How to protect yourself from identity theft

Identity theft is big business for cyber criminals, but a devastating experience for victims. It’s out of control and worse than you think.

Millions of Americans and people all over the world are affected, resulting in billions of dollars in losses each year. 

Identity fraud is everywhere. Almost every day, we see news reports describing new techniques for crooks to steal your personal information, as well as warnings about big data breaches that expose your sensitive data to hackers on the Dark Web. 

The Sad Reality

Yes, it’s happening.

According to a Debt.com research from 2021, four out of ten people had been victims of identity theft. While many people believe that it will never happen to them, the increase in stolen identities is raising concerns. 

A report released by the Federal Trade Commission in February 2021 revealed that Americans lost $3.3 billion to fraud in 2020, up from $1.8 billion in 2019. The proportion of Americans reporting losing money to fraud is also rising, with 34% of 2020 fraud report incidents involved financial loss, up from 23% in 2019.

Here are some other shocking realities that everyone should be wary of:

Every 14 seconds, someone falls victim to identity theft

Tactics used in stealing identities are evolving and becoming more sophisticated . Because of this, identity fraud cases are at an all-time high. Cyber criminals use both traditional and more complex techniques depending on their targeted victims. 

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Experts believe that due to the increasing frequency of thefts, someone becomes a victim every 14 seconds. According to most research, this rate will rise in 2022, making it an even bigger problem for Americans.

In the United States, identity theft cost $56 billion in 2020

In 2020, about 49 million people were victims of identity theft. As a result, traditional identity theft caused $13 billion in losses. The victims could be persons whose personal information has been compromised as a result of data breaches and other cyber-attacks.

One of the most revealing facts is that direct-interaction scams, such as phishing emails, resulted in a significantly larger loss of $43 billion. This means that bad actors are becoming more daring and willing to steal from individuals directly.

33% of Americans have been victims of identity theft

According to Proof Point, 33% of Americans have experienced identity theft at some point in their life. This is three times greater than Germany’s or even France’s figures. It is also twice as high as the global average. Respondents in the United States are more open on social media than those in other countries, rendering their information more exposed to cyber burglars.

40% of account takeovers occurred in a single day

Fraudsters are quick in their attempts to take over accounts, according to Javelin Research. The company’s 2020 research on identity scams showed that 40% of account takeovers occur within 24 hours of a criminal gaining access to a victim’s account.

The pandemic provoked cyber crooks to intensify their stealing campaigns. In fact, account takeovers increased by 307% since its start in 2020.

2.2 Million fraud reports were filed with the FTC in 2020

According to the Federal Trade Commission (FTC), the victims also lost $3.3 billion in fraud in the same year. That’s nearly double the money lost to identity thieves in 2019, which was $1.8 million.

The most common type is credit card fraud

According to the FTC, credit card fraud is the most common form of attempted identity theft. Identity burglars typically gain access to another user’s registered credit card through various means. In other cases, they may obtain a new credit card using the details and name of of a unsuspecting user. Most identity criminals conduct  small-scale test steals before committing the larger fraud.

These and many more statistics show that identity theft is becoming more prevalent in the twenty-first century. As more data moves away from physical paper to digital form, the likelihood of it being stolen increases.

While “malicious outsiders” continue to steal data, users still bear a large portion of the responsibility for their lost data. Current patterns indicate users still tend to be less concerned about managing their own data security, which makes them vulnerable.

So what is Identity Theft?

Identity theft happens when someone steals your personal information and uses it to commit fraud and leverage it to commit other crimes.

Personally identifiable information (PII)

Personally identifiable information is information that can identify an individual when used alone or with other relevant data. 

Personally identifiable information include:

• Name, date of birth, home address
• Social Security Number
• Financial information, such as bank, credit card, loan, and crypto accounts
• Passport
• Driver’s license number and other valid IDs
• Usernames and passwords
• Health ID
• Employment ID
• Tax identifications number

How criminals steal identity

Consumers cane become victims of identity theft through a multitude of methods . Crooks can physical steal mail from your mailbox or search through your trash for invoices and bank statements that contain personal data – name, address, etc.  Others may steal wallets and purses, or duplicate your credit card through skimming devices. This can sometimes happen when your waiter or clerk moves away to handle your payment.

