Fighting Identity Theft

In today's marketplace, you'll find a growing number of companies offering services aimed at helping consumers fight against identity theft. Fortunately, there are also steps you can take to help reduce your risk of becoming a victim of identity theft.

In this publication, we're going to explain some of the measures you can take to decrease the risk of a thief stealing your identity. In doing so, we're first going to talk about the services that are provided free of charge or that you can purchase. Later on, we're going to discuss some of the simple precautions you can take to help lower your risk of falling prey to identity theft.

Identity Theft Prevention Services

Additional Resources

It is possible to find roughly five different types of identity theft prevention services offered on the marketplace today:

Credit Freezes
Identity Theft Insurance
Fraud Alerts
Credit Monitoring
Data Sweep Services

Each of these services offers the consumer a slightly different form of protection. For example, one service might help prevent identity theft, while another might help an individual recover from a theft. Each of these services is discussed in more detail in the sections below.

Credit Freezes

For a small fee, credit-reporting bureaus offer consumers the ability to freeze their credit report. Also referred to as a credit report lock, or credit lock, the credit freeze stops all access to an existing credit report. By freezing, or locking an account, the consumer prevents thieves from opening up a new line of credit.

While a credit lock down is effective at preventing thieves from opening a new account in the consumer's name, it does not prevent a thief from accessing existing credit. A credit freeze is also somewhat inconvenient for consumers since they must pay a small fee of around $10 each time they want to lock or unlock their credit report.

Identity Theft Insurance

Identity theft insurance doesn't provide coverage for losses, and it doesn't prevent theft from occurring in the first place. What this service does is provide insurance coverage for expenses incurred following the theft of someone's identity.

Coverage is normally purchased as a rider on a homeowner's insurance policy and the policy premium can range from $10 to $100 per year depending on the deductibles chosen. As is the case whenever buying insurance, make sure you understand the extent of the coverage provided, as well as the deductibles that may apply.

Fraud Alerts

You can request that a credit reporting bureau place a fraud alert on your credit report if your identity has been stolen or you have reason to believe that it may have been stolen. Once placed on your report, potential creditors must either contact you directly or use what is referred to as "reasonable policies and procedures" to verify identity before issuing credit.

Once again, one of the drawbacks of this type of service is that it does not prevent thieves from accessing an existing account. However, fraud alerts are effective at protecting your credit score from further damage in the event it has been stolen.

Credit Monitoring

For about $50 to as much as $200, you can find a wide variety of service providers that will monitor your credit reports, and provide you with an alert if changes are made to your account. If you decide to purchase this type of service, then you need to make sure you understand exactly what you're buying.

Typically, you will find that the service will only monitor one of the three credit reporting bureaus. For example, each of the three major credit-reporting agencies offers this service:

Equifax - offers Credit Watch Silver, Gold, Gold Family, as well as Score Watch
Experian - offers Credit Manager, and CreditCheck Monitoring
TransUnion - offers Credit Monitoring, and Identity Guard's Credit Protect

However, each credit bureau only offers monitoring services for the information they collect, and creditors frequently do not report to all three bureaus. So to ensure your credit report is protected at all three bureaus, you may have to subscribe to three different services.

Data-Sweep Services

This type of company checks the Internet for listings of your personal identifying information. If your personal information is found on the Internet, then this service company will alert you to the potential fraudulent use of your personal information.

Data-sweep services can cost nearly $100 and covers a wide-variety of online information such as public records, email addresses, as well as real estate transactions. If you believe someone may be posting your personal information on the Internet, then this type of service can be a good investment as a preventative measure.

Precautions Used to Prevent Identity Theft

As promised earlier, we're also going to discuss some of the simple precautions you can take to help lower your risk of becoming a victim of identity theft. Perhaps the most effective approach you can take to help protect yourself against identity theft is to be stingy when it comes to giving out personal information.

Now that simple rule of thumb sounds easy enough to follow, but what are some of the ways we can practice this technique:

Confidential Papers - consider shredding papers containing confidential information such as bank statements, credit card receipts, insurance statements, medical records and credit card offers. When away from home, make sure a trusted friend or relative collects your mail each day. Even better, contact your local post office and have the mail held until you return from your trip or vacation.
Social Security Number - you should never carry your Social Security card in your wallet. If you're asked by a service provider for your Social Security number, then ask them why they need the number, and what happens if you don't provide one. This way you can make an informed decision whether or not you want to share the number.
Internet Use - perhaps the easiest way to protect your identity while surfing the Internet is to keep your computer's antivirus program up-to-date, as well as using a firewall. Be wary of phishing emails asking you to update passwords or other confidential information. Avoid responding to any unsolicited offers sent to you, including clicking links in emails.
Password Protection - whenever possible, place passwords or pins on bank accounts and credit cards. When you're creating passwords use techniques that result in hard-to-guess combinations of upper case letters, numbers, and special characters.
Credit Cards - if you have the discipline necessary to carry a credit card, then avoid using a debit card where a credit card is accepted. Credit cards offer consumers more protection if lost or stolen than debit cards.
Verify Identities - never give out personal identification information unless you were the person that initiated contact and / or you're confident that you're speaking to a legitimate organization.

Identity thieves are always devising new ways to steal someone's identity. Emails, fraudulent websites, and even outbound telephone calls are commonly used to obtain personal information. Most companies, and especially companies offering financial services, will never ask its customers or potential customers for personal or bank account information via emails, telephone calls or letters.

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