Protecting Your Identity Can Save You Money

Identity theft affected 4.8 million people in the United States in 2020, according to the country’s Federal Trade Commission. Protecting your identity is serious, and it is time to learn more about how to do it right.

This is not an incredibly high number, but it also represents an increase of more than 45% percent when compared to the cases reported in 2019.

Being a victim of identity theft can affect you in a variety of ways depending on the type of identity theft that took place. However, a common denominator is that the victim will find themselves psychologically affected by the event due to having their good name compromised.

The effects of someone taking advantage of your identity for their own benefit can be devastating for your finances. It not only could allow someone to take debt on your behalf or steal money from you but also 29% of the cases of identity theft involve tax fraud, which could result in a serious chat with your local tax authorities.

Once identity theft occurs, it will not only take hours and a lot of energy to get the matter solved but also thousands of dollars. With some luck, you might be able to have the guilty party identified… but this rarely happens.

As such, protecting yourself against identity theft or being able to find out early if it happened, is extremely important to minimize the damage that such an event can cause for you and your loved ones, as well as your finances in the short and long term.

Let’s talk about how protecting your identity by reducing the risk of identity theft and being able to tell early if you have been a victim of identity theft can save you a lot of money and headaches.

What is Identity Theft?

Identity Theft is a crime that occurs when a criminal obtains your personal information to impersonate you, which will then allow them to commit fraud, steal your money, or other criminal acts.

While there are various types of identity theft, most of them have a financial objective in mind, which makes personal information such as social security numbers, bank account credentials, or credit card information especially attractive to criminals.

Someone who has stolen your identity might not only use it to steal from you but can also use your stolen identity to deceive others to steal from them, making this illegal activity a problem that has a big impact on society. This act is especially common among scammers who impersonate victims to deceive their relatives or friends by making themselves pass as the victim.

Identity theft can be anything from a bank account being taken over, having your social media accounts hacked, someone getting credits using your name, and many other activities that result from someone else acting as if they were you.

How Does Identity Theft Take Place?

With the advent of the technical revolution, identity theft has become increasingly reliant on technology, with personal information leaks in online websites and applications becoming much more frequent. Such leaks usually result in “dumps” of personal information being posted in online marketplaces for anyone to acquire and take advantage of.

While good security practices such as the use of a strong password, 2-factor authentication, and other security measures can increase the chances of successfully protecting your identity while using digital platforms, criminals can also attack the service provider to obtain information, which means that identity theft can occur to anyone.

While more common in the past, identity theft can also take place when someone steals your personal belongings (such as wallet, purse, passports, etc.), recollects information by checking or redirecting your mail, rummages through your trash, or gains access to an old computer you didn’t wipe.

What Can A Criminal Do with Your Personal Information?

There are no limits to what criminals can do with your personal information as it is entirely up to their creativity, skill, and morality.

While extreme and rare, there have been cases in which criminals have assumed and lived under the identity of other people, even going as far as forming a family under the false identity (or sometimes 4). https://www.foxnews.com/us/nyc-woman-discovers-she-is-married-to-multiple-men-after-identity-theft

Most commonly, Identity thieves will not go as far but will limit themselves to actions such as:

• Changing your mailing address to gain more information and access to services you are subscribed to.
• Open new lines of credit under your name.
• Subscribe to services such as phones to commit other crimes.
• Open bank accounts to write bad checks.
• Scam other people under your identity.
• Impersonate you when caught by the police.

According to the Insurance Information Institute, the 5 most common types of identity theft in 2020 were applying to government benefits, credit card fraud/new bank accounts, online shopping and payments, business/personal loans, and tax fraud.

With data breaches becoming more common by the day, protecting your identity is paramount to prevent bad actors from using your personal information to commit crimes against you or others.

How Expensive Can Identity Theft Be?

According to a report published in April 2021 by the Bureau of Justice Statistics, a division of the U.S Department of Justice, financial losses caused by identity theft totaled $15.1 billion among more than 16.3 million victims (considering those older than 16 years).

The same report shows that depending on the type of problem associated with identity theft, it could take from 1 day or less to 6 months and more for victims to resolve their financial and credit problems.

The average loss each victim suffered according to the report was $930, going as high as $3060 when the stolen information was used for multiple types of misuse, which means prompt action on such cases is essential.

While it is easy to think that only rich people might be affected by identity theft, statistics show that half of identity theft victims were part of a household with an income of less than $75k, with 25% earning between $25k and $50k.

