David Lerner Associates: Coping with Fraud and Identity Theft

Whether they're snatching your purse, diving into dumpsters, stealing mail, or hacking into computers, identify thieves are a reality and can cause havoc with your financial life.

Identity thieves can empty a bank account, max out credit cards, open new accounts in one’s name, and purchase furniture, cars, and even homes using someone else’s good credit history. And to add insult to injury, if they use that stolen identity during an arrest and then don't show up for a court date, the person whose identity was stolen may be subsequently arrested and jailed.

All the victim gets is the headache and expense of cleaning up the mess they leave behind.

Protect yourself against identity theft

There are really two types of identity theft:

• Account takeover–this is what happens when a thief gets access to existing credit or debit cards (or even just the account numbers and expiration dates) and goes on a shopping spree..
• Application fraud–this is what happens when a thief gets hold of a person’s Social Security number and uses it (along with other personal information) to obtain new credit in that name.

It may not be possible to completely prevent either type of identity theft, but here are some steps one can take to avoid becoming a victim.

Take Stock

It's important to review one’s credit report periodically. Check to make sure that all the information contained in it is correct, and there is no fraudulent activity. Every consumer is entitled to a free copy of his or her credit report once a year from each of the three national credit reporting agencies: Equifax,TransUnion, and Experian. You can visit www.annualcreditreport.com for more information.

Social Security

In the US, the most important personal identifier is the Social Security number (SSN). Guard it carefully. Never carry this card with you unless you'll need it. The same goes for other forms of identification (for example, health insurance cards) that display one’s SSN. If state laws require that the SSN number is also the driver's license number, request an alternate number.

Don't have the SSN preprinted on personal checks, and don't let merchants write it on a check either. Don't give it out over the phone unless the call is to a trusted organization. Ask the three major credit reporting agencies to truncate the SSN on any credit reports. Try to avoid listing it on employment applications; offer instead to provide it during a job interview.

Don't leave home with it

Most of us carry checkbooks and credit cards, debit cards, and telephone cards all the time. This is not good practice. A thief who steals a wallet or purse with all this information in it will have a treasure chest of new toys to play with.

Carry only the cards and/or checks needed for any one trip. Keep a written record of all account numbers, credit card expiration dates, and the telephone numbers of the customer service and fraud departments in a secure place–at home. Make a copy of all cards and other information in your wallet or purse.

Keep your receipts

Don't throw purchase receipts away or leave them behind; they may contain the credit or debit card number used to make the purchase. And don't leave it in the shopping bag in the car while shopping; if a thief breaks into the car and the item you bought is stolen, they could have access to credit or debit card details as well. Save all receipts, and check them against the monthly credit card and bank statements. Watch for unauthorized purchases.

When you toss it, shred it

Before throwing out any financial records, such as credit or debit card receipts and statements, cancelled checks, or even offers for credit received in the mail, shred the documents, preferably with a cross-cut shredder. Without this precaution, it’s possible that someone looking through the trash might find more than discarded leftovers.

Take a byte out of crime

A personal computer is now in almost every home. Make sure that it does not inadvertently reveal personal information to others. Take steps to help assure that this won't happen.

Install a firewall to prevent hackers from obtaining information from the hard drive or hijacking the computer to use it for committing other crimes. This is especially important if one has a high-speed connection that leaves the computer continuously connected to the Internet. Moreover, install virus protection software, and update it on a regular basis.

Try to avoid storing personal and financial information on a laptop; if it's stolen, the thief may obtain more than just the computer. Make it as difficult as possible for a thief by protecting these files with a strong password–one that's 6 to 8 characters long and that contains letters (upper and lower case), numbers, and symbols.

When it comes time to upgrade to a new computer, remove all personal information from the old one before disposing of it. Doing so by using the "delete" function isn't sufficient to do the job; overwrite the hard drive by using a "wipe" utility program. The minimal cost of investing in this software may prevent being wiped out later by an identity thief.

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Some of this material has been provided by Broadridge Investor Communications Solutions, Inc.