A few years ago, someone accessed a rarely used checking account belonging to Rick Kahler, a wealth advisor living in South Dakota. He didn't find out about it for months—not until he received a quarterly statement in the mail from his bank, outlining a series of unauthorized withdrawals totaling $6,300.
It's not the first time Kahler's been a victim of identity theft. "It used to be that my identity was stolen quarterly," he says.
Kahler doesn't expect that this latest incident will be the last. After all, identity theft and fraud affect millions of people each year: In 2018, some 14.4 million people, or about 5.7% of consumers, were victims, according to a report from Javelin. That's down from 16.7 million victims in 2017. But there were more cases of high-impact fraud like thieves seizing control of victims' existing accounts, or opening new ones in their names.
Still, Kahler has taken a few simple, effective precautions and he advises his clients to do the same.
Most of the ways you can make yourself a tougher mark for thieves and fraudsters come down to safeguarding your personal data.
That's how most cases of identity theft play out: A criminal steals credentials that let them pretend to be you. There are a lot of different ways your info could be compromised, from data breaches to someone going through your trash.
"It's really about your identity credentials and how those can be misused," says Eva Velasquez, president and CEO of the Identity Theft Resource Center. Those credentials, she says, can include "your Social Security number, your driver's license number, your date of birth, maybe your passport number...[as well as] usernames and passwords. There's a ton of them."
These three easy steps can make it harder for criminals to obtain and use your info, reducing your risk of becoming a victim:
A moving target is harder to hit than a stationary one—and you can become a moving target by frequently changing your usernames, passwords, and other login credentials. Make sure you have a unique combo for every account, too.
It's an effective way to stay a step ahead of identity thieves, although it takes a little extra time and organization. Swiping sign-in credentials is one of the easiest ways fraudsters can access your accounts and get their hands on your money. If you use the same password at several sites, it multiplies the risk—experts say criminals often try login details stolen in one breach on other accounts.
Aim for complex, 10-12 character passwords, and sign up for multi-factor authentication if you can. Multi-factor authentication requires someone logging into your accounts to pass through two layers of security with two separate, independent credentials—for example, you may need to use a thumbprint on your smartphone screen and input a password on a login page.
If you feel that keeping track of varying, complex passwords is daunting, you can try a password manager like Dashlane or LastPass.
The three big credit reporting agencies, Experian, Equifax, and TransUnion, let you sign up for fraud alerts, which require lenders, such as credit card issuers, to reach out to you directly to verify your credentials if they receive an application. Fraud alerts last for a year but can be extended to as long as seven years—and they're free.
There are other alerts you can sign up for, too. Some free sites, like Credit Karma, will send you alerts if there's a change in your credit score, for example. Banks and credit card issuers typically notify you if they see any suspicious account activity, and they may even let you set up notifications for account changes like an updated password or a new bill payee added to your account.
After Kahler's experiences with fraud and identity theft, he's more careful to set up alerts and monitor his accounts for unusual transactions. Although his bank reimbursed him for those stolen funds, he'd rather not take the risk of losing more money—or have to deal with the annoyance of closing and reopening compromised accounts.
Consumers worried about thieves opening new financial accounts in their name should consider stronger protection in the form of a credit freeze. Implementing a credit freeze is now free and, once it's in place, it stops anyone—even you—from opening up a line of credit in your name.
A freeze isn't a cure-all: Thieves can still use stolen info to perpetuate other kinds of identity theft like filing fake tax returns to snare your refund, or obtaining medical care and prescriptions under your name. And keeping your credit frozen is somewhat inconvenient—you'll have to temporarily lift the freeze any time you want to open a new credit card, for example.
Still, it's the most effective way to protect yourself. That's what Kahler tells worried clients: "You can freeze your credit if you're [that] concerned."
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