The Federal Trade Commission (FTC) received 2.8 million fraud reports in 2021 from consumers.  2.8 million!  Consumers reported fraud losses of $5.8 billion in 2021, which was an increase of 70% in comparison to 2020. 

Online shopping and imposter scams were the most commonly reported types of fraud. Behind those were scams that involved prizes, sweepstakes, lotteries, internet services, and business and job opportunities. 

With scams and fraud rising, what steps are you taking to protect yourself from becoming a victim of fraud in 2022 and beyond? 

No-Brainer Security Steps

There are easy steps consumers should take to protect sensitive information online.

  • Strong Passwords.  Creating strong passwords for online logins is important as well as creating unique passwords for online accounts. Making a unique password for each account may seem like a pain, but storing passwords in an encrypted software or database is one way to avoid forgetting login information. 
  • Two-factor Authentication.  This is a security process in which consumers provide two different types of information to verify themselves. Typically, the first type of information is a username and password. The second layer of information includes a passcode sent to a different device or a facial scan. Two-factor authentication is a highly recommended extra layer of security and a way to protect online accounts containing personal information. If an online account provides two-factor as an option, take advantage! 
  • One Device.  Select one device (laptop, computer, cellphone, etc.) to access online accounts containing personal information. The device used for accessing this information should also contain a password or, even better, two-factor authentication to access the device in the first place. 

Along with the above, consumers should be cautious about the information shared online. While some information shared on social media and other websites might be harmless, fraudsters can use this information to guess passwords and security questions. 

The Case for Credit Freezes

According to the FTC, a credit freeze is the best way consumers can protect against an identity thief opening new accounts in their name. A credit freeze can be particularly helpful if you have experienced identity theft or had your information exposed in a data breach. Implementing a credit freeze is done online or by calling each of the three main credit bureaus (Equifax, Experian, and TransUnion). 

A credit freeze prevents creditors from accessing your credit report and does not affect your credit score. Typically, you cannot receive new credit (credit cards, mortgages, car loans, etc.) if a creditor cannot access your credit report. Thus, placing a freeze blocks fraudsters who might be trying to open an account in your name. This also means that if you are applying for new credit, you need to temporarily lift the freeze to be approved for a new loan or line of credit. You do not need to lift a credit freeze when applying for a job, renting an apartment, or purchasing insurance. 

In addition to placing a credit freeze, regularly monitoring your credit report is not necessarily a way to prevent fraud but a way to catch an identity thief early on before too much damage is done. Consumers are entitled to a free credit report annually from each of the three main credit bureaus. Visit www.annualcreditreport.com to order your reports or call 1-877-322-8228. Additionally, Equifax is offering those in the U.S. six free credit reports per year through 2026, which is in addition to the one free Equifax report you can get at www.annualcreditreport.com

Going the Extra Mile with Social Security and the IRS

Do you want to go the extra mile to protect your identity? Consider establishing your “My Social Security” account online. The Social Security Administration encourages consumers to create “My Social Security” online accounts to take away the risk of an identity thief creating one in your name instead. Since many consumers do not create their accounts until benefit commencement begins, there is an opportunity for this type of fraud to go undetected for a long period. Visit www.ssa.gov to establish your account. 

In addition to establishing an online Social Security account, the IRS is now offering an extra layer of protection for all taxpayers in an Identity Protection Pin (IP PIN). The PIN prevents others from filing a tax return using your Social Security number. The IP PIN is a six-digit code known only to the taxpayer and the IRS and helps prevent thieves from filing fraudulent tax returns. For more information on IP PINs, visit www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin

Summary

The reality is identity theft and online scams are becoming more prevalent day by day. Consumers need to remain vigilant of the personal information shared and stored via online accounts. Taking preventative steps to secure sensitive data will only improve your chances of not becoming a victim of fraud. Act today! 

Abby VanDerHeyden, CFPis a Wealth Advisor with Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website at www.bedelfinancial.com or email Abby at AVanDerHeyden@bedelfinancial.com.

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