Imagine yourself rummaging through the mail. You come across a credit card offer for your child. You might just disregard it, thinking that there was some sort of mix up. After all, we all know how aggressive credit card companies are with their marketing! What you might not have realized is that this is a prime example of you child’s identity being stolen!
Identity theft is a SERIOUS problem. And, it’s not getting any better. As of today, it’s a reality that we need to live with. Cyber criminals will ALWAYS be one step ahead of the authorities and two or more steps ahead of you. I’m writing this article because while I am perfectly comfortable “being online”, I can honestly say I’ve probably put a little too much trust in humanity.
I used to think it was nothing more than a major inconvenience. OH was I wrong. After reading about the victims, the effects don’t just stop at financial. You could have effects that are legal, emotional, physical, social and much more. It takes multiple YEARS to recover fully. It was estimated that tens of millions of hours were spent last year in trying to resolve the effects of identity theft. Lost jobs, benefits, reputation and so much more.
For this reason, I’ve done a lot of research, found some horror stories of identity theft (most of which I don’t want to repeat) and gathered some of my favorite tips to help you get proactive about identity theft protection for your whole family.
Identity Theft Protection for YOU
According to LifeLock, in 2017, 16.7 Million people were affected by identity theft. That’s not as surprising as me saying, $16.8 BILLION was stolen! This shows you how far ahead of us these cyber criminals really are. This is just what we KNOW of!
The most common types of identity theft are:
- Using your identity to gain employment or file an income tax return – 34%
- Making fraudulent purchases with a credit card number – 33%
- Opening a wireless phone or utility account – 13%
- Taking over or opening a new financial account – 12%
- Using your information to take out a loan or lease – 7%
- Gaining government benefits – 7%
An identity theft horror story
I want to tell you about Carlos M. Gomez. Carlos was awoken in the middle of the night by federal agents with handcuffs. Carlos was a UPS driver who was accused of being involved in a million dollar money laundering operation.
Carlos spent close to two weeks in prison and several months under house arrest before they realized the mistake. After being released on a $100K bond, he was only allowed to work during the day because he couldn’t leave his home at night.
It took federal investigators this long to investigate something you’d think would be relatively easy to prove. It was up to him and his attorney to prove him innocent.
Believe me, this is nothing compared to some of the others. People’s lives have been DESTROYED! Do a little research and see for yourself.
Identity Theft Protection Tips
The first, and easiest thing you can do (and should be doing anyway) is track your own spending. Watch your accounts and categorize every transaction. This has other obvious benefits, but primarily you can find fraudulent transactions and take action immediately.
Next, use credit, NOT debitt. I’ll never forget when I was listening to Frank Abagnale, Jr. (the guy that Leo DiCaprio played in Catch Me If You Can) at a local event. He said that “credit cards are the safest form of currency”. I thought for sure he was going to say cash. But, if someone steals your cash, you can’t get it back. If someone steals your credit card, you can easily challenge the transaction before making the payment.
LifeLock.com provides some additional tips:
- Be careful with both how and where you share your personal information online
- Give your home Wi-Fi network a name that isn’t identifiable to you
- Give your home Wi-Fi network a strong and unique password
- Make your other passwords strong and unique AND different from one another
- Be wary of public Wi-Fi. Your activity can easily be traced by someone sitting right next to you.
- If you have to do business using public Wi-Fi, use a VPN (virtual private network)
Identity Theft Protection for College Students
Colleges use the student’s social security number for a lot of identification purposes. When you combine that, with how often and how much we share on social media, it’s like taking candy from a baby!
Consumer Reports states that in 2017, there was a 120% jump in student loan fraud from the year before. A study shows that 1 in 5 college students will fall victim to identity theft.
College students usually have a VERY minimal credit history, if any at all. This is prime territory for cyber criminals to use their credit profile. College students are spending a lot of time in class rooms, library and other public spaces so it’s important to keep them informed of what it takes to protect their information.
Identity Theft Protection Tips
Obviously, the first thing you should do is educate them on where the risks are. Explain to them the long term impact. How about trying to buy a house and realizing your have a credit score of 400! That might wake them up!
Consumer Reports provides some additional tips that might help with your older children…
- Guard your numbers – As I mentioned, there is a lot of information sharing on a college campus. Protect your information and only share what you MUST.
- Don’t send important mail to the dorm – The security is likely minimal. Use a either your home address, or even a post office box.
