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  • Writer's pictureRobbins Farley

10 Tips on Preventing Identity and Financial Fraud

In today’s ever-increasing online world, we are leaving our identity all over the web. From online shopping, banking and bill paying, much of our routine financial transactions are now digital. Though this makes life easier in many ways, it can also be more complicated if not handled with care.

Here are 10 helpful tips to follow to lessen the likelihood of having your identity stolen.

1. Ensure your home and work computers are password protected and have updated malware and anti-virus software that is frequently run.

2. Avoid obvious passwords such as 123456, password and abc123. According to password experts, a six-digit password takes four minutes to hack, while a 10-digit password takes years. If too difficult, a hacker will just move on as there are millions of short and easy passwords ready to crack.

Consider a password manager on your computer or mobile device. Many password managers not only securely store usernames and passwords, it can also help create them.

3. Consider a credit freeze. A credit freeze helps protect your credit score as you must unfreeze access to your credit report with a pin or password prior to a lender being able to access it. This would reduce the likelihood of someone stealing your identity and opening an account without your knowledge.

4. Ensure you don’t have sensitive personal data on social media platforms such as date-of-birth, mother’s maiden name or where you were born. This information could be used to set up a fraudulent account in your name.

5. Ask your insurance professional if identity fraud coverage is available on your homeowners insurance. Though this will not prevent you from having your identity or financial data stolen, it can make your life easier if it is. Coverage does vary by company, so ask for additional details.

Some companies provide compensation for lost wages, reasonable attorney fees, loan re-application fees and other services. The biggest benefit, however, may be that some companies offer support from a consumer fraud specialist that can guide you through the process of reclaiming your identity and repairing your damaged financial history. There is most likely a cost associated with this coverage, but it is typically between $25 and $50 a year.

6. Do not use emailed links to banks, brokerages or online retailers as you may end up on a “fake” website. Instead, go directly to the website yourself.

7. Consider closing old credit cards you rarely use to decrease the probability of it, or its data, being used without your knowledge. You will want to weigh this exposure against a possible decline in your credit score as having older accounts on your report can show you are responsible with credit over time.

8. Avoid purchasing items with your debit card. If you have the option of using your debit card as a credit card, this is the safer option. Doing this provides you with more protection because a debit transaction removes the money from your account immediately and doesn’t offer as much financial protection. The Truth and Lending Act typically caps a credit card holder’s liability at $50 for unauthorized purchases, while a debit card can be upwards of $500 or more if not reported on time (typically two business days).

9. Check your credit report and score three times a year. This is the best way to ensure your finances are reflected accurately. Experian, Equifax and TransUnion all offer a free annual credit report.

10. Shred all discarded financial and personal documents in a crosscut shredder. This includes credit card solicitations.

You would never leave your purse or wallet out in the open for all to see. Unfortunately, with so many financial transactions flying over the web, you may essentially be doing just that. With just a little forethought, you can better protect yourself and your finances and reduce the chances of becoming a victim of identity and financial theft.

By: Colleen Farley of Robbins Farley and April Weismann of HPM Insurance

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