Thursday, 11 July 2019

It sounds like a nightmare, doesn't it? You imagine someone taking over your life, leaving you helpless, powerless and deeply in debt. What's the reality? And how should you prepare for it?

According to the Federal Trade Commission, identity theft has been top concern among consumers every year for the last 15 years.

Still, more money is lost through identity theft annually than from burglaries. So, just as you'd take steps to discourage anyone from breaking into your house, learn what precautions you can take to make sure they don't break into your private information. 

What is identity theft?

Identity theft is a broad term for describing a variety of ways that criminals can tap into your personal information and profit from it.

By far the most common type of identity theft is stealing credit card information, where thieves use that information to get some quick cash or merchandise. While such theft can be an inconvenience, consumers who stay on top of their credit card charges can quickly inform their bank about fraudulent charges. The credit card company will usually stop payments—if notified prior to payment—and issue the consumer a new credit card.

Typically, that puts an end to the problem. Under federal law, a cardholder's liability for unauthorized use of their credit card tops out at $50. Some state laws even prohibit the $50 on unauthorized use. But beware that a card issuer may find that the charge was authorized, if there is not enough evidence to the contrary.

Another type of identity theft is new account fraud, meaning a thief gets enough information to set up a bank or credit card account in the victim's name. This potentially can be more costly and harder to detect, but it's also harder for the thief. While this type of theft is increasing, it's still relatively infrequent. One variation is called account takeover fraud, where the thief claims to own an existing account. 

How can you stop identity theft?

Identity thieves don't need a lot of information—your name, age, address, and Social Security number usually will do—and it's your job to keep anyone from getting access to that information. Here are some things you can get into the habit of doing to help avoid/prevent identity theft:

  • Purchase a cross-cutting document shredder. This should be your first move. If you have elderly parents, purchase one for them too. Identity theft tends to be higher in states with higher rates of one or more of the following: retirees, vacationers, home foreclosures , and unemployment. 

  • Shred anything that has private information before you dispose of it. Don't put unshredded credit card invitations, bank statements, and other financial records in the trash. 
  • Don't respond to email, text, or phone messages from organizations you don't know. That's not how a legitimate company does business. Delete the messages. 
  • Be careful online. Of course, you know to use hard-to-guess passwords but did you know that crooks can hang out in public places with Wi-Fi connections? Don't look at your online banking information while you're using your laptop at the coffeeshop. Instead, wait until you get home and don't send anything that you want to keep private unless you're using an encrypted messaging system. 

How can you limit the damage when theft occurs?

If an identity thief has tapped into your private information, he can leave a trail of his actions pretty quickly. Here are some steps you can take to get on top of it: 

  • Read your credit card and bank statements carefully—and often. If you've been charged for airline tickets to Fiji, challenge it right away—unless you're actually going to Fiji. 
  • If a bill doesn't show up when you expect it, look into it. A thief might have grabbed it from your mailbox—and no, they're not planning on paying the bill for you.
  • Review each of your three credit reports at annualcreditreport.com. This is a good way to make sure lines of credit are not being opened under your name —and it's free. You can access each of the three major credit service bureaus once a year without incurring a fee. If you want to maximize that free annual benefit, access them one at a time every four months to make sure nothing has changed between checks.

If you've discovered someone has tinkered with your identity, you'll want to notify those credit bureaus as well as several other organizations. The Federal Trade Commission has a comprehensive website that can help lead you through the process. 

Use caution when purchasing ID theft products and services

Identity theft protection products and services can help you monitor your accounts. These can be valuable and convenient tools to keep track of your financial accounts, credit reports, and personal information. But before you pay for any identity theft protection product or service (some of which have subscriptions that cost hundreds of dollars annually), you should do your research and evaluate its track record.

 

The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial advisor about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates. 

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