Identity Theft - Your Identity Can Be Taken Before You Know It by Darren L. Zagarola, CFP®, CPA, PFS As published in Princeton Patch, March 10, 2014 Identity theft is a frightening concept. It might be a new concept to those who only recently began to bank online or use credit cards more often. Someone steals your personal information and uses it without your permission to obtain credit cards, secure loans and access bank accounts. Identity theft can wreak havoc on victims’ finances, credit history, long-term financial planning and most importantly, their reputation. Minimizing the risk of identity theft starts with understanding how thieves obtain someone’s personal information. These scam artists are very resourceful. Some rummage through trash (at homes and businesses) looking for bills or other papers containing personal information. Others steal credit and debit card information by using a special storage device attached to bank and credit card processing machines. Some pretend to represent financial companies or other companies you trust (pharmacies, clinics, doctors) to trick the unsuspecting person into revealing personal information. Others will divert billing statements by submitting change-of-address forms. And then there is the old, reliable method of actually stealing the information directly during a home break-in or by snatching a wallet. These thieves drain their victims’ bank accounts and run up their credit card charges. They sometimes file false tax returns to receive other people’s tax refunds and have even been known to use stolen identities to pay for medical treatment. The damage resulting from identity theft could affect your attempts to purchase a home, a car or other large-ticket items. Your credit score will inevitably be lower, which in turn results in higher interest rates being charged on your borrowing, if you are granted the credit at all. The cost of identity theft is not just monetary; it is a drain on your time, effort and patience. Outlined here are some of the ways you can defend yourself from identity theft. First, shred financial documents and paperwork with personal information before discarding them. Do not give out personal information on the telephone, through the mail, or over the internet unless you are positive with whom you are dealing. Keep personal information in a secure place at home, especially if outside contractors or domestic help (such as babysitters, house cleaners, landscapers, etc.) will be in your house. Protect your social security number by not writing it on checks or carrying your social security card in your wallet. Be especially careful when accessing email and the internet, two primary reasons for the increase in identity theft. Do not use obvious passwords (birthdate, mother’s maiden name, the last four digits of social security number) and never click on links sent in unsolicited emails, even from your friends. Use firewalls and anti-virus software to protect your home computer. But it is not enough just to use these defenses. You must ensure they are updated on a timely basis. Sometimes it’s easy to identify attempts to steal your identity, and other times, not so much. The key is to look for subtle hints. When your wallet is stolen, it’s obvious the thief will soon be trying to use the credit cards found inside to purchase some nice goodies. If that happens, contact: • The credit reporting companies to place a fraud alert on your credit file; • Your credit card companies to directly inform them of the theft; and • The police to alert them to the theft and to provide a record for creditors who may want proof of the crime. Some not-so-obvious signs that your identity might have been tampered with include: • Bills not arriving as expected; • Denials of credit for no apparent reason; and • Bills that you did not incur or phone calls or letters about purchases you did not make. Review your financial statements and credit card statements regularly and look for charges you did not make. We recommend our clients visit AnnualCreditReport.com to request a free credit report on an annual basis from the three nationwide consumer reporting companies (Equifax, Experian, and TransUnion). Review the credit reports and verify that the accounts listed under your name are valid. The report also lists who has been checking into your credit. If you have not been in contact with the company checking up on you, then contact the credit reporting agency and let them know. We also recommend you close all credit cards not being used that appear on your credit reports. These might include credit cards opened at a local sporting event so your card would have your favorite team’s logo, or the cards you opened in college in order to get the free gift being offered. Modern technology makes life easier for everyone, including identity thieves. Be careful and aware of your surroundings and take proactive measures to minimize the risk of being an identity theft victim.