- Get transaction alerts – Just about every banking app has alerts. Turn them on so you can see what’s coming through, live.
- Don’t share it all on social media – I get it, that’s a tough one. Just don’t always announce if you’re not on campus. Additionally, you’d be surprised at how simple it is to piece together someone’s life over a handful of posts. Less is more.
Identity Theft Protection for Young Children
Are you ready for the REALLY scary part! Last year, 1 Million children were victims of identity theft. 2/3 of them were under 8. Even scarier, 6 out of every 10 of these actually KNOWS the perpetrator! Just by announcing the birth of a child on Facebook gives fraudsters 3 pieces of data, date of birth, gender and name. They don’t need much more than that. And again, this is what we KNOW.
Young children are the most vulnerable. They have absolutely no credit history, which means a brand new identity for credit purposes can be made up using only a social security number. The rest, can be made up. In addition to that, no one is watching! How many of you actually think of pulling your child’s credit report each year! Go to annualcreditreport.com and see how NOT easy that is to do! For obvious reason, you need to provide a ton of documentation and have to go direct to each of the three credit reporting agencies.
They call this “synthetic identity theft”. According to an NBC News report, fraudsters can buy a child’s social security number for about $2 on the dark web. After that, it takes about 30 days to build a credit score. From there, it’s credit cards, medical treatment, fraudulent tax returns (searching for a tax refund from the IRS), GETTING A JOB and so on. If you’re not paying close enough attention, this can go on for YEARS! The potential damage is unbelievable.
There are countless stories of children, all grown up realize that they’ve been a victim. A 12-year old “getting a $6,000 car loan” is only the beginning!
Identity Theft Protection Tips
You have a number of options. First, you can pull their annual credit report from annualcreditreport.com if they are 14 or older. Any younger, you have to jump through the hoops at the TransUnion, Equifax and Experian.
Next, you can actually FREEZE their credit. At the individual credit bureaus, you have the option of locking down their credit file. This means, no one can access your credit report, keeping any new accounts from being opened. It doesn’t solve everything, but it does help a little. The problem I see here, is that you need to remember the 4-digit code until it’s time to unlock it. Good luck with that!
TransUnion does offer a credit suppression, which is the same thing, except it automatically un-freezes the credit at age 18. That’s at least a little better, but I personally prefer to start their credit building earlier than 18 years of age.
If you start getting “grown up mail” for your kids, look into it. This can come in the form of a jury summons, credit cards offers and so on. A credit card offer means a credit file, which SHOULDN’T exist at this point.
Personally, waiting a year between each “review” felt a little too passive for me. The one thing that I found that actually makes me comfortable, is LifeLock Junior. I’m sure you’ve heard of LifeLock. It’s the credit monitoring company that monitors the dark web for your social security number, checks your credit file constantly, covers legal fees and even insures you up to a certain amount for losses. You can add your kids to this for $5.99 a month! They get much (if not all) of the same benefits that you get as a member.
I’ve talked about how important it is to develop smart money habits. Identity theft protection for you and your family is just as important as any of them. If you track your spending, take extra care with how you spend time online, including how you set your passwords, you’re on your way.
If you do become a victim, check out this article at thebalance.com to find some tips on what to do AS SOON as you find out.
In step 3 of our 10 Steps to Financial Strength, we talk about transferring your risk. All of this fits very well into that step. By staying proactive with identity theft protection, and even specifically signing up with a company life LifeLock, you’ve effectively set a floor on your risk. Of course, nothing can completely eliminate risk, but if you can minimize loss, it’s one less thing that can keep you away from your financial independence.
Sports Fan, Movie Buff, and Anything Outdoors sums it up. Brad loves spending time with his wife, Ashley, and their two boys. He helps empower people to take control of their money, bringing them the confidence to build the life of their dreams.
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About Matt & Brad
They are identical twins and money experts. Matt and Brad Ruttenberg have, combined, over 2 decades of experience as financial planners. They are known for simplifying money and helping others go from living paycheck to paycheck to thriving financially.
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This communication is strictly intended for individuals residing in the states of Florida, Michigan, Arizona, Nevada, New York, Ohio, and South Carolina. No offers may be made or accepted from any resident outside the specific states referenced. Registered Representative Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. The Money Twins and Ruttenberg & Company are not affiliated with Cambridge.