Have You Made These Identity Theft Mistakes?

Category: Finance

Identity fraud affected over 27 million U.S. consumers in 2021, with losses over $28 billion. Spikes have been noted in 'new account fraud' and 'account takeover fraud' -- two of the most damaging types of ID theft. In addition, more than 1400 data breaches at major corporations had consumers vulnerable to phishing and other forms of fraud. I haven’t found stats for 2022 yet, but we can assume they’re equally dismal. Read on for my tips on avoiding fraud and identity theft, and see if you've made any mistakes that can make it easier for scammers to victimize you...

Protect Yourself From Identity Theft

Identity theft is one of the most traumatic non-violent crimes to which one can fall victim. When a crook uses your good name to commit fraud or robbery, the impact on your reputation, employability, and credit is severe, and can last for years. It's even possible to find yourself arrested for crimes you did not commit. So it's important to protect yourself against identity thieves. Avoiding certain common mistakes is your first line of defense.

Javelin Strategy and Research says "the resurgence of higher-impact fraud types such as new account fraud, account takeover, and misuse of non-card accounts casts a shadow over the progress made in fighting card fraud."

The telltale signs that your identity has been stolen can be subtle and may go unnoticed for months, even years. Inexplicable charges on your credit card bill may be chalked up to clerical errors. Letters from creditors you've never heard of and certainly never did business with may be ignored. But eventually, an enormous credit card bill, legal papers, or police show up at your door. You are denied a mortgage or a job. Then the real nightmare of proving "I didn't do it" begins.

Prevent Identity Theft

It can be maddeningly difficult to clear your name, costing hundreds of hours and thousands of dollars. That's why it's important to take steps NOW to make it as difficult as possible for a scammer to victimize you. Take action as soon as possible if you're making any of the credit-related mistakes below, and you'll tips the scales in your favor:

  1. Not checking your credit report on a regular basis, to see if there is any incorrect information, or accounts you don't recognize. My article FOUR Free Credit Reports Online explains how U.S. citizens can get four free credit reports per year, and avoid the credit report scammers.

  2. Not shredding your sensitive personal documents before throwing them away. A battery-powered cross-cut shredder can render your banking and credit card information unreadable and costs less than $30. "Dumpster diving" is a favorite, low-tech way by which ID thieves collect bank statements, credit card numbers, Social Security Numbers, and other bits of your identity from your trash.

  3. Trusting telephone solicitors asking for personal or financial information to "verify your identity." Common scams involve someone who claims to be from your bank or credit card company, claiming that there is a problem with your account. If you did not initiate the call, hang up and call the toll-free number on your statement, then ask for the security department. This happened to me recently, where callers claiming to be from my utility company and Chase Bank called my unlisted number and asked for me by name. I Googled their number on the caller ID, and found that many others reported similar calls.

  4. Failing to secure important documents, such as tax returns, birth certificates, social security cards, passports, life insurance policies and financial statements in your home. A fireproof safe is a good idea, but remember to bolt it to the floor or hide it well. Consider using encryption for your personal and financial data, in case your computer is lost or stolen. See my article Is it Time to Start Encrypting Your Files? for help getting started with encryption tools.

  5. Being careless at the ATM? Make sure no one is looking over your shoulder when you enter your debit card's PIN at an ATM or point-of-sale terminal. I recommend the "two finger method" where you point two fingers at the ATM keypad, but only press with one. This makes it nearly impossible for someone nearby to discern your PIN while you're entering it. You should also be wary of "skimming" devices at ATMs and gas pumps, which can be used to steal your card information. See All About Skimmers to learn how to identify these devices.

  6. Writing your PINs, account numbers, and passwords on scraps of paper kept in your wallet, purse, or laptop case. A password manager will help in two ways: generating strong passwords, and automatically entering them on websites when needed. See my related articles How Hackable is Your Password? and Try This Automatic Password Changer.

  7. Getting blank checks delivered to your home mailbox from which they may be stolen. Pick them up at the bank branch instead. On a similar note, eliminate junk mail which may contain "convenience checks" and credit card offers that can also be intercepted from your mailbox. Visit OptOut Prescreen for help eliminating these dangerous nuisances.

  8. Not getting notified of new credit cards charges. Check to see if your online banking service has a feature to notify you by phone, text, or email when you when a credit card transaction exceeding some threshold occurs. Also, when you order a new credit or debit card, mark the calendar and follow up promptly if it does not arrive within 10 business days. Ask the card issuer if a change of address request was filed, and if you didn't do it, hit the panic button.

  9. Divulging your Social Security Number to everyone that asks. Don't give your SSN to any business just because they need a "unique identifier" for you. Instead, ask if you can provide alternate proofs of identity, such as your driver's license or birth certificate. Exceptions to this rule would be employers, banks or landlords with a legitmate reason to do a credit check or withhold taxes.

  10. Not using fraud alerts or credit freezes. Consider placing Fraud Alerts with the major credit bureaus, so new accounts cannot be opened without your knowledge. Call Equifax (800-525-6285), and they will pass along the request to both Experian and Trans Union. Fraud alerts expire after 90 days, so you can repeat the process quarterly, or lock down your credit file with a Credit Freeze. A freeze is permanent and free (in most U.S. states) but it may interfere with loans applications, employment screening, signing up for utility or phone service, new insurance policies, and other transactions. See my article [ALERT] Freeze Your Credit Files (all SIX of them) for details on how to freeze your credit file.

