Nearly 12 million adults were victims of identity fraud last year, up 13 percent from the previous year, according to Javelin Strategy & Research.
Identity fraud or theft occur when thieves use your personal information to commit a crime, whether that means stealing your credit card details or using your Social Security number to set up a fraudulent bank account. The California Society of CPAs (www.calcpa.org) recommends these steps to take after and even before identity theft happens.
Understand the Dangers
One of the best ways to prevent identity theft is to understand the many ways that it works. It can involve devices that steal your credit card numbers when you make a purchase, or a sophisticated hacking scheme, but there are also many low-tech methods.
Sometimes thieves will comb through dumpsters, for example, to find your bank or investment account statements or other confidential documents. If you think that this has happened to you or is likely to happen, consider buying a paper shredder or tearing up your statements into small pieces before you throw them out. Doing so makes it harder for thieves to glean information from them.
If you own a small business, keep in mind that federal and state laws have been enacted for businesses that employ as few as one worker, requiring that they destroy confidential information before they dispose of it. These laws will only get more stringent over time and broader in scope.
Phishing: Don’t Take the Bait
Phishing has been around for a while, but scam artists continue to come up with new angles, so it’s wise to be on guard.
Phishing generally involves a fake email or other communication that’s designed to look like it came from your bank or another financial institution or even a government agency. The message urges you to click on a link where you’ll be told to reveal some confidential financial information.
If you get this kind of communication, phone the organization that supposedly sent it to confirm that it’s legitimate. In most cases, you’ll probably find that it is not.
Keep Up with Your Credit Scores
Identity thieves don’t just steal your credit card number; they may also set up completely separate accounts in your name. Then they’ll neglect paying the bills they run up. One way to find out if this is happening to you is to monitor your credit ratings with the three major credit rating agencies.
If you discover accounts you’ve never heard of, you may be able to prevent some of the consequences of identity theft, including the damage it can do to your credit rating.
Don’t Share Too Much on Social Media
Many people reveal their full birthdays and personal details such as pets’ or school names on Facebook or other social media accounts. Unfortunately, this is just the kind of information that financial institutions and other organizations use to verify your identity before allowing you access to your account.
While it’s fun to share these details with friends, there’s a great danger that thieves will use it to clear out your bank account, run up charges in your name or open an account you know nothing about. Before you pump up your online profile, consider how an identity thief might use those details.
If you find out that your identity has been stolen, there are a number of steps you should take immediately.
• File a police report to establish a record of the theft and any consequences that you have discovered.
• Challenge any related transactions with the merchants or financial institutions involved and close any accounts to which thieves may have had access.
• Report the problem to the credit rating agencies and ask that they correct your credit reports and place a fraud alert on your records.
• Let your creditors know about the problem in case any changes in your credit rating affect your borrowing options.
• Look into filing a complaint with the Federal Trade Commission, which will provide you with an ID Theft Complaint Form.
Your Local CPA Can Help
If you have been the victim of identity theft, or want to avoid becoming one, turn to your local CPA. He or she can offer advice on protecting your confidential details, or recovering from a theft, as well as any other financial concerns you may have.
The Money Management columns are a joint effort of the AICPA and the California Society of CPAs as part of the profession’s nationwide 360 Degrees of Financial Literacy program.