Increasing in frequency is online identity theft. This can happen when people:

• Fall for phishing schemes
• Unwittingly download malware that steals their information from their computers or devices
• Use insecure public Wi-Fi
• Use ATMs that are equipped with a skimming device that captures login credentials and personal information
• Share passwords with untrustworthy people
• Become victims of data breaches
• Fall for phone scams that ask for personal, banking, or credit card information

Types of Identity Theft

The first step in protecting yourself from identity theft is educating yourself so you know what to watch out for. Early detection of the warning signs is key to minimizing exposure or damage from this ever growing threat. 

Identity theft has evolved from isolated cases to epidemic levels, courtesy of cyber thieves who are relentlessly looking for new ways to steal other people’s information and money.  There are as many types of identity theft fraudsters utilize, we will describe the most common ones.

1. Financial identity theft

This happens when criminals gain illegal access to your bank, credit, or loan accounts. Once  criminals acquire enough personally identifiable information about you, they can cause a lot of financial harm.

Thieves can engage in the fraudulent creation of new accounts. They can open new banking, credit, or credit card accounts in your name. They can make fake charges using your good credit history.

A burglar can take your home equity through a bogus line of credit (HELOC) or refinanced mortgage using your information.

Your financial information can also be used by criminals to get bogus loans or lines of credit in your name.

A thief can make fraudulent transactions online even if they don’t have your physical credit card. They can also use your credit card details to produce a “cloned” version.

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Financial fraud caused by identity theft can severely harm your credit score and take years to repair.

The red flags:

• Being unable to access your online banking account
• Discrepancies in your bank account balances
• Calls from debt collectors about unpaid mortgage or loan amortizations
• Debits on your credit card for purchases you didn’t make
• Charges on your credit card that are unusual or unexpected
• Unidentified queries on your credit report
• Your credit score has drops unexpectedly

2. Tax identity theft

A tax identity scam happens when a fraudster files a false tax return in your name. They’ll almost certainly report false income and try to get a hefty tax refund from the IRS that belongs to you. Hiring only reputable bookkeepers and accountants is good practice because “ghost” tax preparers are out to scam you.

The red flags:

• Receiving tax records, forms, or transcripts that are unfamiliar
• Scammers posing as IRS agents calling you about tax issues
• Your tax preparer is unable to explain inconsistencies.
• You’re unable to file your tax return because someone else filed one using your Social Security Number
• You receive an IRS notice or letter citing some information you know nothing about 

3. Medical identity theft

Medical identity theft occurs when criminals use your personal information to obtain medical services in your name. They can purchase prescription drugs without your permission, or use your health insurance benefits. It’s one of the most expensive forms of identity theft.

For example, a thief may impersonate you and obtain surgery or other medical treatments using your stolen health plan information. You won’t find out about it until you receive a bill in the mail. Worse, the phony treatments are permanently recorded in your medical records. This could lead to a misdiagnosis or the loss of critical medical treatment.

The red flags:

• Medical expenses for treatments or procedures you didn’t receive
• Incorrect medical record entries
• Your insurance company sending you a change-of-address notice
• Insurance claims being denied because your benefits have been exhausted

4. Child identity theft

Children have been prime targets for identity theft in recent years because their SSNs are clean. Criminals take the identity of a child and apply for credit in the name of that child. It is often only detected when the victim applies for student loans or other forms of credit.

The red flags:

If your child is receiving credit card offers or phone calls regarding late payments or debt collecting, it’s time to investigate.

5. Employment identity theft

Some criminals use your identity to apply for a job, especially if they wish to escape background checks or are unable to work legally in the United States.

This may appear to be less harmful. However, having confusing employment records might pose problems with your credit, Social Security benefits, and taxes. Furthermore, if the impostor gets into legal problems, you may find yourself facing an arrest warrant.

The red flags:

• Your Social Security statement suggests you made more money than you actually did
• You’re required to submit W-2 0r 1099 tax forms for jobs other than what you do 
• You’re refused unemployment benefits because you made more money aside from your regular employment

6. Criminal identity theft

You may be arrested if someone took your driver’s license and used it to commit a crime. As a result, you may be held liable for the crimes of that thief.