There are plenty of common sense things you can do to protect against identity theft, but sometimes it's beyond the control of even the most vigilant. Data breaches perpetrated on healthcare companies, hotel chains, airlines, department stores, mobile phone providers, and social media firms are a "treasure trove" of data that could be used to commit identity theft and fraud. Here's a very interesting article detailing the 68 biggest data breaches of recent years, and what types of consumer data were affected.

What About LifeLock?

You may be considering LifeLock or a similar identity theft protection service. Although this can be helpful, no company can guarantee that identity theft will never happen. These services monitor your bank account, and look for suspicious online activity done in your name. They'll alert you if they spot any red flags and promise to help you repair the damage. But because of lawsuits filed by the credit bureaus, Lifelock can no longer place fraud alerts on your behalf.

It can be a nuisance to manage fraud alerts manually. But given the recent focus by scammers on new account fraud and account takeover fraud, a service such as LifeLock, Identity Guard or IdentityForce may still be useful. The downside is that most cost $10-$20 a month, and none of them can claim to prevent all forms of identity theft.

Do you have other tips for avoiding identity theft? Post your comment or question below...

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Most recent comments on "Have You Made These Identity Theft Mistakes?"

Posted by:

06 Feb 2023

In addition to Bob's recommendations check if your bank or credit card offer monthly alerts for the following:

1. Your social security number found on the "dark web"

2. Any new accounts opened in your name

And it really did not help that one of the Credit Bureaux had all our private info available online for several months in 2022 to anyone who asked for it. Fixed now thankfully.

Posted by:

Cold City
06 Feb 2023

It is nice that I get an email for each and every transaction occurring on my credit cards, bank accounts. For password I used an algorithm that it is easy to remember for every website I need a password for.

Posted by:

06 Feb 2023

Another telltale sign that your identity is being hacked - no snail mail is being delivered to your home.

Posted by:

Daniel Wiener
06 Feb 2023

I do the majority of things you recommend. In addition, the credit card companies have become very good at detecting suspicious activity. Their computers look for unusual patterns of transactions and notify customers when those happen. They may temporarily freeze your card, but you can quickly unfreeze it for legitimate charges. While that can be a minor inconvenience, I very much appreciate that protection. I also frequently check my bank checking and credit card activity on-line, so I can spot any issues and immediately deal with them.

On another note, I pay most of my bills on line, so the number of physical paper checks I have to write has dropped to perhaps half a dozen or so a year. It's not worth buying a stack of 100 or 200 blank checks from a printing house for that. Instead I just ask my credit union for some "temporary" or "emergency" checks whenever I need more. They are happy to print out eight such checks at a time for free, on very official paper and with the correct format (and even the correct number sequence). I'm sure most banks will do the same. It safer and infinitely cheaper than buying blank checks and having them mailed to you.

Posted by:

Ernest N. Wilcox Jr.
06 Feb 2023

I'm a retiree and I have my Credit Bureau accounts (all six) frozen.
I NEVER give out my Social Security number to anyone other than Government agencies and my health plan provider (I know who they are and their phone numbers, so I can check my caller-ID to confirm the validity of the call).
I shred ALL documents containing ANY personal information.
I have ALL my utility services (water, gas, etc.) set to paperless correspondence, so nothing goes through the snail-mail other than Governmental communications.

When online (social media), I generalize anything I say about myself.
I never specify where I live more accurately than my region.
I never specify my age beyond the decade (Example: I'm in my 80s/70s/60s etc.).
I never include my picture in any social media profile (Example: Facebook has a Ukranian flag).

I'm disabled (and my only vehicle is not new), so I don't travel. If someone attempts to steal my identity to commit crimes, and they do not live where I do (or near-by), it shouldn't be too difficult to prove that I'm incapable of committing the crime for which I've been accused.

I don't have any credit cards, and I check my financial accounts every day or two, so if there is anything unusual going on, I'll see it, then contact my bank (there has been only one occurrence so far, and I got it rectified within 24 hours).

I'm careful, and skeptical about everything. I suspect that characteristic helps to keep my identity as safe as possible too.

I've spent considerable time learning to safeguard my identity, but it has been worth the effort. AFAIK, my identity has never been successfully stolen (so far). It the worst ever happens; I'll do whatever I can to rectify the situation.

I hope this helps others,


Posted by:

07 Feb 2023

I do everything mentioned... all my passwords are different and they are pass phrases not words.
I NEVER post anything on social media. Nothing. there is no value in it.
I have one secure encrypted email acct that I use for financial stuff, and another I use for friends and family and a half dozen throw away emails for websites and forums..
For forums I have signed up for where they require a DOB, I NEVER give my correct DOB, and they are different for each forum use so if something turns up using one of my made-up DOB's, I know where it came from.
An excellent website for staying current on web security is this:

Posted by:

Ken Driver
09 Feb 2023

MY 2 credit cards have free credit monitoring with monthly emails showing any credit compromises. Discovercard and Mastercard

Posted by:

29 Apr 2024

Wow. Bob? You've given me quite the TO DO list. THANK YOU!!! LOL

Amazing job. Everyone needs to do all of this. :-0)

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