It’s the New Year, and along with taxes, you should be looking at doing some annual financial maintenance that can protect your identity. Identity theft is all too common, especially around the holiday season with the influx of purchases. You might not even know it hit you until it’s too late. That’s exactly what happened to Michelle, my sister – in -law who allowed us
A horror story of identity theft
Michelle, Clinical Supervisor and Charles sister was the victim of identity theft right in the middle of her wedding preparations. She first noticed that her credit score dropped a couple of points. With the rush of a wedding, she didn’t think much more about it.
A month later she received a call from Citi Bank, the home of a couple of old credit cards she no longer used or carried a balance on. They told her that she needed to pay up on two overdue credit cards. In a matter of 30 seconds on the phone, Michelle realized someone had stolen her identity, used her credit cards, and opened a new credit card in her name.
Michelle was shocked to say the least.
So how did they do it? The thief found just enough old information. Michelle later found out (through LifeLock) that old accounts like MySpace, a concert ticket place, and LinkedIn had all been compromised. She was also a part of a larger security breach with a company a few years ago. The thief likely used this information to hack into her Citi account.
The thief hacked it and promptly changed the address and personal information to their own in Colorado and began spending. They racked up a total of $9,000 in credit card purchases and Citi bank was calling in to collect.
What Michelle did to fix it and get her identity back
Reporting identity theft and getting the marks of your credit report is quite the ordeal. She had to notify:
- The police
- Social Security Administration
- All 3 Creditors
- U.S. Mail
If this does happen to you, Michelle has a few extra recommendations that she learned through the process:
- Change all login and passwords
- Keep records of everything to prove you are a victim
- Request to work with a designated identity theft solutions point person with the creditor where you were defrauded
- Get a signed affidavit of fraud if you run into barriers with the credit card company.
- After notifying all three credit bureaus and reporting fraud, they can monitor your accounts for up to one year or seven (depending on if you want to pay ).
- Be persistent and call regularly for updates on the status of the investigations.
- Notify the Federal Trade Commission. While not required, they can provide you an online account to help you make sure you’ve covered all your basis for reporting and protecting yourself.
Michelle plans to avoid this ever happening again as much as she possibly can. While it’s impossible to avert the bad guys all the time, there are a few security measures you can put in place. Below are five ways to help you avoid a similar fate.
5 Ways to prevent identity theft
Protecting your identity is an easy thing to put off since its really not required by anyone. For the sake of your finances, save yourself the headache and put these three practices into place right now.
1. Lock your unused credit cards
Most credit cards have a feature that allow you to “lock them”. I have credit cards with most of the major companies and the only one that didn’t offer this option was American Express. Do yourself a favor and log into your old accounts, check that you have a $0 balance and then lock the card. The only way to unlock it is to manually log back into the account.
Locking a credit card can be a much better solution than closing the account. That’s because when you close an account, especially an older line of credit, it can lower your credit score.
2. Set credit card alerts
Credit cards allow you to set alerts for all kinds of things. You can choose to have the alerts sent via e-mail, text or both. I have alerts for:
- My balance reaching a certain amount
- When purchases are made online
- Purchases made without a credit card present
- Large purchase alerts (purchases over $500 or so)
On most credit cards the alerts are really flexible. Not only can it help you keep track of your own spending, but also if someone is doing something fishy with your money.
3. Use a money management system
We love Mint and Personal Capital for managing our money. These systems allow us to have all of our bank accounts, credit cards, investments, and loans linked in one place. This way we can get an overview of our money each month and set our budget.
The big plus to a money management system is that they will notify you of unusual spending. They also offer a credit monitoring service so you can check up on your credit score every month or so. Remember, the first sign of identity theft for Michelle was a couple point drop in credit score.
4. Use passwords from google or a password changing service
Using the same old passwords for everything is an easy way to get hacked. Use a password changing service. If you’ve already been hit, like Michelle, sign up for a service like LifeLock that helps to monitor and protect your accounts when you logs in on your phone and computer.
You can also use google suggested passwords, as they are always strong. Just be sure to have google remember them! And don’t forget your google password either. You want to make that just as strong and change it every couple months or so to keep your passwords protected.
Extra tip: For one extra step, set up two methods-entering or two step password protection. This will send a requesting a code to another device each time you log in to ensure you are the only one logging in. For example, if you log-in from your laptop using a new network, they will send you a text with a verification code to enter before logging you in.
5. Check your annual credit report every year
You need to watch your credit score and all of your accounts.
I know. Pulling an annual credit report can seem like a lot more work than logging into Credit Karma or Mint for your free score. But it needs to be done so you can see all accounts open in your name. Even with every protection up, there is a chance that an account can be opened in your name elsewhere. You can get your credit report at annualcreditreport.com.
Of course, if anything does come up, you need to dispute all fraudulent charges, unauthorized accounts opened, and any false addresses on your credit report right away.
Protect your money (avoid identity theft)
Michelle isn’t the only one who has had someone get their credit card information. The Federal Trades Commission says that millions of Americans get their identity stolen every year, with the numbers only increasing. Charles had someone buy an expensive watch on his credit card a few years ago. Thankfully, he caught it the day of purchase and shut them down right away, but it’s all too easy to get hit.
I am also happy to report that Michelle’s credit is now restored. Her case has been marked as resolved and closed!
You can only do your best to protect your finances. By following the tips above you have reduced your risk and taken a step in the right direction for your financial health.
Boom! Just locked my unused credit card. Thanks for the tip! Since it’s not linked to any of my expense tracking accounts I wouldn’t see it until it’s too late.
Yes! That was my favorite tip, although I literally went and did all of these after she told me her story. So smart to lock the cards…I didn’t even know that was an option.