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The High Cost of Identity Theft

The term “identity theft” gets thrown around a lot these days. Protect your Internet passwords, don’t give out your social security number, and be careful your credit card number or bank information aren’t stolen, because by not doing so you could become a victim. But do you really understand what it means to have your identity stolen, or what you could end up losing? Here’s a look at some of the details and repercussions.

Types of Identity Theft

There are a number of different ways someone can steal your identity, and different things they can do with it. One common one is child ID theft. By acquiring the name, social security number, and other information of a minor, a thief can apply for credit cards and take out loans, and it can be years before the child discovers it. Once they do, they’ll find they can’t take out their own credit card or be approved for a loan, due to a bad credit score they had nothing to do with.

Medical ID theft is also prevalent. There are a number of nefarious things someone can do with your medical insurance information. They can get prescription drugs, which you’re then billed for. They can also purchase expensive medical equipment, or even file a false insurance claim, which you’re then liable for.

Finally, there’s tax ID theft. By filing taxes in your name, someone can claim your refund. In 2013, the IRS gave out around $5.8 billion in false refunds due to tax ID theft.

How to Protect Yourself

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There are a number of steps you can take to protect yourself against identity theft. They include…

  • Use Strong Passwords. Use a different password for every new service or account you sign up for. Especially, don’t let your passwords for sites that have your payment info on hand be remotely similar to one another, or to your e-mail password. Otherwise, once someone got your e-mail password, it would be a short journey to getting your bank password, Amazon and PayPal passwords, etc. Use a higher number of characters as well, to make it more difficult to guess.
  • Look Carefully at Your Financial Information. Review your credit report at least a couple of times a year, so you’re up to date and know exactly what your score is and why. Also look carefully at your credit card and bank statements, as well as any statements from your health insurance provider, to make sure there’s no suspicious activity. If you have children, look at their credit report annually, to confirm that there’s no one else using their identity.
  • Shred Physical Financial Documents. This includes credit card statements, bank account statements, receipts, expired credit cards, and anything else with potentially compromising information on it. You never know when someone might be looking through your dumpster to find information they could use to exploit you.

If you are a victim of identity theft, there are a few steps you can take. Put a fraud alert on your credit reports, and contact your bank, credit card company, and any other organization in which your information may have been compromised. You should also contact the Social Security Administration for further instructions on what to do about your social security number. Finally, file a police report, and an identity theft report with the Federal Trade Commission.

However, it’s obviously best to try to avoid having your identity stolen in the first place. Protect all of your important information and keep a vigilant watch for unscrupulous activity, and you’ll be able to keep your identity and your money safe and secure.