One day two years ago, I got an email from a client of mine. In a very concise manner, he told me he was in Singapore for a business deal and he needed to wire $500,000 from his investment account to a bank account in Singapore.
To raise the money, I would need to sell some of his highly appreciated investments. I didn’t want him to be surprised by capital gain taxes, so I replied with an explanation of the tax implications. (For more, see: How to Recover From Identity Theft.)
After that, I was ready to wire the money, so I sent him a short message: “You know our standard procedure, any time a client wants to move more than $10,000, he needs to call me to tell me in his own voice.” I totally expected my phone would ring right away. Instead, I got another email: “I am in Singapore and I don’t have a phone with me, take this email as my authorization to wire the money.”
That sentence made my hair stand on end. Singapore is one of the most highly developed countries in the world. What were the odds that he had access to a computer but not a phone? I called my client’s cell phone immediately. He picked up and I found out that he wasn’t really in Singapore, and that none of those emails were sent by him. His Yahoo mail account had been hacked.
Later, I learned that last year alone, there were over 10 million Americans who became victims of identity theft. This is no joking matter.
Ways to Prevent Identity Theft
Here are 11 things I suggest you do:
- Social Security: Register for online access to your Social Security account to ensure nobody does it fraudulently before you.
- Credit Freeze: Activate credit freeze with all three credit agencies: TransUnion, Experian and Equifax. This ensures nobody can open a credit card under your name since the issuing bank will not be able to check your credit report.
- Credit Report: Every year, check your credit report for unfamiliar names, addresses and accounts. You are entitled to one free credit report every year from each of the three credit agencies.
- Passwords: Use complicated and varied passwords for your logins. You won’t believe how many people use “12345” and “password” as their passwords. Use lastpass.com to store and manage passwords so you don’t have to remember all of them.
- Two-Factor Authentication: For your email account and all of your money-related accounts, use two-factor authentication. In addition to the password, two-factor authentication requires another random code, usually sent by text to your cell phone. This ensures a second layer of protection even if your password is compromised.
- Computers: Use a Chromebook computer as much as possible. Since the Chromebook is basically a glorified browser, it can not run any programs therefore it can not be infected by computer viruses. If you use a Windows PC or a Mac, make sure your antivirus program is up to date.
- Email: Never send your birthday and your Social Security number in an email. That information along with your name could be used to open a bank account or to take out a loan (unless of course you have activated credit freeze.)
- Phishing: Never click on a link in an email, especially one sent by a stranger.
- Secure Website: Never input sensitive information into an unsecure website, one with a http:// URL header. A secure website should have a https:// URL header.
- Credit Card and Health Insurance Statements: Check them to make sure there are no unrecognized charges.
- Transaction Alert: Activate transaction alerts for your credit cards so that every time a >$50 charge is made, you will be notified right away by text or email.
What do you do to protect your identity? (For more, see: Avoid Becoming An Identity Thief's Next Victim.)