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Financial Identity Theft

Did someone use your personal information to commit financial fraud? Discover more about financial identity theft and how to recover.

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The Basics of Financial Identity Theft

Financial identity theft occurs when someone uses your personal information without your permission to commit financial fraud. This can happen in a variety of ways, including through the use of your credit card or bank account information, by taking out a loan in your name or by using your Social Security number to open new accounts. There are a number of ways that thieves can obtain your personal information, including through data breaches, phishing scams and by going through your trash.

Common Tactics of Financial Identity Theft

When it comes to financial identity theft, there are a few common tactics that scammers use in order to steal your information.

  • Phishing is when a scammer poses as a legitimate entity in order to trick you into giving them your personal or financial information. They may do this by sending an email that looks like it’s from your bank or by creating a fake website that looks like a legitimate financial institution.
  • Skimming is when a thief uses a small device to copy the information from the magnetic stripe on your credit or debit card. They can then use this information to create a clone of your card and make unauthorized charges.
  • Rummaging through your trash. Thieves will dig through mail and trash in search of bank and credit card statements that contain personal information. 
  • Data breaches can provide criminals with personal and financial information of consumers. Criminals can buy this data from an inside source or from bad actors on the dark web. 

There is no shortage of tactics for criminals when committing their crimes. Protect yourself by reviewing the red flags and following the below prevention tips to protect yourself from bad actors.

Step 1:Recognize

Red Flags of Financial Identity Theft

There are a few red flags that can indicate that you may be a victim of financial identity theft, including receiving bills or other statements for accounts that you did not open, being denied credit for no apparent reason or receiving calls from debt collectors for debts that you do not owe. Here are some red flags to watch out for:

  • You are contacted by debt collectors for debts you know nothing about.
  • You receive statements for accounts that you did not open.
  • You are denied credit for no apparent reason.
  • You find unfamiliar charges on your credit card or bank account statements.
  • There is a sudden drop in your credit score.

Step 2:Immediate Actions

If you think you are the victim of financial identity theft, it is important to take action right away. Here are some steps to take:

  • Visit IdentityTheft.gov from the Federal Trade Commission to file a report and create a personalized plan for recovery.
  • Contact your bank, financial institutions or credit card providers to close or change any compromised accounts.
  • Change the passwords and PIN for any affected accounts.
  • Contact the credit bureaus to place a fraud victim statement and freeze on your credit.

Step 3:Report

Reporting any type of cybercrime, including financial identity theft, is imperative to help others avoid being scammed. As a society, the more people that report online scams and fraud, the more national reporting data that is collected, and the better chance law enforcement has to catch the criminals and decrease cybercrime.

Report to FTC

Step 4:Recover

Protect Yourself for the Future

Once you have notified the appropriate organizations, it is time to recover and reinforce your cybersecurity by implementing preventative measures.

  1. Don’t share your Social Security number unless absolutely necessary — provide alternative information when possible.
  2. Avoid giving out your credit card or bank account information over the phone unless you initiated the contact or have already established trust.
  3. Review bank and credit card statements routinely for fraudulent charges.
  4. Shred all documents that include your Social Security number or other personal information before discarding them.
  5. Keep an eye on your billing schedule. If a bill doesn’t show up on time, contact the company or organization.

Take 5 Steps for Better Online Security

In addition, it’s important to strengthen your online security to help avoid all types of online scams. Take action to improve your digital posture by following these steps:

  1. Implement Multi Factor Authentication (MFA): Passwords are generally easy for scammers to crack, and even if you use strong passphrases, there’s still the possibility that a cybercriminal can obtain your passphrase in a data breach. Implementing MFA is a great way to maximize your security and ensure that you are the only one who can gain access to your accounts. MFA should be implemented on all accounts where it is available. Check your account’s security settings to see if it is something you can set up.
  2. Update Your Privacy Settings: Privacy settings allow you to control your personal information (name, address, phone number, date of birth, financial details, photos or videos, etc) and how that information is used. Review your privacy settings on all of your accounts including your social media accounts. Consider restricting who can see your friends list, contacts, photos and posts.
  3. Activate Automatic Updates: Automatic updates are a set of changes to an app, software or operating system that are automatically pushed by the developer to fix or improve it. Oftentimes, cybercriminals take advantage of security flaws to plant malicious software on your devices. By activating automatic updates, you will automatically patch security vulnerabilities to protect your data.
  4. Create Strong Passphrases: A strong passphrase is a string of unrelated words separated by hyphen, space, period, capitalized first letter or number. Use passphrases that are longer than 15 characters and include multiple words that do not have any obvious connection between them. The key to passphrases is randomness. Don’t repeat your passphrases between accounts and consider using a password manager to help you remember.
  5. Learn the Elements of a Phishing Attempt: Familiarize yourself with the elements of a phishing email. Phishing emails tend to include a sense of urgency and multiple grammar and spelling errors. If they are asking you to reveal personal information, be suspicious. If you get a strange email, try contacting the company another way to confirm they sent that email. If the email is suspicious, mark it as spam.

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