How to Prevent Identity Theft

December 13, 2009

How Identity Fraud Occurs

Although fraudulent transactions have become easier to execute online, the actual methods used by thieves in identity theft are more likely to be of the old fashioned kind.

According to Javelin Strategy and Research, only 12% of identity fraud cases involved identity theft via online methods such as phishing, spyware or hacking.
How Identity Fraud Occurs

Most cases of identity theft are carried out via 'old fashioned' methods, 'in the flesh' so to speak, where the perpetrator is able to obtain hard copies of identification documents, look over someone's shoulder at the automatic teller machine (ATM), steal wallets and checkbooks, or simply steal mail.

Surprisingly, Javelin Research reports that 17% of victims knew their offenders through family, friends and work colleagues.
How to Prevent Identity Theft

The following points are designed for consumers as a guide to assist in identity protection.

1. Change pins and passwords regularly and keep them private. Be aware of who is in the queue at the ATM and make it difficult for them to see pin numbers being entered.

2. Online passwords should be at least 6-8 characters long, include 2 numbers and at least 1 capital letter.

3. Reconcile credit card and bank accounts regularly or at least review all transactions in each statement. Any unfamiliar transactions should be investigated further and reported immediately.

Although many victims find out that their identity has been used fraudulently within three months of the crime, almost 20% do not find out for several years. (spendonlife.com)

4. Do not provide copies or details of photo identification such as a drivers licence, passport, student card or even of bank account details to anyone who is not an employee of a reputable organisation and without any good reason.

Unfortunately, in this age of technology, criminals need little more than a drivers licence number, expiry date and one other form of identification to set up a debt facility online with a stolen identity.

5. Do not make purchases over the internet with a credit card unless it is a reputable company.

Furthermore, when entering that company's webpage to make a purchase, ensure the URL is typed in rather than clicking on a link.

Facilities like Paypal are highly recommended to make online purchases as credit card and bank details remain hidden from the merchant.

6. Do not click on emails allegedly from banks or financial institutions asking for confirmation or renewal of online access usernames or passwords. These emails are always fake and should be forwarded to the institution's fraud department for investigation. Most companies have an email facility to receive these reports at hoax@companywebsiteaddress.

Banks and financial institutions never ask their clients and customers to make such changes via email.

7. Destroy all unwanted paper communications with a shredder. Thieves only need a full name, address and a couple of other details easily found in mail communications to be able to access an account.

8. Pay attention to the time and date of when online banking accounts were last accessed. Lost and stolen cards, wallets and checkbooks and anything unusual should be reported immediately to the financial institution.

9. Put a lock on the mailbox or use a secure locked mailbox at the post box to receive mail which could potentially contain sensitive information useful to identity thieves. Alternatively, change all communications to be received electronically and purchase appropriate computer software protection for the office and home computers.

10. Keep all wallets, checkbooks, handbags, purses and mail in a safe area of the house and office which is inaccessible by visitors.
No Method of Identity Protection is 100% Safe

Unfortunately, there is no 100% guaranteed method of identity protection, but if these basic precautions are taken, consumers and investors can make it more difficult for identity thieves.