How to Prevent Fraud & Identity Theft

Paying for things, online or in person, has never been faster or more convenient. It has also never been more important to take sensible steps to prevent fraud and identity theft.

Financial institutions and credit card companies are constantly seeking ways to make their systems more secure. You can help. There are also simple actions you can take today that can dramatically lower your risk of falling victim to fraud or identity theft tomorrow. Continue reading to learn more about what you can do.

Be on Alert to Prevent Fraud

Financial experts say one of the best ways to prevent fraud and identity theft is simply to be aware that it can occur and take active steps to minimize your risk.

Review Your Account Statements

Check your bank account and other statements every month and keep a sharp eye out for unexpected, unusual, or unfamiliar charges.

Keep Your Bank Information Up to Date

Make sure your bank has your correct phone, email, and physical address details so you can be contacted if unusual or suspicious activity is detected on your cards or accounts.

Monitor Your Credit

Check your credit report on at least one of the three credit bureaus to make sure no one has opened new accounts under your name. All three are legally required to provide one free credit report per year. 

Experian recommends users check their report every four months and provides a free report once every 30 days.

Track Who Has Access to Your Credit Information

It is important to know who has access to your financial information and to be sure they are trustworthy. 

Many money management and budgeting apps can be set up to access your account information directly. Your financial institution can tell you what third parties have access to your data.

Be Smart in Public

Be aware of the information you may expose when you are out and about. Protect your pin from prying eyes when using a keypad and avoid connecting to unsecured public wi-fi networks when using a laptop or mobile device outside your home.

Protect Your Identity

Good security practices and habits may take a little more time and trouble, but will dramatically lower your risk of fraud and identity theft.

Do Passwords Right

Passwords are a key part of your online security armor. Take the time to do them right:

• Use a different password for every site (yes, every site)
• Avoid using personal info like names or birthdates
• Use a mix of upper and lower case letters, numbers, and symbols
• Consider subscribing to a password management service like Splashdata or Keeper to help you generate passwords and store them securely

Use Two-Step Authentication

Sign up for two-step authentication on sites whenever it is offered. This will require you to provide a second piece of information to confirm your identity — usually a time-sensitive code or link sent via email or text message.

Do Not Store Card Information on Third Party Sites

Avoid storing your credit card information with online merchants or providers whenever possible. Businesses’ computer systems are regularly hacked to steal customer information. All reputable payment platforms should allow you to check out without permanently storing payment information.

Watch Out for Unsecure Websites

Be sure that web pages that require you to provide payment or to enter personal information are secure: 

• Beware of websites that direct you to another website
• Check that the webpage address matches the organization you are dealing with
• Look for a lock, shield, or similar security icon when entering sensitive information
• Be wary of sites that ask you to download information or an application

Mind Your Email

The same goes for emails or messages that ask you to respond or to click on an embedded link:

• Make sure the URL of the link matches that of the organization that sent the email
• When replying to an email, be sure the return address matches the organization you are writing
• Be careful about opening email attachments — if in doubt, try calling the sender

Ask Questions About Your Social Security Number

The Federal Trade Commission recommends you avoid giving out your social security number to anyone other than the IRS, your employer, and your financial institution. If a healthcare provider, school, or another company claims it is needed, ask: 

• Why is it needed, and how it will be protected?
• Why can’t another identifier be used?
• Is it possible to use only the last four digits of your number?

Take Care of Your Paper Documents

Criminals can glean sensitive information from discarded paper statements, bills, or other records. Where possible:

• Request secure email or online statements  
• Consider installing a lockable mailbox
• Shred documents you do not intend to keep
• Protect important documents in a home lockbox, safe, or bank safety deposit box 

Safeguard Your Credit

Your creditworthiness is valuable and needs to be actively protected. All of the three big credit bureaus (Equifax, Experian, and TransUnion) offer services that can help prevent fraud and identity theft.

Place a Fraud Alert on Your Credit Report

A fraud alert on your credit file with the bureaus requires lenders to take extra steps to verify your identity before processing credit card and loan applications. Once set up these alerts usually stay in place for a year and can be renewed indefinitely.

Consider a Security Freeze on Your Credit Report

A security freeze prevents checks on your credit and can help stop unauthorized inquiries. It can also prevent legitimate requests for your credit applications. Credit checks can only be run when you choose to lift the freeze. 

This strategy for preventing fraud is best used if you have already been the victim of identity theft, or are unlikely to require any credit checks for an extended period.

Consider Credit Monitoring or Identity Theft Monitoring Services

The credit bureaus also offer paid credit and fraud monitoring services. These services typically include:

• Continuous monitoring of your credit across all three bureaus
• Web scans to check for your financial information on compromised sites
• The ability to instantly freeze or unfreeze access to your credit file from your online account

Stay Aware to Prevent Identity Theft 

Even with these precautions in place, it is easy to be caught off guard by phone or online “phishing” scams designed to get you to reveal valuable personal details.

Fraudsters will do their best to confuse or panic you into giving them information. However, there are also clear “red flags” to look out for when assessing if a call or online communication is a scam. Click here to read the common signs that it's a scam.