Recently my girlfriend became the victim of identity theft and she wasn’t the only one, in 2013 there were 11,571,900 victims of identity theft (7% of US households were affected) according to the U.S. Department of Justice, Javelin Strategy & Research. We aren’t exactly sure how it happened, but thieves were able to apply for new credit cards in her name and spend significant amounts before she realized. Eventually she was able get the accounts closed down and wasn’t held liable for any of the fraudulent spend but it took a lot of time, energy and a bit of money as well. In trying to track how she became a victim of ID theft, I created this list of things people should do to avoid becoming a victim of identity theft.
1. Change all of your personal identification numbers (PINs) to something that is not easily guessed.
PINs such as “0000” or “1234” or your birthday make it easier for a thief to gain access to your credit accounts. Since January, 2013 banks will also not cover fraudulent transactions if the PIN is something that is easily guessable by a thief.
You should also never use the same PIN for multiple accounts, that way if one account is compromised the others won’t also be compromised. If you struggle to remember multiple numbers, you can have a three digit base PIN (e.g 459) and change the last number based on the name of the banking institution (e.g Chase would be 3 as C is the third letter in the alphabet).
Whenever you enter your PIN you should also cover the input pad with your free hand. This prevents people behind you or any cameras from being able to see your PIN.
2. Shred all personally identifiable documents with a cross shredder.
One of the ways that identity thieves work is by slowly building up a fake identity. For example, they might start by stealing a bank statement out of your trash can. They’ll then use that to get a library card in your name, once they have access to this they might be able to get access to some type of photographic ID. Eventually they’ll have enough to be able to steal your identity completely and create bank and credit card accounts in your name.
By using a cross shredder (a shredder that cuts both horizontally and vertically) to destroy all of these documents identity thieves are likely to move onto an easier target. Cross shredders can be purchased for as little as $25 on Amazon.
3. Don’t carry excessive documentation with you
There is no need to carry multiple photo IDs, credit cards and your social security number card with you where ever you go. Try to bring only the bare essentials, that way if your wallet or purse is lost or gets stolen there is less chance of your identity being stolen. If you do lose your wallet or purse then make sure you report all of your lost documents immediately.
4. Only give out person information when you initiate the call
ID thieves often try to get social security numbers and other personal information by pretending to be a bank or the government. Neither will ask for this information unless you initiate the call, if they initiate the call say “thank you, I’m worried about identity theft. I’ll now be hanging up and calling your official phone number. What department should I request to be transferred to?”
This will also help banks and governments know about scammers targeting their customers.
5. Don’t bother with identity theft insurance
Identity theft insurance is becoming a more and more popular product for insurance companies to sell, that’s because it’s marketed on fear and has massive profit margins. The reasons why we don’t suggest taking out identity theft insurance, is in the event that your identity is stolen it’ll only pay for expenses that are used to recover your identity (phone bills, notary and certified mailing costs, lost wages up to an absolute maximum of four weeks, postage and obtaining credit reports).
It doesn’t cover any of the damage done by the thieves and won’t pay off any debt incurred by them in your name.
6. Access your credit reports regularly, or sign up to a credit monitoring service
If you do fall victim to identity theft it’s best to catch it early to minimize any damage done. This is one of the reasons why you should be accessing your credit report once per year from each of the three credit bureaus (TransUnion, Equifax & Experian). You can do this for free by using the government website: annualcreditreport.com. There are also a number of websites that will monitor your credit report for major changes (e.g applications for new credit) for free. They are:
- Quizzle (works for the Equifax credit bureau)
- Credit Sesame (works for the Experian credit bureau)
- Credit.com (works for the Experian credit bureau)
- Credit Karma (works for the TransUnion credit bureau)
- WisePiggy (works for the TransUnion credit bureau)
What To Do In The Event Your Identity Is Stolen
If you notice that your identity is stolen, you should take the following steps:
- Place an initial fraud alert at one of the three credit bureaus (they are legally required to tell the other two bureaus). This is free and lasts a period of 90 days, you can extend this after the initial 90 days are up. They should also inform you of your right to an additional free credit report, request a copy of this as well (ask them to only include the last four digits on your social security number on the report). You place a fraud alert by calling any of the three bureaus on the following numbers:
- Check your credit reports for accounts that you haven’t opened. If you find any, contact the financial institutions that these have been opened with. Ask to be redirected to the fraud department and state that you’ve been the victim of identity theft and that those accounts are not yours. Make sure you also send a certified letter to each company as well and ask for a return receipt. This way you have a clear paper trail in case they came they didn’t receive any correspondence from you.
- Create an identity theft report. Submit an initial identity theft affidavit with the FTC. Print this off and take it to your local police station, file a police report about the identity theft. Your identity theft affidavit and police report create what is known as an identity theft report. Most financial institutions will require this report before they can remove accounts from your record.
- Make sure you follow our original steps to make sure you don’t become the victim of identity theft again
William Charles is a consumer credit advocate and spokesperson who blogs regularly at Doctor of Credit on topics ranging from credit scores to consumer credit law. He’s available as both a guest speaker and writer. If you have any consumer credit questions, feel free to ask him in the comments.