What's your favorite pizza topping?
That's not an idle question when it comes to protecting your identity. In fact, it's one of many security questions now being used by banks to verify your online banking transactions.
Identity theft is a growing problem, with more than 217 million people affected by data breaches since 2005, according to the nonprofit PrivacyRights.org.
Most of these cases will go unsolved and unprosecuted. Financial institutions simply pay for the losses (passing along the costs), or put the blame on the consumer.
That makes it all the more important that you know the many forms of identity theft, along with what will -- and won't -- protect you. If you think it's only about credit cards, you're probably vulnerable.
A Credit "Freeze" Isn't the Answer
There's widespread advertising for services that promise to put a "freeze" on your credit report, but those services really can't protect you from the most expensive types of identity theft. In fact, consumers are paying big monthly fees for something they could easily do themselves for free.
A temporary credit freeze keeps anyone from opening new credit in your name. You can do that with a click, by going to AnnualCreditReport.com
, which connects you to each of the three major credit bureaus to order your free credit report (safely authenticated), and at the same time request a 90-day credit freeze if you want one.
But protecting against someone opening new credit in your name doesn't give you any protection against a number of identity theft schemes. According to the Federal Trade Commission, credit freezes take care of only about 30% of the identity theft problems.
Identity Theft Dangers
Here are a few identity theft dangers that a credit freeze won't protect against:
Unauthorized use of an existing credit card. If you report fraud promptly, Visa or MasterCard(MA) issuers will remove the charges and it won't cost you a penny. (There are exceptions to this policy for business cards, and for cards issued outside the U.S.)
Unauthorized use of your debit card for purchases or to withdraw cash. A debit card simply doesn't have the same protections as a credit card. If someone has your debit card and PIN, and uses it to withdraw cash, you'll be fighting it out with your bank to prove that it was not really you who withdrew the money. Fraudulent purchases made with a Visa debit card are not protected -- unless the transaction happens to be transmitted over the Visa network, which is used by only 60% of merchants, and which is not apparent to the consumer when you punch in your PIN. Remember, your debit card gains access to not only the balance in your checking account, but to any line of credit you may have, as well.
Unauthorized use of your Social Security number. Establishing a credit freeze doesn't protect you from unauthorized use of your Social Security number, if the user doesn't open any new credit. Illegal aliens often use existing Social Security numbers, and employers who treat them as legitimate workers will make "contributions" on their behalf to your Social Security record. Check each year to make sure that reported earnings aren't more than you earned. An even worse-case scenario has involved unauthorized use of your Social Security number to refinance a house, rent an apartment in your name, etc. You can get your Social Security earnings statement securely online.
"Phishing" online scams. Amazingly, people still fall for scam emails pretending to be from your bank, brokerage firm or PayPal -- asking you to click on a link for a message of urgent importance from your financial institution. These authentic-looking messages trick thousands of people each month into "logging in" to their accounts at a fake site, thus exposing their account numbers and passwords to the thieves. Never click on a link! Instead, go directly to your bank's Web site to log in and receive any messages posted there.
Pizza and Protection!