How Can You Protect Yourself Against Identity Theft?

Just like technology has made it easier for bad actors to steal your personal information to commit identity theft, it has made it easier for people to find out that it has taken place. Be it an SMS from your bank letting you know that a transfer has taken place, a notification letting you know that an unknown IP address accessed your email account, or an email letting you know that someone changed your password, there are many ways to know something is wrong.

However, according to the U.S Department of Justice, 46% percent of identity theft victims found out about the crime when they were contacted by their banks.

The same sources stated that 21% caught on when they noticed fraudulent charges, 28% got notifications from non-financial institutions, 15% when they received a bill, and 12% when they had problems applying to some service (loan, government benefit) or filing income tax returns.

The finding that only 25% of victims knew how the criminal had obtained their personal information, is especially worrying for those interested in protecting their finances and themselves against this crime, as it reflects the difficulty to know which medium criminals will use.

Let’s talk about some of the ways in which you can protect yourself against identity theft.

Use Strong Passwords and 2-Factor Authentication if Possible

Just like the locks to your house, login information is the first step toward protecting your digital accounts.  Believe it or not, a total of 3.4 million internet users had “123456” or “123456789” as their password in 2020, while more than 370 thousand were using “password”.

From these using “123456” or “123456789”, their personal accounts were exposed more than 31 million times, which shows that a compromised account will be accessed by way more than just a bad actor.

The problem gets worse if you are prone to using the same password for different accounts, as criminals will usually attempt to use the same password and username on different platforms.

To protect yourself against these types of attacks, using a password manager to generate and store strong passwords is a great alternative in 2021, as you will only need to create and remember a long and secure password for the password manager, which will then store your random passwords for you.

Services like NordPass, LastPass, and Bitwarden, offer online and app versions of their software to allow you to gain access to your passwords everywhere you go. They also have the advantage that even the platform doesn’t have access to your passwords as they are locally encrypted.

In the same way, make sure to check if the website you are using gives you the option to use 2-factor authentication by receiving an email or SMS (or better yet an authenticator app)  with a code every time you log in from a new device.

Protecting your login information is protecting your identity!

Don’t Use Your Credit Card to Pay Online

While credit card issuers have come a long way when it comes to recognizing fraudulent operations, so have identity thieves and fraudsters when it comes to using credit cards without detection.

Not only will an insecure database or payment processing system result in your credit card’s information being leaked but also your personal information, which will provide thieves with more than enough information to escalate their attacks beyond using your credit card for purchases.

Platforms like Privacy.com have become an increasingly popular way for online shoppers to protect their credit card information while gaining more control over how these payments take place.

This service masks your credit card information by giving you a virtual card you can use for each or multiple purchases, with the best option being the creation of single-use cards.

Using other payment apps that have good security practices is also a great option to mask your credit card information, but you should always make sure that it is offered by a reliable developer or company.

The bottom line is that protecting your credit card information is paramount when protecting your identity and therefore, saving your money!

Make Sure to Destroy Sensitive Data

Be it a bank statement you no longer need or the hard drive of an old computer, being sure to properly dispose of sensitive data is essential when protecting your identity.

Shredding all documents that contain personal information before disposing of them is a well-known way to protect from anyone who might go through your trash bin but what about disposing of a computer?

Well, free software like Darik’s Boot and Nuke (DBAN) should do the trick! It will ensure data is not only wiped but written over, protecting all your precious information.

Use an Identity Theft Alert Service

Just like identity thieves go through thousands of dumps and websites to get access to your leaked personal information, so do companies that make a living out of protecting your information.

As we said, preventing your personal information 100% of the time is just not possible. As such, the best next thing you can do is to be aware if someone got a hold of it.

Companies like Identity Guard will allow you to quickly create an account, set up a watchlist, get tips on how to protect your personal information, and get alerted if there is any activity or signal that could suggest your identity have been stolen.

Those services will usually help you (Identity guard does) to quickly recover your identity and reimburse your funds in cases of stolen identity, making a great option to protect yourself against identity theft.

Sources

https://www.iii.org/fact-statistic/facts-statistics-identity-theft-and-cybercrime

https://www.investopedia.com/terms/i/identitytheft.asp

https://www.nsf.gov/oig/_pdf/brochures/identitytheft.pdf

https://bjs.ojp.gov/content/pub/pdf/vit18.pdf

https://nordpass.com/most-common-passwords-list/