Identity Theft and Identity Fraud: A Large and Growing Risk

publication date: Jun 11, 2012

Hucksters and thieves are often several steps ahead of law enforcement. Eventually, some of the bad guys get caught, but many don't, and those who do get nabbed often go back to their unsavory ways after penalties and some jail time.

Crooks might access one of your accounts; in other cases, the criminal activity may develop with someone opening an account (such as a credit card) using someone's stolen personal information. Victims of identity theft can suffer trashed credit reports, reduced ability to qualify for loans and even jobs (with employers who check credit reports), out-of-pocket costs and losses, and dozens of hours of time to clean up the mess and clear their credit record and name.

Unfortunately, identity theft is hardly the only way to be taken to the cleaners by crooks. All sorts of scamsters hatch schemes to separate you from your money.

Here's my best advice to keep yourself from falling prey to identity theft and unnecessarily losing money.

  • Beware phone inquiries. Never, ever give out personal information over the phone, especially when you aren't the one who initiated the call. Suppose you get a call and the person on the other end of the line claims to be with a company you conduct business with (such as your credit-card company or bank). Ask for the caller's name and number and call the company's main number back (which you look up) to be sure he is indeed with that company and has a legitimate business reason for contacting you. With caller ID on your phone line, you may be able to see what number a call is originating from, but more often than not, calls from business-registered phone numbers come up as "unavailable." A major red flag: calling back the number that comes through on caller ID and discovering that the number is bogus (a nonworking number).
  • Ignore solicitous e-mails. If you're an e-mail user, you may have seen or heard about official-looking e-mails sent from companies you know of and may do business with asking you to promptly visit their website to correct some sort of billing or account problem. Crooks can generate a return/sender e-mail address that looks like it comes from a known institution but really does not. This unscrupulous practice is known as phishing, and if you bite at the bait, visit the site, and provide the requested personal information, your reward is likely to be some sort of future identity-theft problem. To find out more about how to protect yourself from phishing scams, visit the website of the Anti-Phishing Working Group (APWG).




  • Review your monthly financial statements. Although financial institutions such as banks may call you if they notice unusual activity on one of your accounts, some people discover problematic account activity by simply reviewing their monthly credit-card, checking-account, and other statements. You don't need to balance bank account statements to the penny. I don't have the time or patience for such minutiae. The key is to review the line items on your statement to be sure that all the transactions were yours.
  • Secure your receipts. When you make a purchase, be sure to keep track of and secure receipts, especially those that contain your personal financial or account information, and cross-check your receipts against your monthly statements. When you no longer need to retain your receipts, be sure to dispose of them in a way that prevents a thief, who may get into your garbage, from being able to decipher the information on them. Rip up the receipts or, if you feel so inclined, buy a small paper shredder for your home and/or small business.
  • Close unnecessary credit accounts. Open your wallet and remove all the pieces of plastic within it that enable you to charge purchases. The more credit cards and credit lines you have, the more likely you are to have problems with identity theft and fraud and the more likely you are to overspend and carry debt balances. Also, reduce preapproved credit offers by contacting 888-5OPTOUT (888-567-8688) or visiting Unless you maintain a card for small business transactions, you really "need" only one piece of plastic with a VISA or MasterCard logo. Give preference to a debit card if you have a history of accumulating credit-card-debt balances.
  • Review your credit reports regularly. You may also be tipped off to shenanigans going on in your name when you review your credit report. Some identity-theft victims have found out about credit accounts opened in their name by reviewing their credit reports. Because you're entitled to a free credit report from each of the three major credit agencies every year, I recommend reviewing your reports at least that often. The reports generally contain the same information, so you can request and review one agency report every four months, which enables you to keep a closer eye on your reports and still obtain them without cost. I don't recommend spending the $100 or so annually for a so-called credit monitoring service that updates you when something happens on your credit reports. If you're concerned about someone illegally applying for credit in your name, know that another option for you (in some states) to stay on top of things is to "freeze" your personal credit reports and scores (see the next tip).
  • Freeze your credit reports. To address the growing problem of identity theft, you can freeze your credit report, which enable consumers to prevent access to their reports, in every state. Nearly every state now enables consumers, typically for a nominal fee, to freeze their credit information (in those states without such laws, the major credit bureaus allow you to freeze your report). The individual whose credit report is frozen is the only person who may grant access to the frozen credit report.



  • Don't place personal information on checks. Information that is useful to identity thieves and that you should not put on your checks includes your credit-card number, driver's license number, Social Security number, and so on. I also encourage you to leave your home address off your preprinted checks when you order them. Otherwise, every Tom, Dick, and Jane whose hands your check passes through knows exactly where you live. When writing a check to a merchant, question the need for adding personal information to the check (in fact, in numerous states, requesting and placing credit-card numbers on checks is against the law). Use a debit card instead for such transactions and remember that your debit card doesn't advertise your home address and other financial account data, so there's no need to publicize it to the world on your checks.
  • Protect your computer and files. Especially if you keep personal and financial data on your computer, consider the following safeguards to protect your computer and the confidential information on it: install a firewall; use virus protection software; and password-protect access to your programs and files.
  • Protect your snail mail. Some identity thieves have collected personal information by simply helping themselves to mail in home mailboxes. Stealing mail is easy, especially if your mail is delivered to a curbside box. Consider using a locked mailbox or a post office box to protect your incoming mail from theft. Consider having your investment and other important statements sent to you via e-mail, or simply access them online and eliminate mail delivery of the paper copies. Be careful with your outgoing mail as well, such as bills with checks attached. Minimize your outgoing mail and save yourself hassles by signing up for automatic bill payment for as many bills as possible. Drop the rest of your outgoing mail in a secure U.S. postal box, such as those you find at the post office.


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Copyright Eric Tyson, 2008 - 2023 all rights reserved.

Eric Tyson is the only best-selling personal finance author who has an extensive background as an hourly-based financial advisor and who does not accept speaking fees, endorsement deals or fees of any type from companies in the financial services industry or product or service providers recommended in his articles, books and his publications.