Key takeaways

  1. 1 in 20 Americans will experience identity theft this year
  2. The damage caused by identity theft can take months or years to repair
  3. Protecting your sensitive info from thieves and hackers is simple and only takes a few minutes
  4. The FTC has free tools to help protect accounts and recover from identity theft

Your bank statement lists withdrawals you don’t remember making. Your tax refund never arrives, but an online tool says it was deposited into your account. A debt collector calls about a debt that isn’t yours.

You may be the victim of identity theft and not even know it.

About 1 in 20 Americans have their identity stolen and used by thieves every year, equating to over $17 billion lost by victims. 

Most victims of identity theft spend hours with banks, credit card issuers, credit bureaus, government agencies, and others to make themselves whole. Worse, it can damage credit reports for years.

You can take steps if your identity is stolen and used by thieves. But the best solution is to follow some simple safeguards to help prevent identity theft in the first place. 

What is identity theft?

In broad terms, identity theft is when someone poses as someone else to obtain something owned by another: a credit card, a tax refund, a loan, a shiny new cell phone. The thief is long gone when Visa, Verizon, or a lender comes after you for the money they think you owe.

While identity theft can take many forms, here are the most common ways thieves steal your identity (and your money).

Unauthorized credit and debit card use: Thieves use your card info to make unauthorized purchases or open credit card accounts in your name using your credentials (and their own address)..

Account takeover: Thieves access your bank, credit card, investment, or mobile phone account to make purchases or withdraw funds.

Government, identification, job, or tax fraud: Fraudsters use your identity to receive government benefits, generate fake identification, offer documentation to employers or file fraudulent taxes (to get a refund). Lately, much of this has been linked to COVID-19 programs.

Even when victims identify fraud and take steps to close accounts, get refunds, and correct their credit reports, thieves who have their personal information can open fraudulent accounts months or years later. 

Here are some tips on protecting yourself and your information.

The Federal Trade Commission (FTC) recommends watching for these warning signs of identity theft:

  • You see withdrawals from your bank account that you can’t explain.
  • You don’t get your bills or other mail.
  • Merchants refuse your checks.
  • Debt collectors call you about debts that aren’t yours.
  • You find unfamiliar accounts or charges on your credit report.
  • Medical providers bill you for services you didn’t use.
  • Your health plan rejects your legitimate medical claim because the records show you’ve reached your benefits limit.
  • A health plan won’t cover you because your medical records show a condition you don’t have.
  • The IRS notifies you that more than one tax return was filed in your name or that you have income from an employer you don’t work for.
  • You get notice that your information was compromised by a data breach at a company where you do business or have an account.

Before it happens to you, take steps to protect your personal information.

Seven simple ways to protect your identity

    1. Check your accounts often. Review your account statements every month for unusual activity. Check your credit reports at all three credit bureaus for new accounts you don’t recognize. The three credit bureaus (Experian, TransUnion, Equifax) must, by law, provide one free credit report each year. A best practice is to contact a different credit bureau every four months to request a report.
    2. Protect your mail. If your mailbox isn’t locked, retrieve your mail as soon as possible after it’s delivered. Thieves can retrieve credit card offers and use your info to open accounts in your name. Or, even better, remove yourself from marketing campaigns altogether by unsubscribing here.
    3. Protect your phone number. Using a technique called SIM swapping, hackers can take control of your phone number and intercept sensitive account info, such as passwords and security codes. Securing your number takes only a minute or two depending upon your carrier. Here’s how to do it.
    4. Never give personal information, such as Social Security or Medicare numbers, your mother’s maiden name, and other info that companies use to verify your identity. Never participate in social media quizzes that ask for personal information, such as the street you lived on as a child. Don’t overshare personal info on social media.
    5. Pick a strong, unique, password for each service you use - no matter what kind of information you store. Using the same password you use for social media for your email or bank account can put you at extreme risk.
    6. Lock or freeze your files on all three credit bureaus. Securing your files is free and can help prevent thieves from opening accounts in your name. You’ll have to unfreeze or unlock your account whenever you apply for credit (which will be a minor inconvenience), but it’s one of the simplest and most important things you can do.
    7. Keep your technology current by installing security patches as soon as they’re available.

What to do if your identity is stolen

Despite your best efforts, determined criminals can steal your identity. If it happens to you, immediately follow the steps listed on the FTC’s identity theft website. The site will help you build a recovery plan and protect yourself even more in the future.

Schedule a free introductory call today to learn more about how a CFP® professional from Facet can help you make the decisions that will help you live the life you want to live.