How to Prevent Identity Theft -- Part I

What a surprise: Victims of identity fraud are more likely to be between 25 and 34, but don't get too comfortable if you fall outside this demographic group. Everyone is vulnerable.

During 2005, 8.9 million cases of compromised identity were reported in the United States. While the number of incidents decreased 12 percent between 2003 and 2005, the total amount of fraud increased by 6 percent to $56.6 billion, according to a study conducted for the Better Business Bureau by Javelin Strategy & Research, a financial services marketing and research firm.

Javelin revealed that 63 percent of identity fraud was perpetrated by one of these methods:

• Theft by close associates – friends, family, neighbors, etc.
• Lost or stolen wallets, credit cards, and checkbooks.
• Breached home computers.
• Stolen mail or trash.

Credit monitoring services have mushroomed along with identity theft fears. However, as we discussed in a previous column (Don't Use Credit Monitoring Services), frequent credit checks by any third party will lower your credit ratings. And using these services can create a false sense of security because there are actions you need to take to secure your personal information.

Here are some simple steps you can take to protect your identity:

• Never release your Social Security number or any account numbers in response to e-mail, phone, or in-person requests. Call or e-mail the business or organization using public contact information to verify the validity of a request. Do not use an e-mail response link. Type in the whole address for the Web site home page and make contact through the Web site or by phone. Don’t open suspicious e-mail. Delete it immediately. If you’re not sure, contact the company to check before opening the e-mail. Don’t allow your Social Security number to be printed on your checks or any other public documents.
• At work and at home, lock up checkbooks, Social Security numbers, TINs, EINs, passwords, credit cards, copies of old bills, frequent flier cards, birth certificates, passports – anything with personal data. In your wallet, only carry credit cards you use. Be certain you retain all credit, debit, and ATM receipts. Don’t leave your handbag or wallet unattended at church, the gym, work, school, the grocery store, or any place else.
• Shred all bills; credit, debit and ATM receipts; credit card offers; and any personal records before throwing them away. Better yet, convert to online statements and bill paying. Eliminate paper copies of bills. You can print copies of items you need for tax records or other purposes. With online account access, you can check your accounts a few times each month to be certain any charges are yours. Have your paycheck automatically deposited in your bank account. But don’t store credit card or bank account numbers on merchant sites. The minor inconvenience of typing in an account number prevents unauthorized use.
• Invest in a locked mailbox. If it’s not possible for your home, get a U.S. Post Office box for receipt of any financial documents. The yearly charge for a small box runs around $80. Always drop outgoing checks or other sensitive documents in a U.S. Post Office drop box or a locked mailbox.
• When engaging in online financial transactions, you need to install and regularly update firewall and anti-virus software on your computer. And before you discard a computer, be certain you have thoroughly removed all data from the hard drive. You probably don’t need to go to the extremes of the National Security Administration, which smashes used computers to smithereens, but you should scrub the hard drive.

Incorporating these actions into your life will stop most identity fraud.

Next week we’ll examine the ultimate measure you can take to prevent access to your financial information.