What losing your identity can really cost
by Grace S. Yung, CFP
Over the past several years, identity theft has affected millions of people in the U.S. and around the world. Last December alone, a security breach at Target stores exposed credit card information and personal data of more than 110 million people—and it appears to have started with an e-mail “phishing” scheme. More recently, Home Depot has been added to the list of major retailers that have been targeted in a string of hacking attacks by criminals who are seeking customers’ payment information.
Identity theft can happen to anyone, and an identity thief who gains access to your personal information can do a number of things that are extremely damaging and costly, such as:
• Draining your bank account(s)
• Running up charges on your credit cards
• Opening up new accounts for utilities and cell phones
• Obtaining medical treatment on your health insurance.
If you and a partner share bank accounts, investment accounts, and other jointly held items, having your identity stolen could create twice the trouble, as both individuals may be at risk.
Signs of Identity Theft
Even if your accounts don’t show signs of tampering, it’s still imperative that you take action if you’ve had your purse or wallet stolen, for example—or even if you suspect that someone has obtained your personal or financial information. You and your partner should each contact the credit reporting companies immediately and place a fraud alert on your credit files.
In addition, it’s a good idea to regularly check your bank and investment account statements for any type of unusual activity. Today, with most banks and brokerage firms allowing online account access, this is something that you can accomplish relatively easily since you can typically check your balances 24/7.
You should also order a copy of your credit report regularly in order to keep an eye on all of your accounts. This includes loans, credit cards, and other financial activity. All consumers are legally allowed to obtain one free copy of their credit report each year by going to annualcreditreport.com. Here, you will be able to view your information from all three of the big credit reporting agencies—Equifax, Experian, and TransUnion.
It’s a good idea to view all three reports, as not all companies and lenders report financial information to all three of the credit bureaus—so you may find some significant differences. Look for any type of unusual activity on your credit report, and contact the credit bureau immediately if you find any.
In addition to unusual activity on your credit report, there are other signs that may indicate your identity has been stolen. Some examples include:
• Finding unfamiliar withdrawals on your bank statement
• Merchants refusing to take your checks
• Debt collectors calling about debts that you did not incur
• A health insurance plan disputing a payment because your medical records show a condition that you don’t have
• Medical providers billing you for services or supplies that you did not use
• The IRS notifying you that more than one tax return was filed in your name.
Your identity or personal information may also have been compromised if you don’t get your bills or other mail. This could mean that identity thieves are intercepting these items in order to use account information.
Keeping Your Information Safe
One of the best ways to avoid becoming a victim of identity theft is to keep your personal and financial information safe. There are a number of ways to do this, both in online and offline situations.
When on the computer, there are several important “rules” that should be followed to keep your information as secure as possible. This is especially important if both you and your partner share the same computer, as it may contain sensitive personal and financial information about both of you. These include:
- Install security software. Making use of anti-virus and anti-spyware are two of the best ways that you can protect your computer. Doing so can protect your important files and online passwords for bank accounts, investment accounts, and other important areas.
- Don’t open suspicious e-mails. It should go without saying that any e-mail that says you’ve won millions of dollars in a foreign lottery is a scam—especially if it asks you to provide your bank account number so that you can receive “payment.” The number-one lesson here: don’t open these e-mails!
- Be smart about WiFi. When using the WiFi signal in a public location, it is important to be careful about sending any type of personal or sensitive financial information. Remember here that even if you are visiting an encrypted website via a public WiFi network, only the information that you send to and from that website is protected. If, however, you are connecting to the Internet through a secure wireless network, then all of the information that you are sending over that network should be protected.
- Don’t share passwords. Regardless of whether you’re working in a public place or in the privacy of your home or office, sharing your password should be off limits. This not only goes for computer-related information, but also the password for your ATM card and other items that could lead criminals to your personal and/or financial data.
When you’re out in the “real” world, there are also ways to protect your information from identity theft. For example, whenever you’re disposing of anything that contains your personal information on it, you need to be very sure that you have destroyed, shredded, or removed any access to it.
This means that prior to getting rid of an old computer, don’t just hit the Delete button to remove old files. You also need to use a “wipe” utility program to overwrite the entire hard drive. You should follow a similar procedure when discarding cell phones or other mobile devices.
You should also carefully guard your Social Security number—and if someone does happen to ask you for it, be sure that you ask why it is needed, how it will be used, and how it will be protected.
There are other ways to protect yourself, too. Services such as LifeLock help to safeguard your financial and personal information. When you sign up with these companies, they will actively monitor for potential threats by looking out for unusual credit card transactions, bank activity, and entries on your credit report.
If a threat is detected, you will be alerted via phone, text, or e-mail so that you can quickly put a stop to any additional transactions, and take any further action that may be needed. While the cost of these programs can vary, a basic plan costs approximately $10 per month. But considering that, on average, those whose personal information is misused can lose an average of more than $9,600, the price is well worth it.
Personal finance-related questions may be e-mailed to [email protected]
Grace S. Yung, CFP, is a certified financial planner practitioner with experience in helping domestic partners plan their finances since 1994. She is a principal at Midtown Financial LLC in Houston and was recognized as a “Five-Star Wealth Manager” in the 2014 September issue of Texas Monthly.