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Advisor Perspective

Advisor Perspective

How to Protect Yourself Against Identity Theft and Consumer Fraud

Marcus Velasco

Marcus Velasco

Advisor
Marcus enjoys sharing the tools and resources, as well as his experience, that help clients build and stick with their financial plans. Clients know they can count on him to face important decisions in life with confidence and clarity.

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The final numbers aren’t available yet, but identity theft and consumer fraud are tracking to have their biggest year in 2020. In 2019, more than 3.2 million reports of fraud and identity theft were recorded, with victims losing $1.9 billion. The losses included more than 270,000 cases of credit card fraud, averaging $6,000 per incident. In Illinois, alone, more than 200,000 fraudulent unemployment claims were filed with the Illinois Department of Employment Security in 2020. Criminals are getting bolder, more creative, and more aggressive. We’ll explain what you can you do to help protect yourself.

How does this happen?

Criminals focus on credit card fraud, medical identity theft, account takeover, Social Security ID theft, mortgage fraud, and tax return fraud – anything they can do to gain access to your finances. They generally start in one of two ways:

Imposter scams come in many varieties but work the same way. A scammer pretends to be someone you trust or should trust to convince you to send them money or provide personal information that will allow them to steal your identity. A caller may say they’re from a government agency, your bank, or utility, or they have a “great offer” for you and ask you to provide personal information.

A government agency won’t ask you to wire money. Just hang up. If you’re concerned that it may have been a real call, return the call using a phone number you know from a statement or a secure website.

Identity theft and identity fraud are terms used to refer to crimes in which someone wrongfully obtains and uses another person’s personal data in a way that involves fraud or deception for economic gain.

These crimes can be simple, such as “shoulder surfing” – watching you enter credit card information into a website – or listening in on a telephone conversation. If you receive preapproved credit card offers in the mail, thieves can obtain these and activate the cards without your knowledge. It doesn’t need to be complicated.

Theft can also be more complex, and criminals are getting better at using technology. You’ve probably received attempts in your email inbox or by text message, usually with a “can’t-miss opportunity” or a time-sensitive offer available to you if you just click on the link.

The link will take you to a fake website and again, ask for your personal information. Clicking on unknown links or attachments can also install spyware or malware on your computer, giving them access to your computer. If you don’t know who the email came from or you didn’t expect it, delete it.

How can I protect myself and my family?

You can take basic steps to minimize the risk of becoming a victim of identity theft or fraud. Remember the word, “SCAM:”

S: Stinginess about providing your personal information to others unless you have a reason to trust them. Adopt a “need-to-know” approach to your personal data. Don’t give your information out to someone who calls you. Be cautious using a public computer or free Wi-Fi.

C: Check your financial information regularly and review monthly bank and credit card transactions. You can use identity theft and credit protection services or simply monitor activity on software, such as Quicken or Mint.com, on a consolidated basis for good prevention.

A: Ask for a copy of your credit report periodically. In 2019, the number of new credit card accounts opened fraudulently increased by 88%. Individuals are entitled to a free copy of their credit report from the three reporting agencies every year. The credit reports can be obtained at annualcreditreport.com.

Due to increasing fraud during the COVID-19 pandemic, you can obtain your reports weekly through April 2021. Reviewing your credit report regularly will help you spot fraudulent activity or mistakes and increase your chances of resolving them.

M: Maintain a careful record of your banking and financial accounts. Enroll in paperless billing for credit cards, utilities, banks, etc., and obtain this information through a secure online site. Shred any mail or documents that contain personal information.

Protect your personal computer by using password managers, firewalls, and antivirus software, update security patches, and change passwords regularly for internet accounts. Additionally, maintain photocopies of your driver’s license, passport, Social Security card, and credit cards, securing the copies with any important legal documents in a safe.

As simple as it sounds, don’t forget the importance of password protection. Six of the top 10 passwords in use are numbers in sequence (123456, 12345678, etc.), and a seventh is the word, “password.”

Here are a few simple guidelines to creating strong passwords:

  • Make sure your password is complex – longer passwords are harder to hack.
  • Use words that aren’t in the dictionary – combine with numbers and punctuation or misspell words on purpose.
  • Don’t use pet names, family names, and key dates – social media has made our lives more public. Your date of birth, anniversary, and favorite pets’ names aren’t good passwords.
  • Use two-factor authentication where possible. It’s a safeguard from the site you’re logging into that sends you a one-time code you need to enter before you can log in.
  • Use different passwords for different accounts. Passwords are leaked occasionally or posted online, and it may take you awhile to discover this. Having a unique password for each account minimizes the damage of having all of your accounts compromised. The difficulty of having many strong, unique passwords brings me to my next point …
  • Use a password manager. Password managers store your unique, strong passwords securely, so you don’t have to remember them. Password managers can work with different browsers and mobile devices. Some password managers will fill in your usernames and passwords automatically.


What to do if your identity is compromised

If you’re a scam victim or your identity has been stolen, act fast. The Federal Trade Commission has a number of resources available for identity theft at www.identitytheft.gov and https://reportfraud.ftc.gov/#/ if you were a scam victim. Both sites have procedures for reporting the theft/fraud. They also suggest that you:

  • Create new logins and passwords for your accounts
  • Place a fraud alert with the credit bureaus (Equifax, Experian and TransUnion)
  • Contact any companies involved
    • Your credit card company if a credit card was compromised
    • If new credit accounts were opened, call the customer service departments for help with closing them
  • Consider filing a “credit freeze” or an extended fraud alert with the credit bureaus
  • Update and strengthen your passwords or consider a password manager
  • File a report with your local police department

With the increased use of technology and the constantly changing identity theft landscape, it’s more important than ever to minimize the risks of becoming a victim. Consult your JMG advisor to discuss suggestions for protecting your financial identity and the actions to take if your financial identity becomes compromised.