Investing Insights

March 25, 2017

5 Ways to Help Avoid Identity Theft

Identity theft is the fastest-growing crime in America. A recent study from Javelin Strategy & […]

5 Ways to Help Avoid Identity Theft

Identity theft is the fastest-growing crime in America. A recent study from Javelin Strategy & Research found that $16 billion was stolen from 15.4 million U.S. consumers in 2016, compared to $15.3 billion from 13.1 million victims a year earlier.

Over the past six years, identity thieves have stolen over $107 billion.

Identity theft has the potential to ruin lives. All a thief really needs is your Social Security number and a few other rudimentary details to drain your bank account, steal your tax return and run up unauthorized card charges, all undetected and in your name.

The rise of the internet has forced us to seek easy-access communications at the expense of personal security. Life has been made easier by replacing physical transactions with digital ones. However, the mass archival of our personal information by the websites we use is leaving our data security in the hands of major businesses and government.

There is no better time than now to learn how to keep your intimate data on lockdown. Consider these strategies:

File your income tax returns as soon as possible. Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund.

While the IRS and state governments have devoted considerable resources to prevent tax-related identity theft, you can take a step to prevent this type of fraud by filing your tax return as soon as possible. This will prevent someone else from filing a fraudulent return and possibly claiming a refund of your tax payments prior to you filing your actual return.

Use strong passwords and change them often. A strong password should be a minimum of 12 characters and should be a combination of uppercase, lowercase, numbers and symbols. The password should not be a standard dictionary word, a family name, familiar dates, such as the year of your birth, or have repetitive characters. Consider using a favorite phase or song lyric.

Furthermore, it is highly recommended that you use a different password for each website that contains or has access to financial information, including your email account.

Password management is complex, and we often fail best practices when creating and managing our passwords. However, there are several free or inexpensive password managers such as LastPass and Dashlane that will provide strong protection and ease of use to ensure that you are managing our passwords and data effectively.

Watch what you write in an email. It appears that no one is immune to having their email hacked. Hackers gain access to your account and scour your emails for any information related to your financial activity, including where you bank, where your investment assets are held, who you transact with, and a host of other personal information.

From your email account, they can email your banker, your financial advisor and other possible sources of money to request that funds be wired or otherwise forwarded to a third-party account or even your own bank account where it is later intercepted. To the receiver, the email appears legitimate as it came from your email address and is often written in your own style.

While strong password practices and security software can greatly minimize an email hack, you are still not immune. Avoid writing about specific financial matters. Notify your banker, financial advisor and CPA to be mindful of what they communicate via email and that any files that they send are thoroughly encrypted. You should also require that they call you and not respond via email before acting on any request that you make via email to transfer funds from your account or send private information.

Always use security software with firewall and anti-virus protections. Make sure the security software is always turned on and that you can automatically update it. Encrypt sensitive files, such as tax records and brokerage statements you store on your computer, or use a cloud hosting service to retain these documents.

Learn to recognize and avoid phishing emails, threatening calls and texts. Thieves pose as legitimate organizations (bank, brokerage firm and the IRS), which do not communicate via email or text. Do not click on links or download attachments from unknown or suspicious emails. If you do think the email is legitimate, go to the company website and log on directly.

Also, pay attention to the URLs of websites you visit as fraudulent websites will sometimes change the domain to .com instead .net to throw off unexpecting visitors.

These tips will help prevent you from becoming a victim of cyberthieves. However, as cyberthieves become more sophisticated, so should you in safeguarding your personal information.