You Should Take These Three Easy Steps to Protect Yourself Against Financial Fraud and Identity Theft
In 2013, 40 million Target shoppers were notified that their payment card information was stolen by hackers in one of the most infamous data breaches ever. The following year, 50 million Home Depot shoppers received the same alert. Last year, there were 980 reported data breaches exposing over 35 million personal records—many including payment card information and Social Security numbers.
It's likely that your information was exposed in one of these many breaches. But not all is lost. Adopt these three cybersecurity resolutions to keep your money and credit safe.
1. Create a Secret Email Address for Your Financial Accounts
Our personal email addresses have become a key to our lives on the Internet. We enter them into countless databases when we sign up for newsletters, create new accounts, and order items online. We don't think twice about it.
But if we use that same email address for our online banking and credit card accounts, we're putting our finances in danger. If one of those various databases is hacked, we're essentially handing half of our financial account credentials over to the hackers.
Make the hackers' job harder by creating a "financial-only" email address that you use just for your online financial accounts. This secret email should not reveal anything about you. Make your username (the part before the @ sign) something generic that does not reference your name, initials, or other identifying information. Of course, create a strong password and use two-step verification on your account.
2. Set Text or Email Alerts for Bank Accounts and Credit Cards
What if you could know exactly when money was leaving your accounts like the banks and credit card companies do? You could catch fraud as it is happening and limit your losses.
You can do this, actually. The majority of major banks and credit cards allow you to sign up for text or email alerts that are sent to you anytime money leaves your account, or a charge is pushed through. If you receive an alert for a purchase or withdrawal that you did not make, you know right away to contact your financial institution and alert them of the fraud.
To enable these instant alerts on your account, log in or create an online account at your bank and credit card companies. If you have trouble finding the alert settings on your account, contact your institution's customer service for assistance.
Often, you determine the dollar amount that triggers an alert. For example, you can choose to get notified only for charges that exceed $200. It's best, however, to set that dollar amount as low as possible. Thieves commonly test accounts with small purchases and the sooner you catch them, the less damage they can do.
3. Put a Security Freeze on Your Credit Files
One of the best ways to protect your credit and finances is by freezing your credit file. By default, our credit files at the big three credit bureaus—Experian, Equifax, and TransUnion—are set to open. That makes it easier for you to obtain new credit, but it also leaves a dangerous hole in your security.
A credit freeze, also known as a security freeze, closes that hole by locking your credit file with a PIN that only you know. In order to apply for new credit or access your credit file, the freeze needs to be lifted with that PIN. This is more secure than the credit monitoring that most companies offer after a breach. Credit monitoring will simply alert you after credit has been opened in your name—you still have to clean up the mess. A credit freeze stops that from happening.
To freeze your credit, you need to contact all three of the credit bureaus—Experian, Equifax, and TransUnion. The price of a credit freeze varies per state but is usually around $10. Freezing your credit at all three bureaus will cost $30. This fee is waived for proven identity theft victims, and more states are beginning to offer the service to everyone for free.
These three actions should take you less than an hour to complete and will significantly improve your financial defense against the scams, hacks, and frauds that plague us all. Even if your financial data is swept up in the next data breach, your accounts will be protected.
This information is provided for educational purposes only and is not intended to provide specific advice or recommendations for any individual. It should not be construed as research or investment advice and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.