Five Tips for Guarding Against Identity Theft

by J. M. Pressley
First published: February 22, 2009

Identity theft can be costly and time-consuming to clear up. Here are some tips to make your life easier—and a potential thief's job a lot harder.

Identity theft has been getting a lot of press in the past few years. Last year alone, nearly 10 million cases of identity theft were reported, a 22% increase over 2007 (source: Javelin Strategy & Research). It's not a new issue; Congress first passed the Identity Theft and Assumption Deterrence Act in 1998 as a response to the rising problem. Fraud in your name can be costly and time-consuming to clear up. As with many forms of crime, an ounce of prevention is worth a pound of cure. Here are some tips to make your life easier-and a potential thief's job a lot harder.

  1. Safeguard your Social Security number. Your Social Security number (SSN) is a crucial piece of personally identifiable information. Its unique role in tracking an individual's income means that pretty much any financial account requires your SSN with the application. That makes it imperative that you protect it; armed with a valid SSN, a criminal can start creating an entire alternate identity in your name. Keep your Social Security card someplace safe, not in your wallet. Avoid writing your SSN on any checks, account statements, or other documents, and try asking if you can give alternate forms of identification (i.e., a driver's license number) whenever possible. Don't give your SSN out unless it's a necessity. That especially includes any e-mail solicitation asking you for your SSN—it's most likely a scam.
  2. Make sure your electronic information is securely transmitted. Be aware that the Internet is not necessarily the safest means of sending sensitive information. Most information is sent "in the clear," meaning that the transmission of information isn't encrypted. That's a primary reason why you should avoid sending anything that could compromise an account's security through regular e-mail channels. When making orders online, make sure you know and trust the business (any company doing business online should publish its privacy and security policies) and make sure their website is secure—your browser will indicate whether or not there is encryption in place when ordering. You can also look for secure Web pages to start with https:// in their address. Services such as PayPal (www.paypal.com) can provide an additional layer of protection by limiting the exposure of bank accounts and credit cards when making online payments.
  3. Limit your paper exposure. Wherever possible, consider choosing the "paperless" option with financial statements, payments, invoices, etc. Most institutions now offer some form of e-delivery, either sending the document itself or notifying you of its availability. This helps avoid clutter at home while keeping your account details secure. If you simply can't do without paper, consider investing in a good cross-cut shredder for safe document disposal. At the very least, a shredder will make it a lot harder on any dumpster-divers when you're tossing old paperwork.
  4. Stay aware of your surroundings. This is harder than it sounds. It means paying attention while you're at an ATM, at the cash register, or even just talking on the telephone. A professional thief doesn't need much of an opportunity to get compromising information. It's less about suspicion than it is about common sense. Make it more difficult and you make yourself a worse mark. Just as a burglar prefers an unlocked door to breaking in, identity thieves are looking first for the low-hanging fruit. This type of theft is more discreet than the typical bump-and-run pickpocket job, but a little attention can go a long way.
  5. Consider taking advantage of credit services. You are guaranteed one free credit report from the three major agencies each year. You can order this online from www.AnnualCreditReport.com. There are also a number of identity protection services, although these generally come with monthly fees (sometimes for services you could do yourself for free). Regardless of the guarantees any service may make, always be sure to know the terms and limitations, and confirm that if the company is monitoring your credit report, they are monitoring all three reporting agencies. Definitely do your homework and research your options before signing on with any protection service.

Sources

Associated Press, Federal Trade Commission, U.S Department of Justice, CNN, Time Magazine