Protect Yourself Against Identity Theft

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Question:  I hear stories about how my financial life can be ruined if someone gains access to my personal identifying information.  What can I do?

Answer:  Identity theft has become a huge problem.  Just this week the IRS released an updated estimate stating hacker thieves stole the personal tax information of 334,000 taxpayers from an IRS website, giving them all the information they would need to assume your identity.  A few months ago, the Office of Personal Management announced that hackers gained access to the personal date of 4 million current and former federal employees.  Retail stores including Target and Home Depot have had their customer credit card data stolen.  And countless individuals have inadvertently been comprised by telephone scammers, credit card skimmers, and corrupt service personnel.

The outcome of having your identity stolen can range from an inconvenience to financial ruin.  A friend recently had her office broken into while she was on vacation.  The burglars took her tax return, checkbook, and credit card. They were able to cash a check and withdraw money from an ATM.  They almost succeeded in opening a credit card with an online retailer.  We can’t do anything about hackers that tap into the IRS, government, or commercial data bases, but we can at least watch for suspicious behavior. Here is a checklist that should help:

1)  Consider a credit freeze

Visit this FTC website,   http://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs,  for details.

2)  Bank and credit card statements

Reconcile your statements as soon as possible after you receive them.  If you notice any unauthorized transactions, notify the bank or credit card company immediately. 

3) Your trash

If you routinely discard mail and papers that contain your name, address, social security number, credit card applications, credit card statements, etc., sooner or later you will likely become a victim of identity theft.  A thief will use the information to apply for credit cards and destroy your credit score.  Shred all papers that contain any personal information.

4) Your mail box

One lady received a credit card bill that indicated that a credit card check had been cashed at a local pizza place.  The check was one of those cash advance checks that credit card companies send you. Someone had stolen her mail and used one of the blank checks enclosed. Review your statements.

5) At a restaurant

Most restaurants in Europe require the waiter to scan your card in your presence.  Here in the U.S. they usually take it away to process, giving an unscrupulous waiter time to record the information from it. Check your credit card statements as soon as you receive them.

6) Your fitness center locker

If you leave your locker unlocked while you are taking a shower you are setting yourself up as an easy target.

7) Your email inbox

If you get a lot of emails like I do, you probably get the occasional phishing email asking you to confirm an account status by clicking on a “login” link.  Don’t click. For example, identity thieves posing as the IRS are sending out emails notifying taxpayers that they have a tax problem or a refund due.  These emails often look authentic with IRS logos and disclaimers. They ask the recipient for personal financial information.  Delete the email, do not click on any links or open any attachments, and do not reply.  The IRS doesn’t send taxpayers emails about their tax matters.

Kenneth B. Petersen CFP®, EA, MBA, AIFA® is an investment advisor and Principal of Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey.   He welcomes questions that you may have concerning investing, taxes, retirement, or estate planning.  Send your questions to: Ken Petersen, 2340 Garden Road Suite 202, Monterey, CA93940 or email them to ken@montereypw.com.