How to Protect Yourself from Identity Theft and Financial Fraud

Learn to Protect Yourself from Identity Theft and Related Scams

Thief stealing driver's license and SS card
Thief stealing driver's license and SS card. Getty Images/Tetra Images

As hard as you work to make money and as difficult as it is to save it, the last thing you want to do is lose any of it to fraud. Financial fraud is now the number one consumer complaint, and billions of dollars are lost each year to unscrupulous operators and hackers.

Some fraudulent activities and scams have been around for years, yet millions of people continue to fall victim to them. A healthy dose of skepticism and a bit of caution is sometimes all it takes to protect yourself from these low-tech schemes.

But newer fraud schemes, which often use the internet or computer software, can be more difficult to combat. The best defense is becoming familiar with the most common scams, being wary of suspicious activity, and, of course, learning methods to protect yourself.

Learn About Identity Theft

Perhaps the most troublesome and costly form of fraud is identity theft, which is the fraudulent and criminal acquisition and use of a person's personal and identifying information most commonly for financial gain. That personal information could include any identifying information from your name to your Social Security number and bank account information to credit card numbers. Generally, this information is used to assume a person's identity and incurring debt under their name, but there have been instances of identity theft to performs crimes or receive medical care.

How do thieves steal your identity?

All it takes is access to personal information is getting access to documents that you may simply throw away like bank statements, copies of utility bills, credit card statements, or credit applications. The more low-tech approaches might include digging through your trash, stealing from your mailbox, or stealing your purse.

But one of the most popular identity theft scams is known as phishing. Phishing scams are versatile and easily translate to multiple forms of communication from paper mail to phone calls and email to pop-up internet messages. With these sorts of scams, scammers are looking to trick you into providing your personal information.

The Consequences of Identity Theft

The consequences of falling victim to identity theft can be devastating for you legally and financially. Depending on your credit card company or bank's fraud detection services and policies, your personal financial liability may thankfully be limited on your credit and debit cards, but when a scammer gets a hold of your Social Security number or other sensitive personal information, the consequences can be more than financial. You might find yourself spending several years and hundreds if not thousands of dollars in attorney fees clearing your name and your credit. Some victims of identity theft have even suffered from false imprisonment

How to Protect Yourself From Identity Theft

To protect yourself from identity theft, take the following precautions:

  • Shred or tear up pre-approved credit card offers, bills, cancelled checks, bank statements, and other documents that contain personal or financial information before putting them in the trash or recycling.
  • Review your credit card statements and bank statements frequently for unfamiliar transactions.
  • When using an ATM, make sure nobody can see the numbers you punch in. If somebody is behind you, shield your hand when entering information.
  • Don't carry your PINs with you and never give your PIN to another person.
  • Never give out your credit card number to anyone who calls you unsolicited.
  • Guard your Social Security number. Don't give it out to salesmen, vendors, or others who have no legal need for it. Don't carry your Social Security card with you.
  • Don't use your mother's maiden name, your date of birth, or the last four digits of your Social Security number as a password on credit card or bank accounts. This information is too easy to obtain and can be used by thieves to access your accounts.
  • Use a locked mailbox to prevent checks, credit card offers, and other financial information from being stolen.
  • By law, you're entitled to a free copy of each of your three credit reports once a year. Request these free copies from the three major credit reporting agencies Equifax, Experian, and Trans Union once a year and review for any credit transactions that don't look right.

Other Common Financial Scams

Scams evolve as quickly as our technology and ways of doing personal business. You'll never be able to keep up with all of the scams out there, or even the most popular scams, as resourceful scammers come up with new ways to get access to personal information. The best defense in any case is remaining aware, keeping your guard up, and always looking into requests or communications that just don't seem right. Scammers can be very convincing, but with some skepticism, you can avoid falling for their schemes. 

For More Information on Identity Theft

If you think you've been the victim of financial fraud, contact your State's consumer agency. For more information on Internet fraud and other identity fraud resources, visit:

There's no end to the schemes and scams that unscrupulous people will come up with to part you from your money. Awareness, caution, good sense, and a little healthy paranoia will go a long way towards protecting you from fraud.