Identity thieves have many ways to steal and abuse your personal and financial data. But there are also many ways you can fight back, even if you belong to a group that’s experienced higher rates of ID theft. If you want to minimize your chances of becoming an identity thief’s next victim, here are the actions you should take, as well as some that may not be worth your time or money.

1. Watch what you trash, recycle and donate.

Properly dispose of electronics that contain sensitive information, such as old computers, USB memory sticks, SD memory cards and cell phones.  Deleting files doesn’t really get rid of them, and don’t assume an electronics recycling service or donation center will destroy your sensitive data.  You need to securely wipe or physically destroy the hard drive yourself. (Click here and here for two sources on how to do this.) Also, shred documents containing personal information before putting them in your trash or recycling bins.

2. Place fraud alerts.

If you’re at higher risk for identity theft because of a security breach or because you’ve lost or had stolen documents with sensitive personal data, place fraud alerts on your credit files with Experian, Equifax and TransUnion, the three big credit bureaus. That being said, fraud alerts aren’t always effective because credit bureaus sometimes ignore or overlook them, so you may want to take your protection one step further with a credit freeze.

3. Freeze your credit.

You can place a freeze on your credit files with Equifax, Experian and TransUnion. A credit freeze prevents creditors from checking your credit and should thereby prevent someone else from opening a fraudulent account in your name. “Thawing” a freeze could be a hassle if you want to do anything that involves having your credit checked, from applying for a car loan to refinancing your mortgage, but it will be less trouble than resolving a case of identity theft. Depending on the laws in your state, a credit freeze may be free or may entail a small fee.

4. Monitor your credit for free.

While numerous services will take your money month in and month out to monitor your credit reports and alert you to any new activity that shows up on them, you accomplish these tasks just as easily without paying. Check your credit reports for free on a regular basis through and through companies such as Credit Karma and Quizzle.

Also, use free credit monitoring from Credit Karma or Credit Sesame to check for new accounts you didn’t open or credit applications you didn’t initiate. Free credit scores, even if they’re just "educational scores" (not the official ones lenders get), can also be helpful because a major change in your score that you don’t know the cause of could alert you to fraud.

Also, sign up for any legitimate free credit monitoring service you are offered as a result of a data breach and follow up on any alerts it sends you.  See Top Websites For Checking Your Credit Scores.

5. Monitor your finances online.

Yes, you should review your bank, credit card and other financial statements for mistakes and fraudulent transactions, but if this is the only way you monitor your finances, it’s time to enter the 21st century. By the time you detect fraud on a monthly statement you receive in the mail, a thief could have done weeks’ worth of damage, not to mention that bank and credit card statements sitting in your mailbox expose you to identity theft.

You’re better off logging into each of your accounts online a few times a week, or using personal finance software like Mint to monitor all your credit card, bank and investment accounts in one place. It takes just a few minutes a day to log in and make sure there’s no suspicious activity on your accounts. See Four Reasons To Check Your Credit Cards Online.

6. Be aware of medical ID theft.

It’s possible for thieves to steal your health insurance information and use it so someone else can obtain treatment in your name using your benefits. “Awesome, they’ll meet my deductible for me!” is not the proper response, unfortunately. In a worst-case scenario, information about the condition the thief was treated for under your name could find its way into your medical records and result in you receiving the wrong medical treatment that makes you sicker or even kills you.

Check your medical bills and health insurance statements for evidence of fraud.  While you’re at it, you can look for mistakes and excessive charges and possible save yourself some money. See 5 Overlooked Places Where Your Identity Can Be Stolen.

7. Limit others’ access to your data.

There are many ways in which you have no control over the data identity thieves want because you’re relying on third parties, such as the IRS and the stores you shop at, to keep your data safe once you hand it over. But you should still take charge of the ways your identity could be stolen that you can control:

– Do not provide any requester with personal information unless you initiated the transaction and you know how the other party will use that information.

– Don’t carry around anything that contains your Social Security number.

– Don’t have your driver’s license or Social Security number printed on your checks.

– Ideally, send and receive mail only through a locked, secured mailbox at the post office. (Though not quite as secure, a locked mailbox at your home or apartment is more convenient and better than an unlocked one.)

– Don’t use public WiFi; thieves can easily intercept your personal data if you do.

– Use a firewall and security software for your personal computer to protect against hacking and data theft.

– Use long, complex passwords online that don’t contain any personal information  or dictionary terms, and use a unique password for each website you patronize.

8. Don’t waste your money on an identity theft protection service.

Consumer Reports states that about 50 million U.S. consumers spent $3.5 billion on identity theft protection products in 2010.  However, most identity theft protection services don’t offer anything that you can’t do yourself for free, as we’ve described above.

If you’re considering purchasing one of these plans, keep in mind that you’re shopping in a marketplace where even big-name companies that you might think of as being reputable have been fined for deceptive marketing practices and forced to give customers refunds.  No service can prevent identity theft, and Consumer Reports has found that the threat of true identity theft involving information such as your name, birth date and Social Security number is rare.

ID theft protection services often make appealing offers of insurance that is supposed to cover your financial losses if you become a victim. Most identity theft victims don’t lose any money because of the crime, so promises of large amounts of insurance are unlikely to come in handy.

Even if you do experience an event that you’d expect to trigger an insurance payment, you might learn that this insurance doesn’t kick in until federal consumer protection laws, homeowners or renters insurance, or the merchant pays any share they owe, according to Consumer Reports. The insurance policies offered by identity theft protection services also have numerous loopholes giving the companies that offer them a way out of paying you. 

If you don’t want to do the work yourself, it may be worth paying a service to do it for you  – just make sure you understand what you’re getting for your money before you give them your credit card number and authorize those recurring monthly charges. Don’t pay for a service that offers little more than a false sense of security. And check first to see if you already have identity theft protection through a bank account, credit card or insurance policy. See Identity Theft Protection Service: Worth Having?

The Bottom Line

If, despite taking these numerous precautions, you detect possible identity fraud, act immediately. You’ll limit the thieves’ damage and your time spent resolving the problem.