The red flags:

You may be detained by a police officer for a crime you didn’t commit. Or you may be denied employment or a promotion because of some negative thing found in your background check.

Other types of identity theft include:

• Elder identity theft
• “Friendly” or familial identity theft
• Unemployment identity theft
• Government benefits identity theft
• Synthetic identity theft
• SSN identity theft
• Account takeover fraud

Who are Most Vulnerable to Identity Theft

Consumers of all ages have reported criminal events at similar rates in previous years. The figures today present a different situation. Consumers aged 40 to 69 are reporting increasing rates of identity theft, indicating a greater vulnerability to this type of threat.

Here’s a look at the prime targets of identity fraudsters. 

Seniors

Seniors are more vulnerable to online phishing and telephone frauds than younger people because they are often less tech-savvy.

While the figures for seniors are likely to be substantially higher, an AARP poll indicated that victims 55 and above were significantly less likely to admit to being scammed. Tax identity theft and medical identity fraud are two common scams perpetrated by nursing home and long-term caregivers.

Children

Thieves often have a bad credit history. This is why they particularly target children because they can use their Social Security numbers to create clean credit profiles. Family members are often the perpetrators because they may have access to a child’s Social Security number.

College students

Students are particularly vulnerable to identity theft for various reasons. They are inexperienced with money and rarely keep track of their everyday transactions. Many parents have their children under their account. They have no idea which transactions are fraudulent because their children are studying away from home.

Military personnel

Active-duty military personnel are less likely to detect any discrepancies in their credit reports while deployed. Because they move frequently, the chances of  their personal information being exposed is greater.

How to Protect Yourself from Identity Theft

It’s crucial to be aware of how identity theft works, the warning signs, and who are most vulnerable. It’s even more critical to protect yourself from identity theft to maintain a good credit history to avoid financial losses and damage to your career and reputation.

Here are 10 things you can do to make it much harder for thieves to steal your identity.

1. Be aware of the most common ways identity crooks steal your identity

We’ve discussed this topic earlier in this post but we want to emphasize its importance.  Criminals need access to your PII in order to steal your identity. Some of it may have already been exposed as part of some data breach. However, this isn’t the only way to fall prey to identity theft.

Identity burglars use other tactics to get hold of your identity, such as physical theft, phishing scams, shoulder surfing, and social engineering attacks. 

You could also be at risk when you respond to unsolicited messages or calls, lose a piece of mail, use your devices in public, or visit the Internet.

2. Heed the warning signs

This especially applies to phishing attempts. Scammers use phishing techniques to deceive you into handing over your personal information. Texts and phone calls you receive can appear and sound legitimate. However, any information you offer or websites you click can compromise your identity.

Scammers frequently try to spoof their contact information to make it appear to be coming from a legitimate phone number or email address. But if you examine closely, you’ll notice that they differ from the information on the alleged sender’s website.

Phishing emails don’t mention your name, may contain grammar mistakes, and frequently use threat, urgency, or enticing promises for you to act. They may also contain links or attachments with compelling reasons to click or scan them.

If you have any suspicions, do not respond or click on any links or attachments. Instead, use the information on the company’s official website to contact them directly.

3. Keep your personal and financial information safe offline and online

Ensure that your personal and financial information are kept physically secure in a safe place, especially if you have roommates, coworkers, or house help. This includes your wallet or purse that carries your IDs. Here are some safekeeping tips you should consider:

• Make sure your bank account statements, credit card statements, and sensitive information on other financial accounts are kept away if you have employees working in your home.
• Shred sensitive materials, such as credit applications or credit offers, insurance forms, medical statements, charge receipts, checks, and bank statements, and canceled or expired credit and ATM cards.
• Never leave your credit, debit, or ATM card receipts in public, such as at a bank or a store.
• Outgoing mail should be deposited at the post office or in a PO collection box, not in an insecure mailbox, while incoming mail should be collected quickly. Rather than having new checks mailed, pick them up at the bank.

To protect your personal information online, refrain from posting them on social media and elsewhere online. Make sure your social network privacy settings limit who may view your information, such as your birth date, home address, workplace, and photos. Examine your friends or connection lists and restrict people you don’t know.

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Whether you’re buying at a retail store, joining an online club, or receiving a phishing email, asking for your information is a common technique to collect your information.

