How to help protect against identity theft

Quick insights

• Identity theft can occur when your personal information is not secure.
• Using strong passwords, setting up two-factor authentication and following online safety best practices are some ways to help protect against identity theft.
• Federal laws provide certain protections against identity theft and its consequences.

Identity theft is the fraudulent acquisition and use of someone’s personal information, usually for financial gain. When someone commits identity theft, they may use stolen information to open new credit accounts, make fraudulent purchases or commit crimes in the victim’s name.

In this article we’ll discuss how identity theft occurs and ways that can help you reduce the risk.

How identity theft occurs

Identity thieves often target sensitive information such as Social Security numbers, bank account details and credit card information. Access to this information can enable identity thieves to impersonate you or commit fraud in various ways.

• Financial: Stealing your personal information to make fraudulent charges or open lines of credit in your name.
• Medical: Using your personal information to submit fraudulent claims to Medicare and other health insurers.
• Criminal: Using another person’s identity to commit a crime or avoid arrest or conviction.

Types of identity theft

How personal information is obtained varies. Some common methods used to commit identity theft include:

Phishing scams

A phishing scam is an attempt to obtain sensitive information such as usernames, passwords and credit or debit card details by someone disguising themself as a trustworthy person in an electronic communication.

Data breaches

Data breaches occur when an unauthorized party gains access to a database containing personal information. The stolen data can be used to impersonate victims, open fraudulent accounts, access private systems and more.

Mail theft

Thieves may steal directly from your mailbox to obtain account statements, tax information or new credit or debit cards. One way mail theft may occur is by dumpster diving. This involves rummaging through trash to find bills, statements or other documents that contain personal information.

Despite the rise of digital methods and paperless statements, traditional techniques like mail theft still present potential risk.

Skimming devices

These are used to illegally collect data from the magnetic strip of a credit, debit or ATM card. They can be placed, for example, over the card slot of an ATM or gas station pump to illegally obtain your card’s information.

Malware and spyware

Malware, short for malicious software, includes various threats, with spyware being one type designed to secretly monitor user activity. Malware can be installed on your computer without your knowledge. It can track your keystrokes to capture passwords, account numbers and other personal data.

Wi-Fi eavesdropping

Unsecured Wi-Fi networks can provide a way for thieves to intercept the data you send and receive online, including passwords and account information. Public, unsecured networks are open networks and are typically easier to hack into than private networks.

Identity theft via social media

Thieves can gather personal information that you share on social media to guess answers to security questions or to create targeted phishing attacks.

8 ways to help protect yourself against identity theft

Identity theft can be a significant hassle for the person impacted. It can result in financial loss, credit damage and emotional distress—all of which can take time to undo.

There are several steps people can take to help safeguard information and reduce the risk of identity theft.

Here are eight ways to help protect against identity theft:

1. Secure your personal information

Security steps can start at home. It can be a good idea to store important documents, such as your Social Security card, passport and birth certificate, in a safe place in your home. Shredding documents before disposal can be a helpful way to reduce the risk of personal information being accessed.

Identity theft can also occur through phone scams. Verifying the identity of callers before sharing information is a useful precaution.

2. Use strong, unique passwords

A best practice is to use passphrases to protect against unlawful access to your information. A strong passphrase is comprised of multiple words and avoids using information that could be guessed easily.

Ideally, each of your online accounts should have a unique password to help prevent theft. Keeping track of multiple passwords may be challenging, so you may want to consider using a password manager to help you remember and protect your passwords.

3. Enable two-factor authentication

Two-factor authentication adds an extra layer of defense by requiring a second form of identification. In addition to your password, two-factor or multi-factor authentication requires that you prove your identity a second way—often via a passcode, facial recognition, email or verification code.

Whenever possible, you may want to consider enabling two-factor authentication on your online accounts.

4. Use public Wi-Fi carefully

Public Wi-Fi is generally less secure than private networks. You may want to be cautious of what you're sharing and accessing when using a public network.

You may want to avoid accessing private information, like your bank or credit card accounts, when using public Wi-Fi. Using a virtual private network (VPN) can add a layer of protection when using public Wi-Fi.

5. Monitor your financial accounts regularly

Detecting identity theft early can help mitigate its potential risk. Checking your accounts regularly—including bank and credit card accounts—can help you spot unauthorized transactions early.

You can also take a proactive approach by setting up alerts so you can be notified of any transactions over a certain amount and identify if they are out of the ordinary.

6. Check your credit reports regularly

Consumers can request a free credit report annual from each of the three major credit bureaus. Regularly checking your credit reports can help you spot any unusual activity, such as a credit inquiry or new accounts that you did not authorize.

7. Be cautious with emails and phishing scams

Emails asking for personal information, even if they appear to be from a legitimate source, can pose a security threat. Clicking on links in suspicious emails may lead to phishing websites designed to steal personal information.

For example, people can create email addresses that look like legitimate emails from stores you shop at but are designed to entice recipients to click on harmful websites or provide personal information.

8. Keep your computer and mobile devices secure

Up-to-date operating systems and browsers also may help protect your information. Having the latest version of your computer or phone’s operating system, the browsers you use and any antivirus can make it harder for identity thieves to access your information.

Consider using an identity theft protection service

There are services that can monitor credit and personal information for any signs of identity theft. Some services also offer recovery assistance and insurance to help mitigate the impact if identity theft occurs.

Federal laws protecting against identity theft

Should your identity or personal information get stolen, you may be protected by federal law. Some federal laws that may apply include:

• Identity Theft and Assumption Deterrence Act: Makes it a federal crime to commit, attempt or aid in knowingly transferring or using another person's identifying information.
• The Fair and Accurate Credit Transactions Act (FACTA): Allows consumers to request and obtain a free credit report once every twelve months from each of the three nationwide consumer credit reporting companies.
• Fair Credit Reporting Act: Protects consumers' credit information and privacy and ensures that consumer reports are accurate and used for legitimate purposes.

The Federal Trade Commission (FTC) is tasked with enforcing federal identity theft laws and providing resources for victims.

How to report identity theft

If you are a victim of identity theft, consider reporting the incident to the appropriate authorities and secure any accounts that may have been compromised. Here are some actions you could take:

• Reach out to the fraud department at your credit card issuers, bank or other places where you have accounts that may have been compromised.
• Report your identity theft to the FTC online at IdentityTheft.gov or call 1-877-438- 4338.
• Contact the three major credit reporting agencies and ask them to place fraud alerts or a freeze on your accounts.

In summary

There are many things you can do to help protect yourself and your finances against identity theft. A few options include regularly monitoring your financial accounts, using unique passwords, being cautious of the information you share online and using a secure mailbox to protect your personal information.

Taking proactive measures can help reduce risk, and if identity theft occurs, various actions and federal laws may offer protections. While identity theft is a serious issue, it can be effectively managed with the right knowledge and tools.