How to Protect Yourself Against the Growing Threat of Fraud, Scams, and Identity Theft

Online scams and identity theft are becoming an increasingly significant threat, especially in the wake of several recent large-scale data breaches that expose sensitive information to cybercriminals. In a digital age where personal data is a valuable commodity, knowing how to protect yourself is crucial to safeguarding your identity and financial well-being.

Why are you increasingly vulnerable to fraud

The fraudsters are increasingly sophisticated in their approach. The problem is the amount of information out there about all Americans. With each wide-scale data breach, you can assume that your name, address, date of birth, and social security number is out there for purchase on the dark web. In addition, we live increasingly online lives. Its likely that criminals can find out who your family members are, where you grew up, and even where you last went on vacation. 

You are vulnerable because criminals can combine all this information to try to trick you into revealing passwords and other financial information using emails, texts, and even phone calls claiming to be banks or government agencies. In the future, AI generated voices might impersonate loved ones. Although paranoia is unhealthy, you need to be vigilant and follow careful steps to stay safe.

Here Are 6 Important Steps to Protect Yourself from Becoming a Victim

1.) Place Fraud Alerts and Credit Freezes

After a data breach, one of the first steps you should consider is placing a fraud alert or a credit freeze on your credit report. Both measures are free and can offer a line of defense against fraudulent activity. I recommend the credit freeze as a superior way to control who has access to your credit.

A fraud alert serves as a warning to potential creditors that your personal information may have been compromised. It doesn’t block access to your credit report, but it does require extra verification before any new credit is issued in your name. This is a convenient option as you only need to contact one of the three major credit bureaus (*Equifax, Experian, or TransUnion) to set up the alert, and they will notify the other two. Fraud alerts typically last for one year, though they can be extended to seven years if you are a confirmed victim of identity theft. You do have to prove that you have been the victim of fraud or a data breach to put a fraud alert on your credit.

A credit freeze, on the other hand, offers a stricter level of protection and there are no restrictions on when you can use it. If you freeze your credit, potential creditors cannot access your credit report, making it difficult for identity thieves to open new accounts in your name. Unlike a fraud alert, a credit freeze must be set up individually with each of the three credit bureaus, and it remains in effect until you decide to lift it. You will need to temporarily unfreeze your credit report whenever you plan to apply for new credit or loans. Although it can be inconvenient to keep a credit freeze at the credit bureaus, it is a sure way to know that credit and accounts are not opened in your name without your consent. I keep my credit frozen at all times. I also recommend that you freeze your children’s credit reports, since children are also susceptible to identity theft.

2.) Never Click on a Link, Respond to a Text, or Call a Number Sent to You.

You need to always assume that any thing sent to you by email or text can be fraudulent even if that email or text knows who you are or has your account number. You should call your financial institution using the number on their website (which you should navigate to yourself). Be wary of documents sent to you using services such as Dropbox or Docusign if you are not expecting to receive a document. Criminals are using these channels to send documents which install malware on your computer. They are also trying to trick you into revealing even more detailed information about your accounts. 

Be especially wary about supposed official calls from the IRS or other government agencies. Most government agencies will contact you by mail. If someone does call you and you think it could be legitimate, get their name and department and tell them you will call them back through the agency’s official phone number. Do not take that phone number from the caller but look it up online.

Another scam is when someone calls you to tell you that your loved one is in trouble, and you have to send money immediately or else there are serious ramifications. They are creating urgency and only THEY can resolve the problem. It’s hard to resist an approach like this. Try hard to contact your loved one directly and if possible, try to contact the relevant authority/hospital yourself. If this is something that is happening overseas, contact the US State Department. Do not send money to the person who contacts you because the chances are very high that it’s a scam.

3.) Monitor Your Financial Accounts and Credit Reports Regularly

Monitoring your credit reports and financial accounts is critical to spotting suspicious activity. You can request free credit reports from the three credit bureaus (* Equifax, Experian, and TransUnion) at AnnualCreditReport.com, a site authorized by the federal government. Keeping a close eye on these reports will allow you to catch signs of identity theft early, such as unfamiliar accounts or inquiries. Many banks will let you see your credit report through their website.

