Fraud and Identity Theft: How to Protect Yourself and Your Finances
Identity theft is a type of fraud that occurs when someone steals your personal information, and can have serious financial and personal consequences, such as damage to your credit score, loss of funds, and even criminal charges if the thief commits crimes in your name.
Identity theft happens when a criminal or criminals steal your identity and uses your personal or financial information without your permission. It can damage your credit status and cost you time and money. Criminals may steal your name and address, credit card, or bank account numbers, Social Security number, or medical insurance account numbers and they could use them to:
Buy things with your credit cards
Get new credit cards in your name
Open a phone, electricity, or gas account in your name
Steal your tax refund
Use your health insurance to get medical care
Pretend to be you if they are arrested
How to report ID theft
To report identity theft, contact:
The Federal Trade Commission (FTC) online at IdentityTheft.gov or call 1-877-438-4338
The three major credit reporting agencies. Ask them to place fraud alerts and a credit freeze on your accounts
The fraud department at your credit card issuers, bank, and other places where you have accounts
Use IdentityTheft.gov’s list of steps to help you recover.
How to protect yourself from identity theft
Taking steps to protect your personal information can help you avoid identity theft. Here’s what you can do to stay ahead of identity thieves.
Protect documents that have personal information
Keep your financial records, Social Security and Medicare cards, and any other documents that have personal information in a safe place. When you decide to get rid of those documents, shred them before you throw them away. If you don’t have a shredder, look for a local shred day, or use a marker to block out account numbers.
If you get statements with personal information in the mail, take your mail out of the mailbox as soon as you can.
Ask questions before giving out your Social Security number
Some organizations need your Social Security number to identify you. Those organizations include the IRS, your bank, and your employer. Organizations like these that do need your Social Security number won’t call, email, or text you to ask for it.
Other organizations that might ask you for your Social Security number might not really need it. Those organizations include a medical provider, a company, or your child’s school. Ask these questions before you give them your Social Security number:
Why do you need it?
How will you protect it?
Can you use a different identifier?
Can you use just the last four digits of my Social Security number?
Protect your information from scammers online and on your phone
If you’re logging in to an online account, use a strong password.
Add multi-factor authentication for accounts that offer it. Multi-factor authentication offers extra security by requiring two or more credentials to log in to your account. The additional credentials you need to log in to your account fall into two categories: something you have — like a passcode you get via text message or an authentication app, or something you are — like a scan of your fingerprint, your retina, or your face. Multi-factor authentication makes it harder for scammers to log in to your accounts if they do get your username and password.
Do not give your personal information to someone who calls, emails, or texts you. It could be a scammer trying to steal your information.
How To Know if Someone Stole Your Identity
In addition to taking steps to protect your information, it pays to know how to tell if someone stole your identity. There are things you can do yourself to detect identity theft. There also are companies that sell credit and identity monitoring services.
What you can do to detect identity theft
Here’s what you can do to spot identity theft:
Track what bills you owe and when they’re due. If you stop getting a bill, that could be a sign that someone changed your billing address.
Review your bills. Charges for things you didn’t buy could be a sign of identity theft. So could a new bill you didn’t expect.
Check your bank account statement. Withdrawals you didn’t make could be a sign of identity theft.
Get and review your credit reports. Accounts in your name that you don’t recognize could be a sign of identity theft. Here’s how you can get your free credit reports.
Credit monitoring services
Credit monitoring services scan activity that shows up on your credit reports. They might monitor activity at one, two, or all three of the major credit bureaus — Equifax, Experian, and TransUnion.
Credit monitoring services will usually alert you when
A company checks your credit history
A new loan or credit card account appears on your credit reports
A creditor or debt collector says your payment is late
Public records show that you filed for bankruptcy
Someone files a lawsuit against you
Your credit limit changes
Your personal information, like your name, address, or phone number, changes
Credit monitoring services will not alert you when
Someone withdraws money from your bank account
Someone uses your Social Security number to file a tax return and collect your refund
If you’re considering using a credit monitoring service, here are some questions you can ask them:
How often do you check credit reports for changes?
Which of the three credit bureaus do you monitor?
Is there a limit to how often I can review my credit reports?
Will I be charged each time I review my credit reports?
Are other services included, like access to my credit score?
Identity monitoring services
Companies that offer identity monitoring services check databases that collect different types of information to see if they contain new or inaccurate information about you. Those could be a sign that someone is using your personal information. These services can detect uses of your personal information that won’t show up on your credit report.
Identity monitoring services may tell you when your information shows up in
A change of address request
Court or arrest records
Orders for new utility, cable, or wireless services
An application for a payday loan
A request to cash a check
On social media
On websites that identity thieves use to trade stolen information
Most identity monitoring services will not alert you if someone uses your information to
File a tax return and collect your refund
Get Medicare benefits
Get Medicaid benefits
get welfare benefits
Claim Social Security benefits
Claim unemployment benefits
Identity recovery services
Companies that sell credit and identity monitoring services also may offer identity recovery services to help you fix any damage caused by identity theft. These services may be included or cost extra. Some of the services they offer may be things you can do on your own for little or no cost.
Identity recovery services typically give you access to counselors or case managers who will help you recover your identity. They may
Help you write letters to creditors and debt collectors
Place a freeze on your credit report to prevent an identity thief from opening new accounts in your name
Guide you through documents you have to review
Some services will represent you in dealing with creditors or other institutions if you formally grant them authority to act on your behalf.
Identity theft insurance
Companies that sell monitoring services also may offer identity theft insurance. These services may be included or cost extra.
Identity theft insurance may cover
out-of-pocket expenses directly associated with reclaiming your identity, like
the cost of copying documents
postage costs for sending documents
costs for getting documents notarized
wages you lost
legal fees you paid
Identity theft insurance generally won’t reimburse you for money stolen or financial loss resulting from the theft. Most policies won’t pay if your loss is covered by your homeowner’s or renter’s insurance. If you’re considering getting identity theft insurance, ask about the deductible and find out what’s covered and what isn’t.
