Why I Assume My Identity Has Been Stolen: And What I Do About It
My grandfather had never been to Russia, but that didn’t matter because his credit card number made it there without him. He was a simple man that enjoyed watching Wheel of Fortune every night and playing a pocket sized version of poker (clearly this was before the age of smartphones) while sitting in his blue recliner. All he attempted to do was to buy an outdoor thermometer, but the company he purchased it through was nothing more than a net set up to steal his credit card information and sell it within Russia. This was almost two decades ago, and the internet wasn’t even half of what it is today. Now it seems that nothing is safe. Between the Equifax and Target data breaches, whether you’re making a purchase online or in person, your information is at risk. As a result, I’ve taken the stance that I will always assume that my information is out there on the dark web for anyone to use, and here’s what I do about it.
Use a Credit Card for Most Purchases
If someone is going to steal my information, I would much rather it be connected to my credit card than my checking account. There are two reasons for this. First, most credit cards will reimburse you for fraudulent charges fairly quickly once you file a report. That means your spending power is back in place within minutes and with little inconvenience to you. While the same may be offered by your bank, restoring those funds typically takes significantly longer. It’s more valuable to have cash than credit, and when you risk things like missing a mortgage payment because your bank account has been wiped out, it can have lasting effects on your credit score. Secondly, many credit cards now have built in fraud monitoring. It’s still a work in progress, so often they may shut your card down if they think there is a fraudulent charge, though you really just may have made a purchase that got processed through a different city and therefore was flagged by the credit card company. While it may be a nuisance, I appreciate that there is some level of watchfulness and can usually restore the functionality of my card within seconds by simply texting my credit card company.
Keep a Low Balance in My Checking Account
Sometimes there will be transactions that you have to run through your checking account. There may be no way around it, so I try to keep the balance in my checking account low to minimize potential losses. Often this can be intimidating because you may worry about unexpected costs and overdrafting, so I keep any extra money I think I might need for the month in a savings account at the same bank. That way I can transfer it in seconds if I need it, but it is still inaccessible should my debit card be compromised.
Check My Spending Frequently
The purpose of this is two-fold. First, it encourages me to check in on my budget daily, but more importantly from a privacy standpoint, it allows me to catch discrepancies quickly. If you’re checking your charges every day, it’s much easier to remember where you were the previous day and to match your expense to your memory from that day. A week down the line, a charge with a vague description could be difficult to place, and you may have to do a lot of work to validate that the charge is legitimate. Additionally, if you do notice a fraudulent charge, the earlier you catch it, the quicker you are able to report it to the credit card company to have your account restored and to change your credit card number before any more charges can be made.
Monitor My Credit Report Regularly
Despite the Equifax breach, checking your credit report regularly has never been more important. If someone has stolen your identity, they may use it to open a credit card, take out a loan, or even to buy a house. Your credit report is where you would discover such information. You can check your credit report here annually for each of the three credit reporting agencies: Experian, TransUnion and Equifax. Essentially, that’s the equivalent of three free credit reports per year, so spread them out over the course of the year to make sure you have a regular check on what’s going on with your financial information. If you notice any discrepancies be sure to report them to the credit reporting agency as quickly as possible to mitigate any potential damage to your credit score.
File My Tax Return as Early as Possible
With all of the massive identity breaches within the past year or so, I would not be surprised to see fraudulent tax returns on the rise. Often these returns will be filed under your name to receive a cash refund. As a result, when you finally go to submit your tax return, the IRS has already received a return in your name and it presents significant hurdles for you to receive the appropriate refund in your name. Filing your tax return as early as possible is one way to try to cut off the bleeding before it starts. If, however, you suspect that a fraudulent tax return has been filed in your name here’s what the IRS suggests you do about it.
The Bottom Line
While companies such as Equifax and Target eventually notified their customers of data breaches, federal regulations in this area are still a work in progress. Your information may have been compromised via a huge breach, or just a waiter writing down your credit card information when you pay at a restaurant. There is really no way for you to know just how many places your private information may be available, but at least by assuming the worst you can try to prevent or curtail damage at the source.
Written By: Lindsay Dell Cook
Lindsay Dell Cook is a CPA, finance writer, and founder of Budget Babble. She lives in Philadelphia with her uber supportive husband and adorable daughter. When she's not working, she enjoys spending time with her family, taking their lovable mutt for walks, or reading a good book while buried under a pile of cats.