Over the past decade or so, identity theft and cyberattacks have become common threats for individuals and businesses. Nearly every day there are news stories about companies being “hacked,” which of course can have an impact on their customers as well.
Traditionally, cybercriminals typically focused on acquiring their victims’ private information for the purpose of financial gain. But as these thieves have become more sophisticated, they are now able to inflict much more serious financial and even physical damage. This type of crime could even change your life as you struggle to restore your credit and bank accounts, your medical records, and possibly even your personal reputation.
The good news is that as this type of crime has grown, so have the ways you can go about protecting yourself. Putting some precautions in place could make a world of difference in your personal and financial life.
Common Online Threats
It is estimated that roughly 49 million consumers lost $56 billion to identity-theft fraud in 2020. Approximately $13 billion in losses were due to “traditional” identity fraud, which consists of criminals stealing personal information for their own gain.
Beyond the usual identity theft and unauthorized use of credit cards, some of the more common online threats include:
Falsified Tax Returns – Tax-related identity theft occurs when someone uses a victim’s stolen personal information—including their Social Security number—to file a tax return and claim a fraudulent refund.
Medical Identity Theft – Identity thieves use someone else’s personal information and medical records to obtain health care. Because the victim’s medical history would then be compromised with the criminal’s own medical records, it could become life-threatening if the victim later needs medical care and is given the wrong treatment and/or medication.
House Stealing or Deed Theft – Criminals can steal someone’s identity and then forge deed or title documents in order to “sell” the victim’s home to unsuspecting buyers, or to borrow against the equity that has been built up in the property.
The Long-Term Impact of Cybercrimes
If you become a victim of ID theft or other type of cybercrime, it can affect you in a number of ways. As an example, in addition to the time and effort it can take to restore your credit and finances—with no guarantee that you will ever be able to get back to square one—this type of situation can impact you mentally and emotionally.
For many victims of identity theft, missed workdays are also common, and in turn, your income (and possibly even your job) could suffer as a result of the time you must set aside to recover lost funds, rectify your credit report, and ensure that your information is intact going forward. Likewise, personal relationships may also be affected.
Taking Steps to Better Protect Yourself
Although there is no guarantee that you will never become a victim of identity theft or a cyberattack, there are steps you can take to reduce the odds:
• Create strong email and account passwords, and change them regularly.
• Have a two-step login or authentication process on your email and online financial accounts.
• Do not save credit card information online for future transactions.
• Pay bills online (physical checks are easy for thieves to steal).
• Regularly update the software on your internet router and your other devices.
• Run anti-virus software.
• Do not open emails and/or links unless you know who they are from.
• Never provide personal or financial information in response to potential “phishing” emails (i.e., emails that appear to come from a reputable source that trick you into revealing personal or financial details).
• Make sure that you back up the data on all of your devices on a physical external hard drive, and via a cloud backup service.
• Ensure that you have strong privacy settings on your social-media accounts, and do not post personal details such as your home address or phone number.
• If you go online while you are in a public place, install strong privacy programs on your laptop, tablet, and/or smartphone.
• Use a separate email address for conducting banking and financial transactions.
• Put a security “freeze” on your credit files maintained by the three major credit bureaus (Equifax, Experian, and TransUnion).
• Set up automatic updates on your smartphone apps and computer programs.
• Purchase identity theft and/or cybersecurity insurance coverage.
• Know what steps to take immediately if you become the victim of a cybercrime.
Protecting yourself from a cyberattack can take some time, but it can be well worth it to reduce your chances of becoming a victim. Your financial-planning professional can tell you more about how to keep your investment and retirement accounts safer, and also implement these types of precautions as part of your overall financial plan.
This article appears in the July 2021 edition of OutSmart magazine.