David Lerner Associates: Coping with Fraud and Identity Theft Over the Holidays

On Black Friday and Cyber Monday, Americans will be hitting the stores. Research firm eMarketer predicts total retail sales will top $885 billion this holiday season, a 5.7 percent increase over last year. One reason for the expected increase is that retailers are extending deals and discounts across a longer period of time. While that is good news for the American consumer, it’s also a bonus for financial fraudsters.

Whether they're snatching your purse, diving into dumpsters, stealing mail, or hacking into computers, these financial scammers can cause havoc with your financial life. More than half (54%) of the data breaches that occurred in 2014 related to identity theft.

Protect yourself against identity theft

There are two main 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 U.S., 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 leave home with it

Carry only the cards and/or checks needed for any one trip. A thief who steals a wallet or purse with all your cards and your Social Security card gets a treasure chest of new toys to play with.

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, so that if it is stolen you have that data easily available.

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.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

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.

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.