Identity theft—the unauthorized use of a person's personal information for financial gain—is far more common than many realize. More than 16 million people in the U.S. had their identity stolen in 2012, according to the Federal Bureau of Justice.1 Most cases of ID theft involve someone accessing the victim's credit or bank accounts, but thieves may also use a person's information to obtain medical services, get a job or file a fake tax return. Some thieves may use high-tech strategies to steal your information, like hacking into the databases of big corporations. But many cases of ID theft are decidedly low tech—a thief may simply steal your mail or rifle through your trash.
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Protect Yourself and Your Identity
You need a multi-pronged approach to protect yourself from identity theft. The 10 tips below will help you keep your personal information secure and avoid becoming a victim.
- Create strong passwords: Make your passwords a random mix of letters, numbers and symbols. Don't use the same password for different accounts and change passwords frequently.
- Shred documents: Shred any documents with personal information on them before throwing them away, such as credit card offers, insurance documents and bank statements. Remove the labels from prescription bottles.
- Be careful about what you carry: Don't keep your Social Security card or number in your wallet. Store your Social Security card, passport and birth certificate in a safe place.
- Monitor your credit: You can request one free credit report every year from each of the three major credit reporting agencies. Visit www.annualcreditreport.com to get started.
- Keep your information close: Don't give out personal information (like your credit card or bank account numbers) to people over the phone unless you are sure of their identity. Use similar caution when sharing information online.
- Secure your devices: Put a password on your smartphone, tablet or laptop. Use caution when downloading apps ("lookalike" versions of popular apps may contain malware). Update apps and security software since newer versions may contain security fixes that add an additional layer of protection.
- Watch your mail: If you have an unsecured mailbox, consider having sensitive documents sent to another address, like a P.O. box. Put a hold on your mail when you go on vacation.
- Keep documents secure: Unfortunately, identity thieves are sometimes people we know. Keep documents with personal information in a secure, locked location in your home.
- Opt out: You can opt out of receiving pre-approved or pre-screened offers of credit or insurance by visiting www.optoutprescreen.com. Opting out reduces the chance that a thief will steal your mail and fill out applications for credit in your name. (It also reduces annoying junk mail.)
- Don't overshare: Use caution and common sense when sharing information on social networks like Facebook and Twitter. Don't broadcast your address, phone number or that you'll be out of town for two weeks. Even sharing seemingly inconsequential information can be harmful—thieves could use it to answer your challenge questions and gain access to your accounts.
Act Quickly If You Suspect a Problem
The Federal Trade Commission has resources for people who are victims of identity theft, including sample letters to send to businesses and credit reporting agencies to alert them of the theft, and tips for dealing with specific types of ID theft, such as tax identity theft or medical identity theft.
As with other areas of your finances, vigilance is key to preventing identity theft. You don't have to spend lots of money on credit monitoring, give up on credit cards and shred every piece of trash, but you should pay attention to your account activity and act quickly to resolve any potential problem.