We all have enough to worry about and better things to deal with — the last thing you need is a shadowy hacker opening a new bank account or credit card in your name. Yet identity theft and financial fraud are on the rise. In one year alone during the COVID-19 pandemic, from 2019 to 2020, identity theft cases in the U.S. increased by a whopping 45%, according to the Federal Trade Commission.
Fortunately, it’s easy to reduce your risks dramatically with just a few steps.
Level 1: The Bare Minimum (Seriously, Just Do This)
If you’re prone to using your dog’s name for every password, start here. These steps are quick, effective, and won’t make you feel like you need an IT degree to pull them off.
1. Freeze Your Credit (It’s Free and Takes 10 Minutes)
A credit freeze stops scammers from opening accounts in your name. You’ll have to unfreeze it when you want a new loan, but that’s a small price to pay for peace of mind. Do this at all three major bureaus, using their straightforward instructions:
Freezing your credit is the best way to prevent identity theft, but adding a fraud alert, which you can do at the same time, provides another layer of security. A fraud alert requires lenders to verify your identity before issuing credit in your name. It’s free and lasts for one year.
2. Use a Password Manager (No, Your Brain Doesn’t Count)
You need unique, complex passwords for every site. Unless you have superhuman memory or enjoy resetting passwords every week, get a password manager. It creates and remembers strong passwords for you. 1Password, Dashlane, and Bitwarden are solid choices.
Once you discover how much easier it is to manage all your logins, you’ll likely start telling friends that “they haven’t lived” if they don’t use a password manager themselves. You can also add an emergency contact in case something happens to you and your loved ones need to access your digital accounts.
3. Enable Two-Factor Authentication (2FA)
You’ve probably seen this when logging into your email or bank: after entering your password, you also have to confirm it’s you with a code sent via text or an app. Annoying? Slightly. Effective? Very. Use an authenticator app like Google Authenticator, Duo, or a hardware key like a YubiKey for better security.
4. Monitor Your Financial Accounts & Tax Notices
Sign up for transaction alerts with your bank and credit cards. If someone buys a $3,000 espresso machine in Norway, you’ll know ASAP.
Consider downloading your bank or credit union’s app to your phone or tablet and using that instead of a web login to access your account, since it’s generally more secure.
You’re also entitled to a free credit report from each of the three major credit bureaus once a year. Request them at AnnualCreditReport.com and review for suspicious activity.
This last one is obvious, but easy to skip during a busy week: open your mail when it arrives. One of your financial institutions may be trying to contact you regarding suspicious activity. Review any tax notices right away, since catching issues early can prevent problems.
“Criminals are lazy. They follow the path of least resistance.”
5. Set Up Activity Alerts Beyond Banking
Many online services such as Amazon, PayPal, and mobile phone carriers offer login and transaction alerts. Activating these notifications helps you detect unauthorized activity quickly.
Done all that? Congratulations! You are no longer the low-hanging fruit on the fraudster’s tree, so the odds are already good that they’ll leave you alone.
Level 2: For Those Keenly Aware of Data Risks
Feeling ambitious? These steps give you extra layers of security without requiring you to live off the grid.
6. Opt Out of Pre-Approved Credit Offers
You know those "YOU’RE PRE-APPROVED!" credit card offers in the mail? Identity thieves love them. You can opt out at optoutprescreen.com so scammers have one less way to mess with you.
7. Use a VPN on Public Wi-Fi
Ever checked your bank account while sipping coffee at a café? Hackers love that. A VPN (virtual private network) encrypts your connection, making it harder for bad actors to snoop. NordVPN and ExpressVPN are good options.
8. Switch to a Digital Wallet
Tap-to-pay with Apple Pay or Google Pay is more secure than swiping your card. Digital wallets use tokenization, which means your actual card number isn’t shared with merchants. Fewer opportunities for fraudsters means fewer headaches for you.
9. Shred Personal Documents
Dumpster diving is still a thing for identity thieves. Shred anything with personal info before tossing it, using at least a crosscut shredder.
Better yet, sign up for paperless delivery wherever possible to ensure that no paper documents end up in your mailbox or dumpster.
10. Wipe Electronics Before Disposal
Old phones and computers may still have sensitive data. Before donating, selling, or recycling, do a full factory reset and remove all storage drives.
Level 3: For the Paranoid (or Just Extremely Cautious)
If you want Fort Knox-level security, these steps are for you.
11. Sign Up for an IRS Identity Protection PIN
Tax fraud is a nightmare, but you can block scammers from filing a fake return in your name by getting an Identity Protection PIN from the IRS. Learn more here. If unsure, consult a tax professional for advice.
Also, if “the IRS” calls you demanding payment, hang up—it’s a scam. The IRS doesn’t call, text, or email asking for sensitive info. The same goes for Social Security.
12. Consider Identity Monitoring Services
Not all identity protection services are worth the money, but some can be helpful and worth considering, particularly if being offered to you for free. Just make sure you’re not paying for something you can do yourself.
13. Freeze Your Kid’s Credit
Yes, child identity theft is a thing. Freezing your child’s credit prevents someone from taking out loans in their name. It’s a hassle but worth it.
14. Set Up Other Types of Fraud Alerts
Create a mySocialSecurity Account – Even if you’re not receiving Social Security benefits, setting up an account at SSA.gov prevents criminals from doing it in your name!
Create an account at your state's unemployment agency so you will be immediately notified if anyone commits UI fraud in your name.
Set up a fraud alert for your utilities with The National Consumer Telecom & Utilities Exchange (NCTUE) the credit-reporting agency for, well, utilities and telecom companies.
Many county recorders offer free fraud alert programs to help property owners monitor for potential fraudulent activity on their property.
15. Sign Up for USPS Informed Delivery
This free service lets you preview incoming mail and detect if something important (like financial documents or tax notices) goes missing, which could be a sign of mail theft or fraud.
16. Lock Your Mobile SIM Card with a PIN
SIM-swapping fraud is a growing threat, where hackers take control of your phone number. Contact your carrier to set up a SIM PIN so that no one can transfer your number without your authorization.
Final Thought: Your Future Self Will Thank You
The rise of computers and smartphones has provided unprecedented convenience, but has also opened new avenues for identity theft and financial fraud. Taking a few steps today to lock the front door to your digital life can save you from a world of frustration tomorrow. Why not get started now?