How to Prevent Identity Theft and Respond To It

Technology and convenience go hand-in-hand, right? We can conduct our personal and professional business activities online in ways that hardly could have been imagined even just a few years ago. But, as with many things, there is often a price to pay for convenience. And in this case, there are very real threats to security when putting your private information online… a necessary step to accessing technology conveniences.

Unfortunately, identity theft — where personal information such as your name or social security number is stolen to commit fraud — is more common than we like to admit. Your identity allows a criminal to fraudulently apply for credit, file taxes, get your tax refund, or obtain medical services, resulting in your credit status being negatively affected. You’ll spend a painfully significant amount of time and money trying to restore your good name, with your ability to manage your finances severely hampered in the meantime.

Here’s what you should be doing to prevent identity theft.

• Order your credit report once a year and review to be certain that it doesn’t include accounts that you have not opened. Check it more frequently if you suspect someone has gained access to your account information.
• Keep your social security number (SSN) secure. Don’t carry your social security card in your wallet or write your number on your checks. Only give out your SSN when necessary. In reality, there are few situations when you must share this information. Just because you are being asked to provide your social security number does not mean that you need to provide it!
• Don’t respond to unsolicited requests for personal information (your name, birthdate, social security number, or bank account number) by phone, mail, or online. If someone is asking for this kind of personal information, that’s a red flag. Stop to ask yourself what is really going on.
• Keep your private information private. Shred receipts, credit offers, account statements, and expired cards. Store personal information in a safe place at home and at work. Make sure others cannot see you typing your passwords on computers and at ATMs.
• Keep your personal mail safe. Collect it promptly. Ask the post office to put your mail on hold when you are away from home for several days. Consider getting a locking mailbox.
• Take the time to pay attention to financial transaction details. Be aware of your billing cycles. If bills or financial statements are late, contact the sender. Review your receipts and compare receipts with account statements, looking out for unauthorized transactions. You can also consider switching to electronic statements.
• Get tech-savvy by installing security protection software on your home computer.
• Create complex passwords that identity thieves cannot guess easily. Enable 2-factor verification on your password-protected online accounts. Change your passwords with regularity, and when a company that you do business with has a breach of its databases.
• Prevent medical identity theft by guarding your social security, Medicare, and health insurance identification numbers. Only give your number to your physician or other approved health care providers – and only when they absolutely require it! Review your explanation of benefits to make sure that the claims match the services you received. Request and carefully review a copy of your medical records for inaccuracies and conditions that you don’t have.

The worst part is that you may not know that you are the victim of ID theft until you experience a catastrophic financial consequence, like unexplained significant bills, aggressive collections, or denied loans when you are depending on additional credit. Identity theft is a faceless crime. You will have no idea who is doing this to you and they will, no doubt, give you little thought as they rampage your life. Yet the consequences of this crime are scars that will mark its victim for years to come.

This is no more true than in the case of Child Identity Theft, where a child’s identity is stolen and might go undetected for many years, resulting in incredible damage by adulthood. This is why I recommend setting security freezes for the entire family. The reality is that credit monitoring services are not enough. Someone can still open an account in your name and ruin your credit history. Encourage all of your family members to contact each of the three credit reporting agencies (TransUnion, Equifax, and Experian) and place a security freeze on your credit files. With the security freeze on your credit file, no one can open a new account (take out a mortgage, a car loan, or other financial commitment on your behalf) unless they have your secret pin.

If you are a victim of identity theft, report it immediately to the FTC either online or by phone at 877-438-4338. To report it online and get a personalized recovery plan, this is a terrific user-friendly site that will walk you through the steps of recovering your identity. Once you file the ID theft with the FTC, you will have an ID theft affidavit. Print and take the ID theft affidavit with you to file the crime with the local police. The ID affidavit and your police report are your identity theft report. Your identity theft report will be very important as you resolve the problem with creditors, banks, and any other companies where fraudulent accounts were set up in your name.

You may also report specific types of identity theft to other agencies:

Tax Identity Theft

Your social security number is used to falsely file a tax return, typically to get a tax refund or a job. Be aware, the IRS DOES NOT initiate contact with a taxpayer by sending an email, text, or social message requesting personal or financial information. Should you get an email that claims to be from the IRS, do not reply or click on any links. Your fear of this crime can be used against you via email scams that falsely alert you to a crime and seek your personal information that will later be used to steal from you. Instead, you should report it to the IRS and your state’s Department of Taxation or Revenue. File a report with the Federal Trade Commission (FTC). You can also call the FTC Identity Theft Hotline at 877-438-4338 or TTY 866-653-4261. Respond immediately to any IRS notice; call the number provided. If instructed, go to the Identity Verification Service. Complete IRS Form 14039, Identity Theft Affidavit; print, then mail or fax according to instructions. Continue to pay your taxes and file your tax return, even if you must do so by paper.

Medical Identity Theft

Your Medicare ID or health insurance member number is used to get medical services, or to issue fraudulent billing to your health insurance provider. If you believe you have been a victim of medical identity theft, call the Federal Trade Commission at 877-438-4338 (TTY: 866-653-4261) and your health insurance company’s fraud department. You can create a complaint form with the details of your experience at IdentityTheft.gov to share with them and with law enforcement. If you suspect that you have been the victim of Medicare fraud, contact the U.S. Department of Health and Human Services’ Inspector General at 800-447-8477.

In addition to federal government agencies, you should also report the theft to other organizations, such as:

• Credit Reporting Agencies – Contact the three major credit reporting agencies to place fraud alerts (or freezes on your accounts if you have not done this important preventative step so that no one can apply for credit with your name or social security number). Get copies of your credit reports, to be sure that no one has already tried to get unauthorized credit accounts with your personal information.
• Financial Institutions – Contact the fraud department at your bank, credit card issuers, and any other places where you have accounts. You may need your ID theft reports from the police and Federal Trade Commission in order to report the fraud.
• Retailers and Other Companies – You will also need to report the fraud to companies where the identity thief created accounts, opened credit accounts, or even applied for jobs in order to clear your name.
• State Consumer Protection Offices or Attorney General – Your state may offer resources to help you contact creditors, dispute errors and other helpful resources.

If you need more help — and I hope you take steps to ensure identity theft never happens to you — the Federal Trade Commission offers a publication, Taking Charge – What to do if Your Identity is Stolen that shares detailed tips, checklists, along with sample letters.

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