In today’s fast-paced digital world, identity theft has become a growing threat, with nearly 33% of Americans having experienced an attempt to steal their identity. Alarmingly, experts estimate that a new case occurs every 22 seconds. As financial professionals, one of our top priorities is helping clients protect their wealth, and that starts with safeguarding personal information.
This post offers practical strategies to help protect your personal and financial data and ensure your financial security remains intact.
The Most Common Types of Identity Theft
Identity theft can take many forms, with some of the most prevalent including:
Credit card fraud
Government documents or benefits fraud
Loan or lease fraud
Each of these can have significant consequences if your information is stolen and used maliciously.
The Financial Impact of Identity Theft
Recovering from identity theft can be a long and complicated process. Depending on what personal information is compromised, victims often face challenges like disputing fraudulent charges on their credit reports, cleaning up compromised bank accounts, and restoring their credit.
For example, if an identity thief uses your Social Security number to gain employment, you may have to work with both the Social Security Administration and the IRS. Similarly, identity thieves can manipulate your tax records, leading to issues with under-reported income or stolen tax refunds. In some cases, legal fees and ongoing costs may further complicate the recovery process.
Common-Sense Protections
At a bare minimum, use technology-enabled safeguards to help protect your identity and personal data, such as antivirus protection software, password managers, identity theft protection, virtual personal networks, and two-factor authentication on devices and accounts. While identity thieves are becoming more sophisticated, there are simple actions you can take to reduce your risk. Here are a few strategies:
Keep your mail secure: Criminals can steal sensitive documents directly from your mailbox. Avoid leaving mail uncollected for long periods, and consider putting a hold on mail deliveries when you're away.
Review financial statements regularly: Scrutinize your bank and credit card statements for any unusual activity. Thieves often start with small transactions to test the waters before making larger purchases.
Freeze your credit: Consider placing a freeze on your credit to prevent unauthorized access. It’s an easy process with the three major credit bureaus and can prevent new accounts from being opened in your name.
Use strong, unique passwords: Avoid using the same password for multiple accounts and opt for longer, more complex passwords. According to the FBI, passwords with at least 15 characters are significantly harder to crack.
Shred documents with personal information: Not all identity theft happens online. Paper records like bank statements and utility bills can be just as dangerous in the wrong hands. Shredding them is an easy way to protect yourself.
Opt out of pre-screened credit card offers: Criminals can intercept these offers and use them to open accounts in your name. Opting out reduces your exposure.
Clean out your wallet: Here are a few suggestions to reduce your risk of becoming a victim:
Social Security number: Leave your Social Security card at home in a safe location. Those nine digits can help an identity thief to obtain loans or credit card accounts in your name. A bad actor could also use your Social Security number with the IRS.
Checks: Leave checks and deposit slips at home. These items may contain more information than you think, including your name, address, bank name, routing number, and account number.
Password cheat sheets: Scraps of paper with sensitive information, such as PINs and passwords, can be risky, so add them to the list of what not to keep in your wallet.
Numerous cards: It may be best to limit the number of credit cards in your wallet. The same goes for excess cash and gift cards.
Bypass the PIN at the gas pump: One of the most common schemes is when criminals install a skimming device directly over the credit card slot at a gas pump. These skimmers capture and store your card data when you insert or swipe your card. If something looks off, don’t use that pump. Also, if you use a debit card to pay for your gas, bypass the PIN if possible and use your zip code instead. That may prevent someone from stealing your PIN using a pinhole camera.
Safe Disposal of Digital Devices
t’s not enough to simply delete files from old digital devices before discarding them. Thieves can still recover sensitive data, so it’s essential to use proper disposal methods. Many communities offer secure electronic recycling events where devices can be safely discarded.
Identity Theft Protection Services
Identity theft protection services monitor various sources, such as credit reports and the dark web, for signs of suspicious activity. These services provide alerts when unusual activity is detected and guide you through the recovery process if needed. While they can be a useful layer of defense, it’s important to research and choose a service that best fits your needs.
Warning Signs of Identity Theft
You may not immediately realize you've fallen victim to identity theft, but there are several red flags to watch for:
Unexplained bills or charges
Debt collection calls for accounts you did not open
Errors on your credit report
Denials of loan applications for no apparent reason
Missing or tampered mail
If you notice any of these warning signs, consider placing fraud alerts or a credit freeze on your accounts. This can help prevent further damage.
Pro tip: When you place a fraud alert on your credit report at one of the nationwide credit reporting companies, it must notify the others.
Protecting Your Financial Future
At Eiger Wealth Management, we believe that safeguarding your identity is as important as making sound investment decisions. Taking proactive steps today can protect your personal and financial well-being in the future. If you’re concerned about identity theft or would like advice on how it fits into your broader financial strategy, feel free to reach out. We’re here to help.
Sources:
IdentityTheft.org, 2024 https://identitytheft.org/statistics/
Lifelock.Norton.com, February 4, 2021 https://lifelock.norton.com/learn/identity-theft-resources/lasting-effects-of-identity-theft
U.S. News & World Report, May 4, 2024 https://www.usnews.com/360-reviews/privacy/identity-theft-protection/10-ways-to-prevent-identity-theft
Discover, May 23, 2023 https://www.discover.com/online-banking/banking-topics/7-things-you-should-never-carry-in-your-wallet/
YahooFinance.com, April 9, 2024 https://finance.yahoo.com/news/9-ways-protect-yourself-credit-110028832.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuYmluZy5jb20v&guce_referrer_sig=AQAAAD-gSiSE0XJ4TWsBMPswXbQ5dvIqZd65QlTQ7IXt-m1XzrWMsaa_1MJICs9I8f3JbANzT4n7V2tWEAP1dx0qWGul0i5wMwqthwwMKxqL0N6wGUqqXW4I_mvPqqTUNIbzHK15PB-7gsKpc3nXnYuSeR_Jup4_lqpxahaoyv7L-nWM
USAGove.com, July 28, 2024 https://www.usa.gov/identity-theft#:~:text=Identity%20theft%20happens
Consumer Financial Protection Board, February 27, 2024 https://www.consumerfinance.gov/ask-cfpb/what-do-i-do-if-i-think-i-have-been-a-victim-of-identity-theft-en-31/
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