How to Protect Yourself From Identity Theft

Identity theft affects millions of Americans each year—here's what you can do to safeguard your personal information.

credit card caught in fishing hook
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Identity theft can be really damaging to your financial well-being and security. According to the FTC, identity theft is when someone steals your personal or financial information and uses it for things such as getting new credit cards in your name, stealing your tax refund, using your health insurance, or making purchases with your credit cards.

In a report released by the FTC called Consumer Sentinel Network Data Book, identity theft was the most reported type of theft in 2020—resulting in $3.3 billion in total fraud losses. According to an analysis by Consumer Affairs, the increase in identity theft and fraud might be due to the amount of people working from home, outside of corporate firewalls and protections.

Here is a handy checklist to help protect yourself against identity theft and keep your personal and financial information safe.

  • Protect your Social Security number and card.

    Never carry your Social Security card in your wallet or put your number on your checks. Disclose it only when absolutely necessary, using other types of ID whenever possible.

    Organizations that need your SSN for identification include the IRS, your bank, and your employer—it's important to note that they won't call, text, or email you for it. If another organization asks to see it, they might not really need it. Ask them why they need it, if another form of ID is acceptable, or if you can just provide the last four digits.

  • Buy a shredder.

    Some identity thieves go dumpster-diving to retrieve personal information. Always tear up receipts, old credit card statements, and other personal documents; running them through a shredder is even better. Deposit all outgoing mail in secure mailboxes, preferably at a post office.

  • Set up secure locations for personal information.

    At home, have a safe or a lockable file cabinet in which you can store sensitive material. Store digital copies of your important documents in a password protected hard drive. While you're at work, stow your purse or wallet in a desk drawer or a cabinet. One with a lock is best.

  • Set up multi-factor authentication to protect your information online and on your phone.

    Set up multi-factor authentication when you can to protect sensitive personal and financial information in online accounts. This can be getting a passcode through text or an authentication app, or a scan for your fingerprint or face. Do not give personal information to someone who calls, emails, or texts you; it could be a scammer, according to the FTC.

  • Get fraud alert.

    Most credit card companies offer fraud protection, some for free and others for a slight fee. These programs alert you when there are any abnormal purchases or activity on your account.

  • Consider a credit freeze.

    A credit freeze prevents credit card companies and other third parties from viewing your credit report. It gives you a little more protection than a fraud alert, but also a little less leeway: You'll need to lift the freeze if you want to apply for a loan or a credit card.

  • Create intricate passwords.

    Passwords that include the last four digits of your Social Security number, your graduation date, or your maiden name may be easy to memorize, but they're also easy to crack. Use a mix of letters, numbers, and special characters to create a foolproof password, and alter it for every online account you have.

  • Make them clever, too.

    Come up with a phrase and use the first letter of each word, a special character, and a number as your password. For example: "I graduated from Central High School number 1." Password: "igfchs#1." And for each site, change the number or a character, or add letters corresponding to the particular website. For example, if you visit, your password would be "taigfchs#1."

  • Set up a PayPal account.

    If you're an avid online shopper, register your information with this secure third-party service, and you won't need to disclose it to other sites. Accepted by most of the biggest online retailers, PayPal also offers around-the-clock fraud monitoring.

  • Think about insurance.

    Although identity theft insurance does not decrease the risk of theft, it may be a good option for you. An insurance policy can provide some assistance in the identity-rebuilding process. Identity theft insurance may cover out-of-pocket expenses that have to do with reclaiming your identity, such as the cost of copying documents, postage, getting the documents notarized, lost wages, or legal fees. However, identity theft insurance usually does not reimburse you for any money or other financial losses from the theft.

Source: Federal Trade Commission, Consumer Information

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