You have the right to say no, especially if it’s unclear how the information is needed for the service or transaction. To buy a pair of jeans, for example, you don’t have to give your complete address. Also, never give out personal information to strangers over the phone or by email.

4. Use strong passwords

Identity thieves love weak passwords, especially if you use the same password everywhere. Once the criminal has your password, they can get into your accounts and cause havoc.

Use passwords with more than 10 characters, upper and lower case letters, digits, and symbols. Never include personal information such as your name, age, birthdate, or the name of your pet. Best practices for password management include password managers, two-factor authentication (2FA), and changing passwords regularly.

5. Avoid using public Wi-Fi

It’s convenient to have free wireless Internet at an airport or a local coffee shop. However, it also provides the ideal chance for scammers to steal your personal information.

Hacking public Wi-Fi networks is common. If your connection is intercepted, an identity thief can take your usernames and passwords. If you must use public Wi-Fi, use a VPN to protect your information.

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6. Monitor your accounts

This involves examining your bank and credit card accounts, mortgage or loan accounts, health insurance, and credit report, among others. Look for any suspicious activity and contact your bank, credit card company, or health insurance provider to verify. 

You’re also entitled to a free copy of your credit report from each of the three main credit agencies once a year under federal law: TransUnion, Experian, or Equifax.

Note that a credit report is different from a credit score. A credit report contains a detailed list of your credit account activity, while a credit score is a number that indicates your creditworthiness.

For added protection, you can use two tools on your credit report:

Before giving credit, a fraud alert requires lenders to verify your identification. A one-year credit freeze with the three credit reporting agencies is standard, but you can extend it for another seven years.

A credit freeze stops your credit files and reports from being shared with others. If you strongly believe that you have been the victim of identity theft, you should request a freeze.

7. Reduce your online presence

Your online footprint includes everything you do online, including Google searches, social media posts, and purchasing habits. Bad actors use this data to create phishing emails, guess your passwords, and even name-drop your friends to convince you to act.

You won’t be able to completely delete your online trail, but you can minimize the information that scammers have access to. Here’s some advice:

• Make changes to your security and privacy settings.
• Limit social media sharing.
• Remove old or inactive accounts.
• Set up a Google Alert for yourself.
• Use privacy browsers like Brave and non tracking search engines like Duckduckgo.

8. Protect your mobile devices

Check mobile app permissions because personal data is also affected by mobile apps. To download the app, many require you to approve certain permissions, such as access to your contacts, images, and GPS position. In many instances, some permissions aren’t relevant to the service you need. 

For your protection, review the permissions settings for each up and turn off those that are inapplicable. 

9. Invest in security software

Antivirus and antimalware software can help you detect and neutralize attempts by clever  scammers to get access to your personal information.

Other security defenses are useless if your computer or phone has already been infected with malicious software because of a lack of antivirus and antimalware software. In short, you’ve given the thieves access to all of your online activities.

Make sure any operating system upgrades are updated as well.

10. Know who you’re dealing with

When someone calls you and asks for personal or financial information, find out who they are, name of the company they represent, and why they are calling. If you believe the request is valid, call the company directly and double-check what you were told before disclosing any personal information.

What to Do If You’ve Fallen Victim to Identity Theft

As soon as you realize you’ve been victimized, here’s what you should do immediately:

• Inform your bank, lenders, and other affected companies.
• Notify the three major credit bureaus so they can place a fraud alert on your account.
• Report the identity theft to the FTC.
• Report the identity theft to the police and other appropriate federal agencies.
• Dispute fraudulent transactions with the companies where fraud took place.
• If you have identity theft insurance, inform your provider who can help you through the steps to recovery.

Our final thoughts. Identity theft is a nightmare nobody wants to experience. But a lot of vigilance can help you avoid the fallout. To do that, you should adopt proactive and preventative measures to keep your information secure.

If you’ve been victimized, don’t lose hope. Many credit card providers and banks offer zero-liability fraud protection as long as the fraud is reported promptly. Check their policies regarding reporting deadlines and reimbursement restrictions.

Investigations into fraud might take weeks or months to complete. Some companies may instantly refund your money for fraudulent transactions. Others may withhold reimbursements until a settlement is reached.