Many people often consider ways to save more money, yet they frequently overlook one of the most painless methods to reduce spending and financial loss: protecting themselves from identity theft. This financial threat can quietly (or loudly) drain your resources, and it’s crucial to understand how to safeguard your financial life.
Unfortunately, many people have experienced large, glaringly obvious charges that they didn’t make, often alerted by their banks. However, fraudulent activity can also fly under the radar for months or even years. And with the volume of bank and card transactions that most people make each month, small fraudulent charges often go undetected. Even worse, if it goes undetected it sends a signal to bad actors that they won’t be quickly caught if they do more of it to you.
Prevention is the best remedy, especially with the rise of sophisticated techniques used by fraudsters, including artificial intelligence. Recently, I heard of a situation where a customer was tricked into a fraudulent transaction during what appeared to be a legitimate Zoom call with bank employees, who were actually deep fakes.
To help you avoid becoming a victim of identity theft, here are some proactive steps you can take:
Lock Your Credit
Many people think of locking their credit only after learning about a breach at a vendor. Or, even worse, they’ve been notified by vendors so many times that they don’t take any action at all. Locking your credit with each reporting agency is a simple step that can prevent unauthorized borrowing in your name. You can easily unlock it when needed, making it a wise practice to keep your credit locked at all times, except for occasions when you actually need it.
Get an IRS PIN
One unexpected way that identity fraud occurs is when someone files a fraudulent tax return on your behalf, in order to receive a tax refund that was supposedly yours. This can result in significant complications when it’s time for you to file your taxes. Obtaining a PIN number from the IRS adds a layer of security, ensuring that your return cannot be accepted without this PIN. Given the IRS's current understaffing issues, you may not discover this fraud until it’s too late.
Review Financial Statements Regularly
Regularly monitoring your financial statements is crucial. While large, obvious fraudulent charges are often flagged by banks, smaller, more subtle charges can slip through the cracks. These can accumulate over time, leading to significant losses if not disputed quickly. Familiarize yourself with your spending patterns and regularly check for any unusual transactions to ensure you catch discrepancies early.
Use a Password Manager and Change Passwords Often
Strong, unique passwords are your first line of defense against unauthorized access to your accounts, and use multi-factor authentication wherever it is offered. Avoid reusing passwords, and change them frequently. Also, be cautious with security questions; they should be treated with the same level of secrecy as your passwords.
Use USPS Mail Monitoring Services
Informed Delivery, offered by USPS, is a service that sends you a daily email with images of pieces of mail that are scheduled to arrive that day. In cases where a resident does not currently use this service from USPS, unauthorized parties have been known to attempt to gain access in order to identify when important and sensitive pieces of mail may be arriving at your home so as to intercept them before you do. By being proactive, you can ensure that no one else has access to your mail and know if something has gone missing.
Use Secure Checks and Pens with Tamper-Resistant Ink
While electronic transactions are by far the most common payment method, many household service providers prefer (or only accept) checks, which are often returned by mail. And though it may seem antiquated, criminals continue to attempt “check washing”, which is where chemicals are used to erase and alter the transaction amount and recipient of a check. That’s why it can be helpful to use a checkbook with carbon copies of each check and tamper resistant paper, in addition to pens using ink that is difficult to alter.
Being proactive in preventing identity theft is crucial in protecting your financial well-being. The process of recovery can be long and arduous, making it far easier to take preventive measures than to clean up after the fact. If you have concerns about your financial situation or need help creating a comprehensive strategy to protect yourself, we’re here to help. Let’s discuss how you can secure your finances today.
This blog was written by Jeremy Bohne, Principal & Founder of Paceline Wealth Management. Paceline is a fee-only investment advisor serving clients in the Boston area, and on a remote basis throughout the country. Paceline specializes in helping tech and biotech executives, physicians, and those seeking financial planning services.