Protecting Your Identity
As with other aspects of your personal and financial life, exercising care and diligence will help you protect yourself from identity theft. Keep passwords, credit card numbers, and other information private to reduce your vulnerability. Shred paperwork before you recycle it. Regularly monitor your account activity. Discovering problems quickly decreases their impact on victims and expedites recovery, says Victor Lamond, operations manager for AAA Identity Champion. "We live in a fast-moving digital world, so the faster we can detect an instance of identity theft and take action, the better we will be at reducing risks to our finances, privacy, and reputation."
You can practice good digital hygiene by using strong passwords and two-factor authentication on your accounts, filtering out spam, being wary of attachments, installing software that regularly checks your computer for viruses and malicious code, and avoiding sharing details (such as your mother's maiden name) on your social media accounts, which you should always set to private.
It's possible to monitor for fraudulent activity using two free tools: credit reports and notifications from financial institutions.
Annualcreditreport.com, a federally mandated service, gives consumers access to a copy of their credit report from each of the major reporting agencies— Equifax, Experian, and TransUnion—once a year. These reports summarize all accounts open in your name, including payment history and other details. Your primary task when reviewing them is to make sure everything is accurate. If you find an error, open a dispute. (Pro tip: Rather than requesting all three reports at the same time, get a different one every four months, which improves your odds of catching any fraudulent activity early.)
Meanwhile, set up email or text notifications for activity related to your debit cards, credit cards, and bank accounts. This is the fastest way to uncover any wrongdoing. These alerts, which can be set up through each provider's website, are highly configurable. For instance, you could be notified immediately if your debit card is used outside the United States, or if a transaction exceeds a certain threshold (whatever dollar amount you choose).
To ratchet up your protection, you can opt into an identity-theft protection service (such as Identity Champion from AAA). These services, sold as subscriptions, keep tabs on your credit report and alert you to fishy changes. Some plans offer recovery assistance when personal information has been compromised, as well as insurance coverage that may cover financial losses related to identity theft.