Preventing Identity Theft

You can’t prevent ID theft. Most of the time that personal identification and financial information is stolen, it’s stolen from data bases of companies with which you have a relationship. These are retailers, employers, investment companies, etc. You have done nothing wrong. These companies have either had shoddy security practices (such as the parent of TJ Maxx or the Defense Department), or they have had employees who decided to steal from within. Either way, there’s nothing you could have done to prevent the problem.

Despite that negative assessment, there are things you can do to minimize the potential for other types of ID theft. More importantly, you can also be ready to respond when you find out that your financial info is stolen.

To minimize the potential of theft, you should shred any identifying information that you throw out. These could be old bills or anything else with Social Security numbers, credit card numbers, etc. You should also have non-obvious passwords on all of your computers (like, don’t use your middle name as your password), and you should have anti-theft software on the computers. You should make sure especially that laptops and hand-held electronics are password-protected with the strongest encryption you can afford – because these are the machines you are most likely to lose.

A few more cautionary notes. Encrypt your cell phone, and do not store your most sensitive financial information on your cell phone. If you are selling an old cell phone or laptop on eBay or through some other secondary market, pay someone to make sure you really have stripped out all your old files that might contain financial info. Don’t give your credit card number or password to unknown people who call you on the phone or send you email solicitations. If you get an email warning about an account that “is going to be suspended unless you conact us,” then call that company first, and figure out if the email is a scam.

Now, if you are victimized by ID theft and you figure it out, you need to contact all of your credit and financial accounts immediately and explain the problem. So it’s best if you have stored somewhere a list of the accounts, the toll-free numbers, and your account numbers. (Store it somewhere SAFE, not on your laptop.) You should also be prepared to check each account at least once per month for two years, just to make sure someone strange has not happened. Sometimes thieves try to buy as much stuff as possible as quickly as possible, before you figure out your credit info has been stolen. Other thieves will wait a little while after a theft, and then try to access an account, as they figure you have stopped paying as much attention, or forgot about one old account.

You can sign up for a credit-monitoring service in advance of a theft, but it’s probably a waste of money. Most likely, your credit providers will give it to you free, as it’s in their interest to make sure your purchases are legitimate. And if your credit info was stolen from a business you work with, they will pay for the credit monitoring – you don’t have to.