Identity Theft: How it Happens and How to Protect Yourself

You’ve spent years improving your financial position and building good credit. Unfortunately, if the wrong person gets their hands on your personal information, the results of all that hard work could come crashing down. And while it might be easy to assume that identity theft won’t happen to you, the risk is higher than you may realize. Over the last 10 years, incidents of identity theft have increased 133%. Knowing how to protect yourself from identity theft is essential for your financial future.

The good news: You can greatly reduce the chances that you’ll become a victim of identity theft with the right information, preparation and tools. Our guide takes you through everything you need to know about identity theft protection. And to make life easier, you can use this quick overview to jump to the sections most relevant to you:

• What Is Identity Theft?
• How Does Identity Theft Happen?
• Preventing Identity Theft
• Signs of Identity Theft
• Child Identity Theft
• Credit and Identity Monitoring and Identity Theft Insurance

What Is Identity Theft?

Put simply, identity theft is the theft of your personal information by a person who uses it to commit fraud or who sells that personal information to others for the same purpose.

Fraud is a broad term that covers a lot of areas, but some examples of what identity fraud might look like in the real world include:

• Theft of a tax refund: Someone with access to your social security number uses it to file taxes in your name. Then, they collect your tax refund.
• Medical identity theft: A person who has your health insurance information and social security number uses that information to obtain medical services or file a claim with your insurance company.
• Credit card or debit card theft: A scammer with your credit or debit card information uses it to make purchases in your name.
• Application for rental: Someone with your social security number, driver’s license and other information uses it to rent a property or a car that they would otherwise not qualify for.

Identity theft is a major problem. On a personal level, it wreaks havoc on a victim’s life. It can result in harassment from debt collectors, inability to access credit, refusal of service from banking institutions and termination of services by utility companies. Beyond that, it’s a crime that is disproportionately targeted at vulnerable populations, like children and the elderly, and has negative economic impact, costing law enforcement between $15,000 and $20,000 to investigate each case of identity theft.

How Does Identity Theft Happen?

While identity theft disproportionately affects at-risk populations, it can happen to anyone. You can protect yourself by knowing some of the most common techniques scammers can use to steal your identity.

• Dumpster diving: When you get a bank statement, what do you do with it? If you throw it away or recycle it, you could be putting yourself at risk. It’s not uncommon for thieves to look through trash or recycling for documents that list the information they are trying to steal.

• Mail theft: Odds are good that you regularly receive mail from your bank, insurance company, mortgage company and many other providers that have access to your personal information. If you don’t regularly check your mail, or if you leave it unattended while on vacation, you’re making theft all too easy.
• Phone scams: If the local radio station calls to tell you you’ve won tickets, don’t be so quick to hand over your personal information. This is just one variation of scams used regularly by identity thieves. They might also call and extend a “one-time offer” or claim to be the Internal Revenue Service (IRS) — all with the goal of obtaining your personal information.
• Email scams: Those who use this technique will send you an email with a request to click on a link within the email or open an attachment. The moment you click, you’re giving them access to your computer.
• Technology theft: Your personal devices offer a number of ways to store your personal data. If someone gets their hands on your cellphone or laptop, they can easily access your bank accounts and personal records.
• Card skimming: Skimming involves placing a phony device on top of a card reader, like at an ATM or a gas pump. In the process of swiping your card, you unintentionally put your information directly into the wrong hands.
• Hacking and data breaches: The more companies that have your personal information, the greater your risk of identity theft. Take, for example, a data breach at Equifax in 2017 in which scammers walked away with the social security numbers of 145 million Equifax users.

Preventing Identity Theft

While there are many ways that scammers can steal your information, there’s also an arsenal of techniques you can use to keep your information safe. Protect your identity by taking the following steps.

Guard Your Social Security Number

This is one of the most important pieces of personal data that you have, and you should guard it as such. Be wary of handing it out for any reason. There are many times you’ll be asked for it, but it’s often not necessary for the other party to have it. For example, many employers ask for social security numbers on job applications, and while it’s necessary for them to have that information later, they don’t need it that early in the interview process.

Take Passwords Seriously

Don’t be cavalier with your passwords. It won’t take long for a hacker to figure out if your password is password1234. Most platforms will indicate the strength of your password — take these guidelines seriously. If you want a hard set of rules to follow, the National Institute of Standards and Technology recommends a password that is longer than 15 characters and that uses unrelated words (e.g., TreeBuildingSkilletCanyon).

Enable Two-factor Authentication

Two-factor authentication is the process by which a platform uses two sources of proof to ensure you are the owner of the account. The first source of proof is your username and password. The second is often your cellphone number or email account, though there are also apps that can help with this. When two-factor authentication is enabled, a text or email is sent to you following the entry of the correct username and password. You then enter the code given within that text or email to access your account. To bypass this, a scammer would have to know your password and have access to your phone or email account.

