits, or drain your accounts before you notice. There are a few simple steps you can take to be more protected.

According to the Insurance Information Institute’s Facts + Statistics: Identity theft and cybercrime:

$16 billion was stolen from 15.4 million U.S. consumers in 2016

That figure is on the rise compared to previous years. Tax fraud accounted for 29.2%, new credit card fraud was 25.6%, and utility, benefits, loan and bank fraud accounted for 38.3%. All of these crimes depend on an identity thief getting your name, address, social security number, date of birth, and possibly other sensitive things like your driver’s license number, bank account number, PIN, etc.

In order to protect yourself, the idea is to keep that information out of their hands or make it so even if they do have it, they can’t use it.

Unfortunately, your personal information isn’t just with you, it is held by countless corporations and government agencies across the country. We depend on them to keep our information secure but there are hacks and leaks all the time, some we never find out about. So you can only control so much… That said here are some smart things you can do to prevent identity theft:

1) Freeze Your Credit

The only good thing about the big Equifax breach in 2017, and the utter incompetence Equifax demonstrated in handling it was, it motivated me to freeze my credit across the board.

The top three credit agencies are TransUnion, Equifax, and Experian. The two lesser known ones are Innovis and ChexSystems.

TransUnion, Equifax and Experian make it somewhat of a hassle to freeze your credit. You have to jump through hoops answering questions, some of which have baffling choices (though picking ‘none of the above’ did work for me on three out of the five questions Experian asked). Experian charged me $10, plus $10 for my wife! Still the peace of mind was worth it.

Innovis and ChexSystems make it a lot easier to freeze your credit. Their online form is short and free. After doing the first three you’ll feel five years younger going through these two.

Links:

• Freeze credit with Equifax
• Freeze credit with TransUnion
• Freeze credit with Experian
• Freeze credit with Innovis
• Freeze credit with ChexSystems

2) Disable Overdraft Protection

If a bad guy has your debit card or checking account number, they can take a shot at draining that account plus any linked overdraft accounts. I wrote about the pros and cons of overdraft protection in detail in a previous post Overdraft Protection - What Banks and Thieves Love. By disabling it, you limit the damage a thief can do. Personally I don’t need overdraft protection. If I were to bounce a check or go over my limit I’d gladly pay the penalty.

3) Keep your Computer, Smartphone and Passwords Updated

In a nutshell, here are some preventive measures to protect your digital identity:

• Keep your operating systems up to date by installing all the recommended updates
• Install an antivirus program
• Rotate your passwords regularly
• Use complex passwords (not 1234, but something that contains letters, numbers and a symbol or two)
• Use a password manager, so all your passwords are different to all the sites you access
• Get a computer that is dedicated to accessing sensitive accounts like your banks and brokerages
• Run encryption for your machine (built into MacOS and Ubuntu), and encrypt your backups

For more on that, see our post on how to secure your online identity.

4) Shred Junk Mail

Your curbside recycle bin is a potential gold mine for identity thieves. Everyday I get junk mail trying to sell me credit cards, new religions, and everything in between. I don’t dare throw it away without destroying it first. Anything that has my name on it gets shredded. This is critical for credit card offers, cash advance checks, tax forms, and anything from my bank, brokerage, or insurance company.

Why take all this effort? Well, it is actually kind of fun to tear up all that crap. But seriously a few times in my life I’ve noticed bums digging through my recycling bin on the curb. Mostly they are looking for bottles and cans. Once I saw one looking for paper. I gave the guy a dirty look out my window and he scurried off… He was probably hoping to find an unopened credit card application, my date of birth, my social security number, or anything else that could be used to get credit. I make sure none of this is sitting out there for the taking.

One way to get the shredding done is with a small paper shredder, but I don’t recommend that approach. They are about $50 from an office supply store or online and I’ve gone through several of them. They are a pain - lots of dust, lots of noise they jam up, and pouring out the confetti can make a mess. If you do get one, go with a cross cut version instead of the strip version (which thoroughly destroys the paper). Note: Paper shredders are very bad to have with little kids around. The kids can’t resist playing with it but they could potentially put their fingers through it.

Years ago I switched to collecting my items to shred in a shoe box and taking it down to the shredding place when it gets full. It is insane how fast the box fills up! It ends up costing $4 - $5 per trip, and they use an industrial grade shredder. Places like FedEx Kinkos offer shredding services too. Sure there is a small risk something might get lifted from the box, but I don’t lose sleep over it.

Periodically the need to shred something really sensitive comes up (old tax documents, paperwork that has been scanned, contracts from years ago, etc). This is stuff that may contain my date of birth, social security number, account numbers or other important details. That stuff goes in a folder in my safe. When I take my quarterly trip to the shredding place I combine the sensitive documents to shred with the junk mail to shred. In the winter, sensitive documents make great kindling in the wood stove.

5) File Your Taxes ASAP Every Year

Taxes suck but what makes them an even bigger pain is until they are filed it leaves the door open to identity thieves. In 2014 it is estimated thieves claimed $25.6 billion in fraudulent refunds and got away with $3.1 billion!

In this case identity thieves use your name, address and social security number to file a bogus return that is doctored to indicate a refund is due. They then have money routed to their own bank account.

By filing your taxes as early you prevent thieves from doing so. Once a return comes in under your social security number, the subsequent ones are blocked because the IRS only allows one return per year. I guess taxes are first come first serve…

Closing thoughts…

We hope you never become a victim of identity theft. Hopefully technology, such as the new credit card chips will actually work, and make it harder for identity thieves to win.

We are software developers with the goal of helping you organize your finances so you can meet your financial goals. On our blog we present things in a down to earth, streetsmart kind of way. We are not financial advisors or CPAs, which is great for you because we are not out to sell you investments of any kind. We have built some fantastic tools for organizing your finances which we encourage you to check out.