Guarding Against Identity Theft
America is enduring a data breach epidemic.
As 2013 ended, the federal Bureau of Justice Statistics released its 2012 Victims of Identity Theft report. Its statistics were sobering. About one in 14 Americans aged 16 or older had been defrauded or preyed upon in the past 12 months, more than 16.6 million people.
Just 8% of those taken advantage of had detected identity theft through their own vigilance. More commonly, victims were notified by financial institutions (45%), alerts from non-financial companies or agencies (21%), or notices of unpaid bills (13%). While 86% of victims cleared up the resulting credit and financial problems in a day or less, 10% of victims had to struggle with them for a month or more.
Consumers took significant financial hits from all this. The median direct loss from cyberthieves exploiting personal information in 2012 was $1,900, and the median direct loss from a case of credit card fraud was $200. While much of the monetary damage is wiped away for the typical victim, that isn't always the case.
Tax time is prime time for identity thieves
They would love to get their hands on your return, and they would also love to claim a phony refund using your personal information. In 2013, the IRS investigated 1,492 identity theft-linked crimes – a 66% increase from 2012 and a 441% increase from 2011.
E-filing of tax returns is becoming increasingly popular (just make sure you use a secure Internet connection). When you e-file, you aren't putting your Social Security number, address and income information through the mail. You aren’t leaving Form 1040 on your desk at home (or work) while you get up and get some coffee or go out for a walk. If you just can’t bring yourself to e-file, then think about sending your returns via Certified Mail. Those rough drafts of your returns where you ran the numbers and checked your work? Shred them. Use a cross-cut shredder, not just a simple straight-line shredder (if you saw Argo, you know why).
The IRS doesn’t use unsolicited emails to request information from taxpayers. If you get an email claiming to be from the IRS asking for your personal or financial information, report it to your email provider as spam.
Use secure Wi-Fi.
Avoid “coffee housing” your personal information away – never risk disclosing financial information over a public Wi-Fi network. (Broadband is susceptible, too.) It takes little sophistication to do this – just a little freeware.
Sure, a public Wi-Fi network at an airport or coffee house is password-protected – but if the password is posted on a wall or readily disclosed, how protected is it? A favorite hacker trick is to sit idly at a coffee house, library or airport and set up a Wi-Fi hotspot with a name similar to the legitimate one. Inevitably, people will fall for the ruse and log on and get hacked.
Look for the “https” & the padlock icon when you visit a website. Not just http, https.
When you see that added “s” at the start of the website address, you are looking at a website with active SSL encryption, and you want that. A padlock icon in the address bar confirms an active SSL connection. For really solid security when you browse, you could opt for a VPN (virtual private network) service which encrypts 100% of your browsing traffic; it may cost you $10 a month or even less.
Make those passwords obscure.
Choose passwords that are really esoteric, preferably with numbers as well as letters. Passwords that have a person, place and time (PatrickRussia1956) can be tougher to hack.
Check your credit report. Remember, you are entitled to one free credit report per year from each of the big three agencies (Experian, TransUnion, Equifax). You could also monitor your credit score – Credit.com has a feature called Credit Report Card, which updates you on your credit score and the factors influencing it, such as payments and other behaviors.
Don’t talk to strangers. Broadly speaking, that is very good advice in this era of identity theft. If you get a call or email from someone you don’t recognize – it could tell you that you’ve won a prize, it could claim to be someone from the county clerk’s office, a pension fund or a public utility – be skeptical. Financially, you could be doing yourself a great favor.
Tax filing online? Seven Tips to Avoid Identity Theft.
Tax filing online is becoming more the norm these days, and identity theft involving tax filing has increased. Read on for seven easy ways to avoid becoming an identity theft victim during tax filing season.
Did you know that almost 1,000 Americans could become victims of identity theft when they file their taxes? According to the Wall Street Journal, the U.S. Justice Department charged nearly 900 individuals with claiming bogus refunds in 2013. In fact, the IRS's identity theft investigations jumped 66% on the whole, with the agency initiating 1,492 probes of identity-theft related crimes in fiscal 2013, compared to 898 in 2012 and 276 in 2011.
You've Got Mail
That email from the IRS most definitely isn't from the IRS. "The IRS never sends unsolicited, tax-account related email and does not collect personal or financial information, PINs, or passwords via email," says Long. "If you receive such an email and have reason to believe it may be legitimate, pick up the phone and call the IRS to verify or Google the subject line of the email; chances are you will find a source on the Internet that debunks the message as a phishing scheme." And if that turns out to be the case, mark that message and spam right away.
While filing your taxes online is fast and easy, it can also be dangerous. "Your local coffee shop with free WiFi is not the place to take care of this arduous task," Long says. "If you use a WiFi connection at home, make sure that it is password protected, or even better, consider [hardwiring] your computer to your modem when submitting your tax information to the software."
Tax Time's Always Better With a Shredder
A shredder is your best friend when it comes to tax documents, Long says. "Make sure that you're destroying any drafts of your tax return or other tax documents; if you don't have a shredder at home, your library or even local copy shop may have a secure shred bin where you can put sensitive information for shredding." Also try to use a cross-cut or confetti-cut shredder, she adds; "If you've seen the movie Argo you know that straight shreds are not safe."
Safeguard Your Social Security Number
It's hard to believe that a 9-digit number can be the gateway to so much identity theft, but it's a main target for identity thieves. "Protect your Social Security number the same way you’d protect a $100 bill," Long advises. "Keep your Social Security card locked at home in a safe and try to mask it on any documents you carry with you." Don't text or email your number, ever, and only give it out when absolutely necessary. "Many businesses ask as a matter of course, but they may not need that information. Ask before providing it."
Protect Sensitive Papers from Prying Eyes
Paperwork that stays out on your desk might have sensitive information on it, including that all-important Social Security number! "Once you're done preparing and filing your tax return, make sure you store your return and supporting documentation securely," Long says. "Scanning it and saving it to your hard drive or a CD-ROM is a wise way to reduce clutter. Just make sure that your hard drive is secure or that you’re locking that CD in a safe, or another secure location in your home."
Password Protect Your Sensitive Emails
Who doesn't love the speed and expediency of email? But, "if you must email your tax return or other documentation to your tax preparer or other party that needs it, make sure you password-protect the file or use a secure data portal to transmit the information," Long says. "As we all know now from Edward Snowden's work, email is not private. You don't want to risk your information being intercepted by the wrong person."
E-file: It's Safer By a Mile
As electronic filing becomes more the norm these days, it has many advantages other than convenience. "E-file your return if at all possible to avoid your information falling into the wrong hands through the USPS," Long says. "If you must paper file, then pay the extra [fee] to send the return via Certified Mail to ensure it gets there."
The watchword for filing your taxes this year might as well be "caution." Think about how careful you are in your tax return calculation sand apply that same diligence in filing your taxes with the state and federal governments. Taking that same kind of care with the security of your documents and digits can go a long way towards making sure your financial information stays just as private as you want it to be.