After the massive security breach at Target during the holidays, it's time to sit up and pay attention to the scourge of identity theft. There is no single way to protect your coveted identity, but there are plenty of best practices to use to keep the criminals at bay.
You should refrain from providing businesses with your Social Security number just because they ask for it. Give it only when required. (Medicare recipients take note: Your Social Security number is printed on your Medicare card, so be careful with it!) Also, don't give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you know with whom you are dealing. If you have older relatives or friends, encourage them to let you know if they have been contacted by any organization that offers a very high or "guaranteed" return at "no risk," requires an urgent response or cash payment, or sends email from an unrecognizable address.
Additionally, it is imperative that you review each credit card statement before you pay it -- I know it sounds silly, but many simply pay the bill, potentially missing a fraudulent charge. Finally, review your credit report every 12 months at annualcreditreport.com. You want to make sure that nothing fishy has cropped up.
Now that tax-filing season has started, you should know that tax-related identity fraud is on the rise. IRS watchdogs say the growing epidemic affected 1.6 million Americans in the first half of 2013, more than all of 2012. With just a few pieces of information fraudsters can file a phony tax return on your behalf, showing a refund and then diverting the funds to an overseas account. The audit report of the Treasury Inspector General for Tax Administration showed that the IRS sent at least 343 potentially fraudulent tax returns in 2011 to the same, single address in Shanghai, China, for a total of $156,533 in tax refunds, and 655 potentially fraudulent tax refunds totaling $220,489 were sent to the same address in Kaunas, Lithuania.
Here's how the scam works: Criminals send emails that look like they're from the IRS. These emails contain malicious software that plucks your personal information. Remember: The IRS never initiates contact with taxpayers about their accounts through email, text messages or social media. If you get an unsolicited email claiming to come from the IRS, do not open attachments or click links -- forward the email to the IRS at email@example.com.
If you think your identity has been stolen, you should immediately contact one of the three national credit-reporting companies (Equifax 800-525-6285, Experian 888-397-3742 and TransUnion 800-680-7289) to put a free fraud alert on your credit report. The alert makes it harder for an identity thief to open more accounts in your name. The company you call must tell the other companies, so no need to call all three. The alert lasts 90 days but you can renew it, and the alert entitles you to a free credit report from each of the three companies.
The next step is to file a complaint with the Federal Trade Commission and print your Identity Theft Affidavit. Use that to file a police report and create your Identity Theft Report. After these initial notifications and filings, you should consider taking a few more steps to prevent further damage. You can place a credit freeze on your credit file, which generally stops all access to your credit report. A less draconian step is to place an extended fraud alert on your file, which permits creditors to get your report as long as they take steps to verify your identity.
The availability of a credit freeze depends on state law or a consumer reporting a company's policies. While fraud alerts are federal rights intended for people who believe they are -- or who actually have been -- identity-theft victims, some states charge a fee for placing or removing a credit freeze, but it's free to place or remove a fraud alert.
Unfortunately, identity theft is here to stay, so the sooner you familiarize yourself with protections as well as remedies, the better off you will be.
Jill Schlesinger is editor-at-large for CBSMoneyWatch.com. She welcomes emailed comments and questions.