Identity theft is a huge problem that cost consumers $16 billion in 2016 and the problem is getting worse. With the Equifax breach nearly everyone’s personal information was stolen and everyone’s personal finances are at risk. How do you prevent your identity from being stolen?
Today, identity theft hit close to home…
A close friend of mine called me this morning saying his checking account had been wiped out because someone stole his debit card information. He was ganked for $1900 and had no idea he was at risk. He had his debit card and only discovered this theft when his bank sent him a text message. The bank new something was up when $800 was spent at Wal Mart and $1100 at UPS.
Thankfully, he will get his money back and although he was the victim of credit card fraud, it could have been much worse as he could have been the victim of identity theft.
Identity Theft Is a Huge Problem
Unfortunately, this type of crime is very common because our information is exposed due to data breaches and other crimes. The Equifax data breach was probably the most egregious considering they are one of the big 3 credit bureaus and have ALL of your personal financial information. In addition to the financial costs, there are hidden costs like the time and stress associated with fixing your personal finances.
What We Cover Today
- Credit card fraud vs identify theft
- How does identity theft happen
- How you can prevent identity theft
- Protecting yourself from identity theft
- Why you shouldn’t use free Wi-Fi
- What to do if you are the victim of identity theft
- How Mr Dollabuzz protects his identity
Credit Card Fraud Vs Identity Theft
Many people may believe credit card fraud and identity theft are the same. In reality, they’re different crimes — and both can seriously damage your credit history, personal finances, and make it difficult for you to get a loan or apply for new credit cards.
Both crimes involve someone assuming a false identity, says Eric Tyson, an economist and the author of “Personal Finance for Dummies.”
The main difference between credit card fraud and identity theft is that credit card fraud usually involves a single account. If someone steals your identity, the damage to your personal finances can be much costlier because someone can open lines of credit like a car loan in your name.
How Does Credit Card Fraud and Identity Theft Happen
There a several ways for a thief to steal your information. A few old school ways are:
1. Phone Scam: Someone calls you and says you won a prize and they need your credit card number to pay for shipping etc.
2. Digging Through Your Garbage/Stealing Your Mail: Thieves steal your garbage or mail and look for credit cards, card applications, and other personal information. However, due to privacy laws the amount of information found through these means is dwindling.
Here are two high tech schemes that are very popular and my friend was probably a victim of number 1:
- Skimming – Electronic devices called “skimmers” can read your card’s magnetic strip and grab your credit card details. Shady service clerks can use these devices to make an electronic copy of your card, which they then transfer to a blank credit card or computer to make fraudulent charges. Skimmers can also be installed at ATMs and gas station pumps. See this reference for more guidance on skimmers and what to look for.
- Phishing – Phishing refers to fake emails, phone calls, or letters claiming to be a business or institution you might know asking for your credit card or other personal information. This is a social engineering tactic where the fraudster hopes you will voluntarily give up your personal information.
The Best Ways To Prevent Credit Card Fraud and Identity Theft
The best way to prevent both credit card fraud and identity theft is to ensure your sensitive information is secured as much as possible. Don’t give your information when unsolicited. In other words, if someone asks you for personal information don’t provide it. If you receive an email from your bank asking for information call them and verify it really is your bank.
A few other tips to prevent credit card fraud and identity theft are:
- Shred important documents
- Don’t write down your social security number
- Use virus protection on your computer and,
- Be wary of free wi-fi
You Shouldn’t Use Free Wi-Fi Because…
it’s an easy way to have your personal information stolen. I know it’s very tempting to use free Wi-Fi. Why use your own data when you can connect for free at the coffee shop or the hotel? Personal finance is all about saving money right Mr. Dollabuzz? Well, ya but hackers love free Wi-Fi since it is easily hacked. Easy hack = easy money for the bad guys.
A CNBC story noted that most people are unaware of the risks of using public Wi-Fi . Additionally, a Harvard Business Review story noted that ” over half of the adults in the U.S. have their personal information exposed to hackers each year. ”
The author (Luke Bencie, Managing Director of Security Management International) states that “we compare the dangers of using public Wi-Fi to the risks of having unprotected sex. In both cases, not taking the necessary precautions can lead to lasting harm.”
The point is to make sure you wrap up your Wi-Fi with a secure password or vpn connection to ensure your personal financial information is safe. Yo, wrap it up B!
How You Can Protect Yourself From Identity Theft
Thankfully, there are several ways you can protect yourself from credit card fraud and identity theft. These services cost money but can be worth every penny in the event your personal information is stolen.
Zander Insurance Group
Zander Insurance Group offers protection against all identity theft events. Price starts at $75 a year for one person and $145 per family for one year. The protection offered is similar to an insurance policy but is NOT an insurance policy.
Here is an overview of services that are provided:
- Unlimited recovery services
- Personal information monitoring
- Change of address monitoring
- Social security number monitoring
- $1 million stolen funds protection and reimbursement protection
- Certified ID theft specialists 24/7/365
- Data breach notifications & credit report monitoring reminders
Here is a more detailed summary of benefits.
LifeLock offers different memberships ranging from $9.99 a month to $29.99 a month for the ultimate plus package and partners with Norton Security which”looks for use of your personal information, and with proprietary technology, alerts you to a wide range of potential threats to your identity.” This also works to protect your devices such as your phone and computer.
Here is an overview of services that are provided:
Zander Insurance Group vs LifeLock With Norton Security
Mr. Dollabuzz personally uses the services of Zander Insurance Group. I receive no commission from them and decided to use their product after the Equifax data breach. I think either service would be fine.
As a service to my readers here is an overview of Zander Insurance’s offering versus other products.
A Few Other Tips on Protecting Yourself
- Monitor credit reports
- Cancel debit cards on a regular basis
- Don’t keep all your money in your checking account. Have your money spread around various checking and savings accounts or use 6-12 month CDs for money you won’t need right away. Here is an overview of various CD’s
What To Do If You Are The Victim of Credit Card Fraud or Identity Theft
If you are the victim of identity theft the first thing you should do is notify your bank or creditors. Second, you should put a fraud alert on your credit report. Next, review your credit reports to identify any unusual activity. These three steps are critical to getting a handle on the extent of the crime and will help limit your financial exposure. Here is a checklist for victims of identity theft and for victims of the Equifax breach.
Identity Theft Can Ruin Your Personal Finances
It is important to be proactive when it comes to protecting your identity. Protecting your personal information, being aware of various scams, and the risks associated with free Wi-Fi can help prevent identity theft.
Using an identity theft service will also mitigate your losses in the event you are a victim. Doing these things will help ensure your personal finances stay Dollabuzz strong.