How Can You Better Protect Yourself from Identity Theft?
Lately it seems that whenever I turn on the television or listen to the radio, I notice advertisements for LifeLock or similar services designed to guard against identity theft. The topic of identity theft always grabs my attention because I have personal experience with it (two instances, in fact). An informal poll at the office revealed that ¼ of our staff has been a victim of identity theft – half of those on more than one occasion. But everyone wanted to know more about how to ward off this crime, and I thought I’d share these best practices with Meridian’s extended family, too. While you can’t completely prevent identity theft, establishing a few personal information policies will go a long way towards helping you avoid being an easy target.
“Brick and Mortar” Shopping
The theme when you go shopping should be “for your eyes only.” This applies, first, to what you should leave at home, and second, to how you guard what you do keep in your wallet. Let’s talk about what you should not take with you when you head to the mall. Leave your Social Security card, Medicare card, and checkbook behind. Your Social Security number (which is printed on your Medicare card if you have one) is all a thief needs to open a credit card in your name without your knowledge. And if a thief gains access to a check or deposit slip, you can be vulnerable even after you discover the fraud and close the account. Only take the number of checks that you will need with you, and write on them with a gel pen (this absorbs into the fibers of the paper and makes the check more difficult to alter).
The Identity Theft Resource Center suggests that as an alternative to carrying your Medicare card, you photocopy the original card and then cut out the last four digits of your Social Security Number.
Now that you know what to leave at home, what precautions should you take with the contents of your wallet? “Shoulder surfing” is a common method that thieves use to access your personal information; be sure to protect your credit cards, driver’s license, and checks from wandering eyes when you pay for your purchases. Your eyes, however, should remain on your credit card at all times to minimize the risk of skimming – when someone slides your card through a second machine and uses the information scanned from the magnetic strip to create a counterfeit card. Whenever possible, avoid stand-alone ATMs, which are often fitted with skimming devices.
Online Shopping – and More
The internet is an increasingly convenient way to shop, pay bills, conduct banking, and connect with others. It is important to remember that computers do not steal our information -identity thieves do. Provided that a merchant’s site is on a secure server (you will see an “https” prefix in the web address; the “s” indicates that the site is secure) and displays a closed yellow padlock next to the URL or in the bottom right corner of your browser, it is safe to shop online. Once you know that you are doing business with a reputable merchant using a secure server, protecting yourself is largely a matter of how you safeguard your computer and what you do when you are online.
When it comes to the computer itself, you will need to install anti-virus, anti-spyware, anti-malware, anti-spam, and firewall programs. Keep all of this software, as well as your operating system, updated. Instead of using “sleep” or “hibernate,” get in the habit of shutting down your computer when you aren’t using it. Doing so will dramatically reduce the risk of it being hacked or infected when not in use. Also, consider storing sensitive personal information – such as passwords, Social Security numbers, tax records, and financial records – on a CD or thumb drive instead of the computer’s hard drive.
Amid the proliferation of social networking and blogging sites, it is increasingly important to take steps to protect your identity when you are on the internet. Share the least amount of personal information required to complete a purchase or use a site, and come up with a strong password that you change regularly. And you may want to reconsider listing your birthdate or birth place on Facebook or the like, as well as posting photos and status updates that advertise when you are not at home.
Use Your SmartPhone Intelligently
Smartphones are essentially mini-computers, and many tasks that you would do on a computer – from paying bills or ordering takeout – can now be done conveniently on your smartphone. Unfortunately, the accessibility and convenience come at the price of diminished privacy and safety. Be sure to complete regular back-ups with a program that allows you to remotely “wipe” your phone if it is lost or stolen.
Apps exist for almost any purpose (you have probably heard the phrase, “There’s an app for that”); in fact, many are designed specifically to steal your personal identifying information. Before you download an app, make sure you know who developed it. Most large companies develop their apps in-house. If an app is new or unfamiliar, take a few minutes to research it to confirm that it is safe and reputable. Make sure that you know what personal information you are allowing the app to access when you accept its terms and conditions, and be cautious about the “Login with my Facebook account” shortcut, which gives apps access not only to your Facebook information but also to that of your friends. Additionally, turn off location services and GPS when they aren’t specifically needed to use an app.
Credit vs. Debit
You have two main choices when you make a purchase with a card: credit and debit. The great thing about debit cards is that they don’t allow you to spend more money than you have. But if your debit card gets into the hands of the wrong person, they can spend all the money that you do have – at least in the account associated with the card. Hands down, credit cards are the safest way to make non-cash purchases. In addition to allowing for disputes with vendors in the event of fraudulent charges, most major credit card issues offer fraud monitoring and/or identity theft protection services. Fraud-related losses are limited to $50 for credit card accounts. On the other hand, debit card holders are responsible for the first $500 of fraudulent charges – IF unauthorized use is detected and reported within 60 days.
The question of Meridian’s official position regarding credit versus debit sparked lively discussion at the office. We all agree that credit cards offer greater protection against identity theft occurrence and loss, yet several of us simply prefer to use debit cards. What you choose to do is a largely a matter of how you value the benefits of using a debit card relative to the greater risk. If you do opt in favor of debit, check your account transactions daily so that you can detect and report suspicious activity as soon as possible. And when shopping online, consider using a PayPal or a secure payment agent (“SPA”), which replaces all of your real personal information with anonymous data that becomes useless after a transaction is complete and cannot be tracked back to you. No matter which form of plastic you choose to use, review your account activity regularly and report loss or any questionable activity immediately.
What Else Can You Do?
In addition to monitoring your account activity, familiarize yourself with the fraud monitoring and identity theft protection services that your banks and credit card issuers offer. As well, it is crucial to scrutinize your credit reports on a regular basis. You can access reports from the three credit reporting bureaus at www.annualcreditreport.com. Each bureau offers a free copy of your credit report once a year; consider staggering your access so that you review one report every four months. You can also place a fraud alert on each of your credit reports for additional protection. If you prefer to delegate the majority of the legwork, investigate the many identity protection services that are now available. Take time to conduct research and read reviews to ensure that you sign up with a reputable company.
If you do suspect that you have been a victim of identity theft, contact the Federal Trade Commission (www.ftc.gov) immediately. The FTC website includes a step-by-step guide that walks consumers through every action that they need to take if they have been affected by identity theft, including creating an Identity Theft Affidavit, dealing with merchants, and removing fraudulent activity from credit reports. Handling the fallout from identity theft can require a tremendous amount of time and effort; the FTC estimates that recovering from identity theft takes an average of six months and 200 hours of work.
You should consider purchasing insurance that reimburses you for financial loss and handles all of the phases of the identity recovery process. This type of insurance only costs about $75/year for individual and $150/year for family coverage. Do not bother with providers who limit their identity repair assistance to an identity repair kit or the guidance of “identity restoration” specialists.
Please contact me or any member of the Meridian team if you have questions about identity theft or any other matter with which we can provide assistance. And be sure to visit our updated website at www.trustmeridian.com or www.meridiantrust.net.
Meet the Author
Laura K. Lyons, CFP®
A Certified Financial Planner practitioner, Laura is the newest member of Meridian’s team. She works closely with Meridian’s clients and is here to help you take the right steps to achieve your financial goals. As a part of this process, she collaborates with your tax professionals, estate planning attorneys, and other trusted advisers. By partnering with a CFP® to coordinate these important aspects of your financial life, you can focus on your passions and interests with the peace of mind that you are making the best financial decisions for you and your family.