When we think about identity theft, we picture someone stealing our purse or wallet, hacking into our computer, or stealing our mail. But there are many other ways someone can go about stealing our identity, including going through our trash, installing fake credit card readers at gas stations to obtain the data on the card, and our waiter taking our credit card so we can pay our bill and using it for other purchases. I’ve even heard of waiters giving you back a fake card and keeping yours. Think about it, when was the last time you verified that the card given back to you was truly yours? With so many ways to steal our identity, how do we protect ourselves?
source: zimpenfish 
Types of Identity Theft
Before I dive into how to protect yourself, you need to understand the two types of identity theft:
Account Takeover: this is when someone gets access to your credit and/or debit and goes on a shopping spree at your expense. Think waiter at the restaurant.
Application Fraud: this is when someone gets access to your social security number and uses it, along with other information to obtain credit in your name. Think of someone stealing your wallet or purse.
Ways To Protect Yourself from Identity Theft
Now that you understand the types of identity theft, how do you go about protecting yourself? After all, in 2011, over 8 million people were a victim of this crime.
- Review Your Credit Report: You get a free credit report from all three credit bureaus once per year. Take advantage of this! Here is a direct link to the site, AnnualCreditReport.com . Additionally, here is a trick I use to get this free report 3 times a year ! Make sure you look over your reports and report any unusual activity you may see back to the credit bureaus. Any claim you file must be looked into within 30 days and reported back to you.
- Leave Cards at Home: There is no need to carry your social security card, your checkbook, debit card, and every credit card you have with you at all times. If you lose your wallet, you will be in for a lot of hassle calling and reporting all of the cards. Only take the one credit card you use with you. Leave everything else at home, ideally in a locked safe . Should you lose your card or your wallet, you only have one number to call.
- Keep Receipts, Then Shred: Keep all of your receipts and then use them to compare against your monthly statement. If everything checks out, shred the receipts. This also applies to statements you get in the mail, credit card offers and cancelled checks. Shred it all. Invest in a durable cross-cut shredder. A good shredder will set you back $200, but is worth the peace of mind.
- Opt Out: When you get the privacy statements in the mail from your bank and credit card company, take the time to read them and fill out the form. By doing so, you prevent them from sharing your personal information with third parties. The fewer companies and people that have access to your personal information, the better off you are. Furthermore, you can opt out of telephone marketing by registering with the Do Not Call Registry . You can also remove yourself from most marketing lists by registering with the Direct Marketing Association  and national consumer agencies .
- Use Your Computer Wisely: Most people fall victim through the internet. To prevent this, make sure you have a firewall installed on your computer and have up to date virus protection as well. When you install your virus protection, set it up to automatically update and scan your computer weekly.
- Do not Open: Do not open emails or attachments from people you do not know. If you receive an email from a business saying your account has been comprised or is asking for information, do not respond to the email. If you are worried that your account was compromised, call the company, but don’t use the phone number in the email. Use the phone number on the statement you receive.
- Look for Security Online: When buying goods on the internet, make sure the site is secure. Most sites have an ‘s’ at the end of ‘http’ which tells you it is secure.
I Was a Victim
I personally was a victim of account takeover. I have no idea how it happened, but I logged on to my bank account one day and noticed a few charges that I didn’t make. I reported it to the bank, but in the meantime, new charges continued to show up. When all was said and done, the person (or persons) had charged close to $500. Luckily my bank refunded me the money. The worst part was that this was my checking account. Because of the “missing” money, I was forced to use my savings account to get me through during this time. I had to wait a little over a month for the issue to be resolved and for me to get my money back.
Overall, there is a lot you can do to protect yourself from identity theft. While some personal finance experts advise against using credit cards, I encourage their use, assuming you pay off the balance in full each month. With identity theft, a credit card company will not make you pay for the charges in question while they review your account. There is no “lost” money that you need to recover, like I had to deal with. Luckily for me, the amount was only $500 and I had more than that in my checking account. Otherwise, the charges would have continued to go through and I would have started to rack up insufficient funds fess. Think of the nightmare! With a debit card, the money is gone from your account. It is not refunded to you until the investigation is complete and this could take 30-60 days or more. Take it from me, do everything you can to protect your identity.
Stay tuned for the next article in the series: How To Recover From Identity Theft .
What are ways you protect yourself from identity theft? Have you been a victim?