How to Prevent Identity Theft

In 2008, there were almost 10 million cases of identity theft in the US alone, 22% more than the previous year.While people are getting better at recognizing identity theft, and minimizing the damage, the best solution is to prevent it from happening in the first place by following these steps.

Steps

1. Choose good passwords and PINs. Choose words and numbers no one would be able to guess even if they were privy to other parts of your personal information, or you can use words and numbers that are familiar to you, but disguise them in a hard-to-guess code, like the Vigènere Cipher. There are even random-generated password programs on the Internet that will provide virtually unbreakable, or uncrackable passwords. In addition, don't use the same password for all of your accounts. Make sure to have a little variation. Avoid easily guessed PINs like birth dates, common numerical sequences, phone number, last four digits of your social security number, etc. Good passwords will include capital and small letters, numbers and characters, and be at least 8 characters long.
   
2. Watch out for "shoulder surfers." That person behind you in line at the ATM or the supermarket may just be another shopper, or they could be paying close attention to you in hopes of seeing your account balance or PIN. Shade the monitor area with your hand when typing in your PIN and try to block others’ view of the screen. It's even a good idea to do this when no one is around; some thieves use binoculars or install cameras so they can watch you from far away.
3. Shred any documents with identifying information on them. Don’t just throw your old billing statements and other documents containing important information into your garbage. There are "dumpster divers" who are willing to wade through old coffee grounds and rotten orange peels to get their hands on your data. Invest in a cross cut paper shredder and completely destroy any piece of paper that has your credit card number, your social security number, or your bank account number on it.
   
   
   • If you get a shredder, make sure it’s one which doesn’t just create strips of paper which can be pieced back together. If you don’t get a shredder, at least tear the materials into small pieces. When using this strategy, some believe in a two-bag approach. They will place half of the remains of a torn document in one rubbish bag and the other half in a different trash container in the home (or, if you have a compost bin, mix part of it in with your compost).
   • Be sure to shred pre-approved and other credit offers (like when they send you blank checks) - don't just toss in the trash. Many thieves will use offers to apply for credit in your name at a different address, and will try to use any checks. Better yet, call your credit card companies and request that they not send cash advance checks in the first place. Phone the opt-out number to stop receiving credit card offers.
4. Protect your snail mail. The mail transports millions of pieces of personal information every day and is one of the most common sites for identity theft activity. A study found that the most frequently used non-technological method for identity theft was the rerouting of mail through change of address cards! So pay attention to your mail. Make sure you get all of your billing statements on time. If you have a mailbox that others can access easily, consider getting a post office box instead, or check your mail frequently so no one gets to it before you do. Most banks offer "paper-less" statements via email or smartphone. If your bank offers this service, consider signing up to lessen your risk.
5. Protect your computer. Many identity thieves now use complex software such as spyware and keyloggers to obtain sensitive information such as passwords and login details without the user's knowledge. Just because you can't see anything wrong with your computer doesn't mean that it is safe to use. Unlike viruses and adware, many spyware and keylogger programs are designed for stealth, so that they can gather as many passwords and sensitive data as possible. A strong and regularly updated firewall, anti-virus program and anti-spyware program will provide most of the protection an individual needs.
   
   
   • If you get an e-mail claiming to be from your bank that tells you to check or update your information such as a password (for any reason), do not use the link in the e-mail, even if the e-mail letterhead/background looks like it came from your bank. If you think the e-mail is real, log on directly to the company or bank's web site and check your records there; if there are no changes, you just avoided being scammed. This type of scam is known as a phishing scam and there are several forms.
   • When you get rid of your computer, be sure to wipe out all of your information first. Ideally, restore it to the factory settings.
6. Watch what you carry. We often carry identifying information in our wallet or purse, and if that should get stolen, it is easy for someone to use that information to their advantage, and quickly. Here are some precautions to take:
   
   
   • Don't carry credit cards (or anything that can be used like a credit card, such as a debit card with a VISA logo). Not only will this severely limit the damage that a thief can do, but it is also a useful budgeting practice. If you must carry credit cards, try to carry only one, and write "SEE ID" next to your signature on the back.
   • Don’t carry extra check blanks, your passport, or any other ID that you are not planning to use that day.
   • Never carry your Social Security card (or any cards that have you social security number on them) with you unless you are going somewhere where it will be absolutely necessary.
   • If you carry a wallet, attach it to your body with a chain or bungee cord. You can also Make a Mugger's Wallet, which is a decoy wallet that you can give to a thief if you should get mugged.
   • If you use a purse or a single strap bag, wear it across your body, so it can't easily be yanked right off your shoulder.
   • Be prepared for if your wallet should get stolen. Read How to Deal With Losing Your Wallet so you know what to do, and can do it quickly.
7. Get a security freeze on your credit. Contact each of the three major credit agencies (transunion, equifax, experian) and have them freeze your credit. There is a small fee depending on your circumstances and/or location. This will keep anyone (including you) from opening new lines of credit, or viewing your credit. This is probably best done when you know you won't be needing to open new lines of credit or getting credit reports anytime soon. You can lift the credit freeze anytime using the Personal Identification Number given to you by each of the three credit agencies involved, and again possibly paying a small fee.