Last year, all the major news outlets covered a number of high-profile security breaches in which large amounts of financial information were stolen from retailers, service providers and restaurants.
All this media attention on financial risks can make a person nervous, and while media coverage often makes problems seem more widespread than they are, people can easily reduce the risk of having their financial information stolen if they follow some basic best practices.
Here are a few simple precautions you can take to avoid identity theft and financial fraud — online and offline.
1) Shop with reputable vendors
It’s ok to shop from online stores you’ve never used before, but look for a couple of important signs that your financial information will be secure.
In my previous article 5 Tips for Safer Shopping Online, I provided best practices for shopping with reputable retailers to avoid getting scammed.
2) Avoid non-bank ATMs
Those privately owned ATMs found inside your neighborhood corner store are convenient when you need to grab some cash, but these types of cash machines are much riskier than the ones installed inside your bank; scammers can install “card skimmers” and/or surveillance devices on the machines to grab your your bank and PIN info, which they can then use to run up charges on your account. It’s very difficult to detect when a machine has been tampered with, so it’s best to avoid the privately owned ATMs altogether.
Not to mention, non-bank ATMs tend to charge exorbitant usage fees, even higher than those charged by other banks outside of your network. Savvy shoppers plan ahead to avoid unnecessary fees!
3) Don’t leave a paper trail
Most financial institutions would prefer that you switch to paperless statements because it costs them less to email your bills or account summaries rather than process all those paper documents.
There’s a benefit to you as well: the less physical paperwork passes through the world with your personal and financial information on it, the less likely it is to end up in the wrong hands. If you sign up for emailed statements, just make sure to actually log in to your accounts and review them periodically.
And if you really, really, really prefer paper statements, invest in a paper shredder so you aren’t just putting all that information out on your curb every week, where an unscrupulous identity thief can easily grab it. (Hey, better safe than sorry!)
Don’t forget that paperless statements are better for the environment as well! Lower costs for banks, more secure for you, and less waste ending up in landfills. It’s a win-win-win.
4) Familiarize yourself with common scams
How is it that scammers are still perpetrating decades-old cons? Because some people continue to fall for them.
Have you ever received an email telling you to log into your account immediately, and even though it seemed somewhat “off,” you clicked on the link it contained anyway? Have you ever gotten a phone call from someone pretending to be the IRS insisting you owe money and need to pay immediately or you’d go to jail? What about a Nigerian prince who wanted to deposit a few million dollars into your bank account?
All of these examples should raise red flags for you, but cons could even be more subtle than that.
Check out this list from the FBI of common scams (or this list of common Craigslist scams) and make sure you know what to look out for. The more aware you are of the potential ways a scammer might try to defraud you, the less likely you will be to fall for them!
5) Practice good password habits
Do you have the same password for every site you use? Do you use really simple and common passwords? Do you write your PIN on the back of your debit card or tape computer passwords to your monitor? Last year, when hackers breached eBay security, the site sent out emails warning customers to change their passwords. Did you ignore those warnings?
If you answered “yes” to any of these questions, you’re making it easier for someone to hack into your accounts and access personal information.
Even when a website uses all available security measures on the back end, it’s not going to help if some unauthorized schemer can log into your account with your easy-to-guess password.
Here are some tips from Norton on the do’s and don’ts of creating better passwords.
Is Identity Theft a Big Issue?
You’ll be relieved to know that fraudulent activity is actually decreasing in terms of total dollars (Source: Javelin Strategy) even as the number of consumer financial transactions continues to grow. Large-scale security breaches are usually caught quickly and, most of the time, victims of these kinds of data hacks are not held liable for fraudulent activity.
What does that mean? It means you shouldn’t be afraid to keep shopping and banking online or using debit/credit cards at your favorite stores … as long as you stay alert and take simple steps to keep your information safe.
Have you ever been a victim of identity theft? If so, how did it happen and what steps did you take to remedy the situation?