Additionally, setting up account alerts with your bank and credit card providers can help you track transactions in real-time. These alerts can notify you immediately of any unauthorized activity, allowing you to take swift action. I get a text message every time something is charged to my credit card. I know immediately if I get a fraudulent charge.

4.) Use Strong, Unique Passwords and Enable Multifactor Authentication

Securing your online accounts with strong, unique passwords is another essential measure. Avoid using the same password for multiple accounts, as this increases your vulnerability if one account is compromised. Consider using a password manager to generate and store complex passwords securely. 

Enabling multifactor authentication (MFA) adds an extra layer of security to your accounts. With MFA, even if someone obtains your password, they will still need to pass an additional authentication step—such as entering a code sent to your phone or using a fingerprint scan—to gain access. There are several methods available for MFA. The best is to use an authentication app such as Google Authenticator or Duo. Receiving a text message or email also works, but if someone has compromised your email or stolen your phone number using SIM Jacking (https://www.howtogeek.com/358352/criminals-can-steal-your-phone-number-heres-how-to-stop-them/ ), then the criminal will be getting your MFA code. Older systems use questions like “What street did you live on in third grade?”. These are particularly insecure because criminals may know this information from your Social Media posts or other methods. Try entering false information for these questions, just make sure to write down or remember the answers you provide.

5.) Update Security Software and Devices

Keeping your devices and software updated is an important way to protect against cyber threats in case you were fooled and opened that vulnerable file or clicked on a link. Operating system and security software updates often include patches for vulnerabilities that hackers exploit. Enabling automatic updates can help ensure your systems remain secure. This is important so don’t neglect acting when you get notified of security updates.

6.) Don’t Give Out your Social Security Number of Birth Date

It is unbelievable the number of service providers who ask for information they don’t need. The truth is that you don’t have to give it to them. Every doctor’s intake form asks for your Social Security Number and I always leave it blank. I have only been asked again one time by the receptionist and I told them that I refuse to provide it. They relented. When I sign up for websites and they ask for my date of birth, I always lie and give a false date. Why does Facebook, Snapchat, or any other social media site need my birthdate? They can wish me a happy birthday on the wrong day. That’s OK with me and then when they have a breach, my birthdate is not out there on the dark web. When you are asked for personal information, always think about whether they really need that information from you.

A Word About Credit Monitoring Services

If a company which had your personal information got breached the one thing they offer you is free credit monitoring services. You can also pay for your own credit monitoring. Personally, I think credit monitoring is a waste of time and money. You can monitor your own credit without those services. These services ask you for your Social Security Number and other personal data to provide those services and that is yet another company that has your information. Freeze your credit instead. It’s far more effective and safer.

In closing…as data breaches become more frequent and sophisticated, it’s important to stay vigilant and take proactive steps to protect yourself from identity theft. By placing fraud alerts or credit freezes, monitoring your financial information, using strong passwords, and staying aware of phishing scams, you can reduce your risk and respond quickly if your data is compromised.

Staying Safe with Financial Advice

When you think about getting advice about your finances, think about who is giving you that advice. You should be getting your advice from a fiduciary, who is required to give you advice in your best interest and must disclose any conflicts of interest. Anyone can call themselves a financial advisor, but a Registered Investment Advisor must be a fiduciary by law. A Certified Financial Planner® has agreed to be a fiduciary and has the training and education to provide financial advice. At Cereus Financial Advisors, which is a Registered Investment Advisor, and all the advisors are CFPs®, you are getting your financial advice from a fiduciary.

The information provided is for educational and informational purposes only, does not constitute investment advice, and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not consider any investor’s particular investment objectives, strategies, tax status or investment horizon. Investing is inherently risky. Information is based on sources we believe are accurate, but we cannot guarantee accuracy. You should consult your attorney or tax advisor. See more disclosures here: Disclosures