Nearly 12 million Americans were victims of online fraud and identity theft in 2011, according to a report by Javelin Strategy & Research, up 13% from the year before. While no one can totally prevent it, there are many things you can do to protect yourself from online fraud and identity theft.
What is Identity Theft and Identity Fraud?
According to the US Department of Justice, “Identity theft and identity fraud are terms used to refer to all types of crime in which someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception, typically for economic gain.”
How Does Identity Fraud Happen?
Identity fraud was the number one consumer complaint received by the Federal Trade Commission in 2011. And of all the fraud complaints received by the FTC, 56% were forms of online fraud (43% via email and 13% via websites).
If you’ve ever received an email from a friend claiming to be stranded overseas and in need of money to get home, an offer from a widow who is looking for a kind, trusting person like yourself to give her your bank account information so she can deposit millions of dollars into your account for safe keeping, or if you’ve received seemingly official emails from banks, PayPal.com, or other financial sites asking you to provide them with your account or other personal info, you’ve probably been targeted for online fraud.
Here are a few of the most common examples of identity fraud:
Those suspicious emails you get that tell you you’ve won a contest, or that the company needs to verify personal information, or that a widow wants to send you a million dollars, are all examples of phishing – an attempt to get you to share your personal information like usernames, passwords, and bank or credit card account numbers. Many of these phishing emails also contain links that, if clicked, can put a virus on your computer to hunt for your sensitive data and send it without your knowledge.
Skimming is the theft of your credit or debit card information at the time you make a legitimate transaction. Skim artists get temporary jobs at restaurants, gas stations and hotels for the purpose of scanning the credit and debit cards of unsuspecting customers using pocket-size skimmers. Thieves also put skimmers over the top of card readers on ATM machines and gas pumps to capture card info, and some add tiny cameras to watch customers type in their pin numbers. Then they print new debit or credit cards with your number and information on them or simply enter your information online to make purchases.
Unsecure Internet Connections
If you have an unsecure wireless internet connection at home, hackers in your neighborhood could use your internet connection to access personal data stored on our computer or network. Also, if use unsecure Wi-Fi hotspots at restaurants, hotels, etc. to access your bank accounts or make online purchases, hackers can monitor your transactions and capture your personal data.
A data breach is the theft or unintentional release of private data (like individual social security numbers, driver’s license numbers, medical records, or financial records and account information) by people unauthorized to access or release the data. Data breaches often occur by someone hacking into a corporate network to steal sensitive data. But they can also occur by authorized or unauthorized employees who view or steal the information. As of October 9, 2012, the Identity Theft Resource Center has reported that over 9,000,000 accounts have been compromised in 324 data breaches affecting universities, web sites, financial institutions, health systems, and more.
Smartphone users are 33% more likely to be victims of identity fraud according to Javelin Strategy & Research due to “careless consumer usage.” How? We forget that when we make a call over a cell phone, or send a text or email, someone else may be listening or may be able to access that info. Also, malicious smartphone apps can steal sensitive information that is stored on your smartphone and send it to identity thieves without your knowledge.
What Can You Do to Prevent Identity Fraud?
While no one can prevent all identity theft and fraud, but there is a lot you can do to protect your identity and private information.
- Check your financial accounts regularly. The sooner you notice something out of the ordinary and report it, the better.
- Install a firewall and anti-virus software to protect your computer and personal information, and update them frequently.
- Update your operating system and web browser software regularly.
- Secure you wireless home (Wi-Fi) network by enabling encryption.
- Be wary of emails that urgently implore you to click on a link to update your account information, use a generic greeting like “Dear Member,” have misspellings or use poor grammar.
- Do not click on any links or attachments. You can often spot a fake email by hovering over the links and checking whether the URL actually leads to the website of the business or, in a scam email, to a third party site.
- Delete suspicious email from your computer completely and be sure to empty your “trash can” or “recycling bin,” as well.
- If you did click on a link, run your anti-virus software’s full system scan feature.
- If you’re not sure if an email is legitimate or not, contact the company directly to verify, or visit their web page by typing in their web address (instead of clicking the link provided in the email).
- Protect your passwords by keeping them in a safe place. Your passwords should have at least eight characters and should contain numbers, symbols and letters. Create different passwords for each online account that you have, and use an online password manager like Roboform to remember them all.
- Use cash more instead of debit or credit cards.
- Never give personal or financial information to unsolicited callers.
- Use a good debit card as a credit card so you don’t have to enter the pin number.
- Never access your financial accounts or purchase anything when using an unsecure public Wi-Fi connection.
- Protect your smart phone by adding a password lock, enrolling in a data wiping program that can be accessed from a computer if you lose your phone, and downloading apps only from trusted app stores.
- Enroll in an identity guard service like LifeLock for as low as $10.00 per month, to monitor access to your personal and financial information.
What Should You Do if You are a Victim of Identity Fraud?
Don’t think you’re at risk for identity theft or fraud? Think again. My wife and I have been victims several times over the last three years:
- My wife’s purse was stolen at a restaurant in Miami Beach, Florida the day before we were to embark on a cruise. She lost her driver’s license, debit card, iPod, and all of our cash for the cruise. Gratefully, our passports were not in her purse!
- My corporate credit card number was stolen during the middle of an 8-day business trip. The credit card company said it was likely due to a skimmer at a hotel.
- Our home was broken into while we were on vacation two summers ago and our computers were stolen. Our tax returns, financial accounts information, and other private data were stored on those computers.
- My wife’s debit card number was stolen two months ago. Again, it was likely due to a skimmer.
Here are three things you should do right away if you think you are a victim of identity theft or fraud:
- If your purse or wallet are stolen, or home has been broken into, contact the police. If you need to file an insurance claim, they will need your police report number.
- If your financial accounts have been compromised, immediately contact your bank or debit/credit card issuer to report the misuse and request a new card.
- Report the incident to the Federal Trade Commission (FTC) through their ID Theft Clearinghouse at www.ftc.gov/idtheft. This will allow the FTC to identify patterns associated with the unauthorized transactions.
- If your data has been accessed through a data breach, consider subscribing to a credit-monitoring service, which is often is offered for free for a year by the company that had been breached.
What steps have you taken to protect yourself from identity theft and fraud? Leave a comment below!