Destroy Documents With Personal Information

Since it’s easy for identity thieves to access your trash and recycling, the safest way to eliminate documents with confidential information is to shred or burn them.

Turn Transaction Alerts On

Most financial institutions will give you the ability to receive transaction alerts so you know when your card is used, when money is withdrawn and more. If someone does illegally access your financial accounts, knowing as soon as it happens means you may be able to reverse the charge and prevent damage.

Be Vigilant About Your Mail

Collect your mail from your mailbox every day, and put your mail on hold when you are out of town. This will ensure that it doesn’t fall into the wrong hands.

Be Wary of Wi-Fi

Sometimes scammers will go to a public location like a coffee shop and set up a Wi-Fi network with a name that’s similar to the real one at that location. For example, espresso-rules might be the name of the real network, but you sign onto the scammer’s version: esspresso-rules. Protect yourself and your identity by staying vigilant and only using trusted networks.

Request Electronic Statements

An increasing number of companies offer electronic statements in lieu of paper. By switching to electronic documents, you can reduce the likelihood of identity theft and feel good about helping the environment at the same time.

Only Use Secure Sites When Entering Information

When you look at a URL, you’ll see “http” or “https” at the front. The “s” means the website is secure, which helps protect your information when you enter it on the website. It doesn’t matter how cool those new sunglasses look; no “s” means no purchase.

Signs of Identity Theft

Even if you know the common scams used to steal your identity and the best ways to prevent identity theft, there is still a chance you could have your identity stolen. Fortunately, if you know how to check for the signs and act fast, you can minimize the damage.

One of the earliest signs of identity theft is the presence of illegitimate charges on your credit card or bank statement. These aren’t always major purchases that will immediately draw your attention, so pay close attention. In fact, identity thieves will sometimes charge a small amount to see if your credit or debit card works before making larger purchases. Review your accounts at least once a week and set up alerts for charges that exceed a pre-determined threshold.

If you don’t catch fraudulent activity early, you’ll start to see other signs your personal information has been compromised, including:

• Being turned down for credit
• Learning that your credit score has taken a significant drop with no known cause
• Unexpected calls from debt collectors
• A reduction or elimination of mail coming to your residence
• Strange activity during tax season (i.e., being told you’ve already submitted a tax return)
• Issues with healthcare and health insurance (i.e., reaching a benefit limit)

If you notice any of these signs, you’ll need to move quickly to take the right steps to recover from identity theft.

Child Identity Theft

Unfortunately, children are an ideal target for identity thieves because it’s less likely the scammer will get caught. Most parents don’t check their child’s credit report and don’t know how to protect their child from identity theft, which means the crime flies under the radar.

Plus, many parents unknowingly ignore the signs of child identity theft. Repeated calls to collect debt from the child and bills in the child’s name are common indicators. But for unsuspecting parents, a call for their child from a debt collector seems like spam. And while that’s certainly possible, don’t be so quick to hang up the phone — the company calling and the debt they’re inquiring about could be real.  

Should you realize your child’s identity has been stolen, the Federal Trade Commission (FTC) recommends freezing your child’s credit report, contacting the companies where fraud occurred, alerting the credit bureaus and reporting the theft to the FTC. When you contact the companies and credit bureaus, let them know that the child is a minor who cannot enter into contracts and have a copy of the child’s birth certificate nearby for proof.

Children aren't the only young population in need of identity theft protection — college students are also at risk of identity theft.

Credit and Identity Monitoring and Identity Theft Insurance

Knowing the signs of identity theft is important for protecting your finances, but spotting those signs quickly is easier said than done. Fortunately, you don’t have to handle this on your own.

Farm Bureau offers Identity Services and Fraud Expense Coverage, which is a great way to help minimize your risk, monitor your exposure and clean up the damage if you do become a victim of identity theft.

The first line of defense is credit monitoring services, which features an innovative warning system that monitors your credit report for suspicious activity. If potentially fraudulent activity is spotted, you’ll be notified by email or text.

The second line of defense is identity theft prevention. With this protection, fraud specialists are ready to proactively lock out identity thieves and ensure any damage you suffer from identity theft is minimized. Not only that, but specialists are available 24/7 to help.

Finally, should scammers successfully steal your identity and take over your accounts, you’ll receive personalized identity theft resolution services from a dedicated fraud expert. This specialist will help you with each step of recovering your identity, including such tasks as contacting credit bureaus, notifying government agencies and dealing with creditors. Beyond that, they’ll also help you submit a case file to your local law enforcement agency.

Take Action

Don’t wait for identity thieves to steal your information before taking action. Learn more about identity theft protection. Talk to your agent today to get started.