Best Identity Theft Protection Techniques: Easily Protect Yourself

Learn how to easily protect yourself, and how to recover, from identity theft with these identity theft protection techniques.

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Identity, in essence, is who we are as a person; it’s what makes us unique and different from anyone else. But did you know that we each have a financial identity as well?

A person’s financial identity is made up of many moving pieces.

From their name to their social security number. From their housing to payment history. All these pieces of information combined form a picture to distinguish each person from the next.

So what happens when someone begins to use your financial information to impersonate you?

As a survivor of identity theft twice over, I can tell you all about it. Read on to find out how to protect yourself and how to recover from such an unfortunate event.

What is Identity Theft?

Identity theft occurs when a person uses someone else’s financial information for their own benefit.

Once the thief gathers enough financial data on the unsuspecting victim, he or she can proceed to open and misuse all sorts of accounts and lines of credit under the victim’s name.

Of course, the thief has no intention of repaying these loans. The victim has to deal with the bills on their own.

According to the Bureau of Justice Statistics, there are three broad types of identity theft:

• Unauthorized use of an existing account: This would be someone getting a hold of your credit card information and making an unauthorized online purchase with it.
• Unauthorized use of personal information to open a new account: In this instance, the thieves get their hands on your name, social security number and other personal information, and use it to open a fraudulent account pretending to be you.
• Misuse of personal information for a fraudulent purpose: In this case, someone may impersonate you while committing a crime.

How Much Does It Cost To Recover From Identity Theft?

As a victim of identity theft, I can tell you from my own experience that identity theft can truly ruin your life and jeopardize your livelihood.

If your financial situation is already tight to begin with, the effects of identity theft can be difficult to overcome.

Imagine for example you have enough money in the bank just to make ends meet. Suddenly, you find out you’ve been a victim of identity theft and that your bank account has been compromised.

You contact your bank right away to straighten everything out. Unfortunately, the bank informs you that they have to freeze your account until they sort it all out, leaving you without access to your money.

The first time I fell victim to identity theft, this is exactly what happened to me. It took about a month and a half, and countless visits to my bank, to get the frozen money transferred to a new account.

In the meantime, I fell behind on several payments, costing me a lot of money on late fees and added interest. Not only that, the late payments also brought my credit score down significantly!

To cover rent and food, I had to borrow some money and then pay it back with interest.

All in all, I was out over $500 when it was all said and done. Unfortunately, I can count myself lucky.

According to a recent identity fraud study, Americans lost about $56 billion to identity fraud in 2020, with an average loss of $1,100 per victim of an identity theft scam.

Recovering from identity theft doesn’t only have a monetary cost. It also costs time, effort, and missed work. But the biggest cost is to the victim’s emotional health.

In more serious cases of identity theft, it may take years to recover and restore your reputation, financially and otherwise.

Identity theft is really something you survive.

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How Does Identity Theft Happen?

In years past, the most common way for a thief to get your information was to “dumpster dive”. This is when an ill-intentioned individual would dig through the garbage to find valuable financial information.

More often than not, this would happen at office buildings and other places prone to handle this type of information.

Dumpster diving is still happening! But as the use of technology and the number of people going paperless increases, thieves have gotten creative to keep up with the times.

I wonder if they have some sort of continuing education school where they learn how to stay up to date in their “industry”? I’d really like to know!

I digress. Other ways for a crook to get your information include:

• Intercepting email communications that contain financial information
• Overhearing a conversation of someone sharing financial data
• Looking through an unlocked phone that’s been left unattended for relevant information
• “Reading” your credit card information with RFID technology
• Watching you input that card’s pin at a point of sale terminal
• “Skimming” your credit card data. This is when a thief uses a device to read the numbers on your credit card when you pass the card through what *looks* like an authentic card reader slot at an ATM machine or a gas station, for example. You can check out this YouTube video for a more detailed explanation.
• Tricking you into freely giving out your information by either calling you pretending to be a company you do business with, or by phishing (impersonating the website of a legitimate business)
• Hacking your computer and accessing any financial information you may have stored in, or access through, your computer
• Hacking the servers of a company that stores your personal and financial information, aka, a data breach

When all else fails, identity thieves can always just fall back on the tried and true method of stealing your purse, wallet, or electronic device.

How To Protect Yourself From Identity Theft

Identity theft is no joke. As I mentioned earlier, it can really mess up your life. So when it comes to identity theft, I definitely believe it’s much better to prevent than to cure. Here’s some simple ways in which you can protect your information:

Online Activity

As much as possible, shop only from reputable, well-known websites. I personally like shopping at Amazon because I can get pretty much anything on there, and they’ve had great customer service on the rare occasions when something’s gone wrong.

To be extra cautious, always check the security of the website before you put in your credit card number. Look for the green padlock and make sure that the website starts with https:// instead of just http://

Additionally, consider investing in a good firewall, and try limiting your purchases from computers other than your own.

If you need to share financial information via email, try to encrypt the communication or protect it with a password.

Be aware!

Thieves may sometimes send you emails impersonating a store or a financial institution. They’ll try to convince you to input your private information right into their system.

To prevent this, always navigate to the company’s website directly instead of through an email link.

Shopping in Person

Be very cautious of who you share your financial information with. We’d like to think that companies will safeguard our information, but I learned the hard way that this is not the case.

In fact, my personal information was stolen once after I filled out a credit application to buy a mattress at a local store.

The application asked for my social security number, banking information, and other personal data.

I didn’t think much of it at the time, and I walked away happy with my 0% financing.

However, months later I started noticing random things show up on my credit reports. I began investigating, and found out from the local police department that my information had been stolen through that credit application.

The mattress store didn’t safeguard it as they said they would. Instead, they just threw away several dozen applications where they were picked up by a local identity theft ring!

So how can you protect yourself? If you’re filing out an application that contains your personal information, insist that they shred it immediately after.

Additionally, you may try carrying around a small roll of privacy tape with you and covering any information you don’t want to be freely available.

Make sure you’ve switched to a chip card, and process transactions as credit to avoid putting in your pin.

Alternatively, you can switch to buying most items on cash and only getting cash out from the bank through a teller instead of an ATM.

If you’d like to try this out, I recommend using a cash envelope system.

This may be annoying, but it will help you reduce your expenses. I wrote a whole post on how this works. You can check it out here!

When Out and About

Take preventive measures when you’re out and about. As much as possible, I try to use satchel style purses to minimize the risk of my purse being stolen.

I also try to carry as few things as possible so I don’t accidentally leave behind anything that may contain sensitive information.

Carry only the documentation that you absolutely need, such as your driver’s license if you drive. Leave home any cards that you wouldn’t use on the normal course of your day. Also, any documentation like passports and social security cards that you don’t normally need.

As a side note, I left my purse behind at a restaurant booth the first time this happened to me. I had so many things with me that I didn’t realize I was missing my purse when I left the restaurant.

When I finally came back for it, it was long gone, along with all my credit cards, social security card, driver’s license, and some money.

Although I called to cancel my cards right away, they had all they needed to open up new lines of credit under my name.

Lastly, avoid giving out information over the phone when there’s people around you, and be aware of your surroundings.

As an extra layer of security, consider using an RFID blocking wallet to prevent against tech-savvy thieves.

Is It Worth To Get Identity Theft Protection?

As the saying goes, it’s better to prevent than to cure. That’s why I strongly advocate for identity theft monitoring.

What do credit monitoring services do? They monitors your financial activity, identify any potential threats, and neutralize them in a timely manner.

In other words, identity theft monitoring provides peace of mind. With myFICO, you have the ability to verify if a transaction is legitimate with the push of a button and while you’re on the go.

Additionally, you will have access to the same credit file used by most lenders!

How Do You Check To See If Someone Stole Your Identity?

Discovering that your identity has been stolen is a really lousy thing. However, the faster you act on it, the easier it will be to fix the damage.

This is why it’s extremely important to check your credit on a regular basis!

Be on the lookout for tell-tale signs of identity theft. These include:

• Accounts you don’t recognize
• Names, addresses or phone numbers that are not familiar to you
• Accounts with higher balances than you would normally carry

Aside from what you can find on your credit report, other signs that your identity may have been stolen or compromised include:

• Unexplained charges on your bank or credit card statements
• Calls from collections agencies about accounts that don’t belong to you
• Bills or other mail that you should be getting isn’t delivered to you
• IRS notices of unreported income from an employer you don’t work for, or of duplicate tax returns being filed under your social security number.
• Invoices from companies you haven’t done business with

What Do You Do If Someone Steals Your Identity?

If you discover that your identity may have been compromised, act fast!

If you do find suspicious activity, call the lender or company where you’ve seen the activity and alert them of the possibility of fraud occurring on your account.

I also recommend that you place a security freeze on your credit report.

A security freeze will prevent any thieves from opening any accounts under your name.

Be aware that this is a pain in the butt since it will also block you from opening new accounts. You’ll have to call the credit bureaus to temporarily lift the freeze if you do want to legitimately open an account. However, this is one of the most effective ways of preventing identity theft.

If accounts have already been opened on your behalf, file a dispute with each credit bureau and alert them to the fact that a fraudulent account exists on your credit.

For additional info on what you can do on your own, visit the Federal Trade Commission, or FTC’s guide if you fall victim to identity theft.  

If you need extra help fixing your credit, you can always get help from a reputable company, such as Credit Saint. To get your free consultation, check them out here!

Final Thoughts

When it comes to identity theft, a little prevention can go a long way!

Depending on the severity of the theft, it may take several years to have your credit back to normal and completely recover from identity theft.

In my case, identity thieves were able to drain my bank account, and open several lines of credit under my name.

They even tried to buy a car, but unlucky for them, the local car dealership’s salesman noticed something was amiss and stopped them.

It took about three years for me to fully recover from the effects of identity theft! To learn more about how I did it, check out my Free Guide to Credit Scores here.

Although it’s stressful and time-consuming, you can recover from identity theft. I can tell you first-hand that it can be done!

Have you ever been a victim of identity theft? Share with us in the comments below!