It’s well established that average Americans find it difficult to save money. Come to think of it, there’s good reason for this. In a stagnant wage environment, they face high and ever increasing costs from legitimate sources, everything from supermarkets, gas stations and drug stores to car repair shops, banks, clinics, the folks who collect college tuition, room and board, and the taxing bodies of local, state and federal governments.

When they’re done paying through the nose for all the expenses of daily living, and counting whatever may be left for enjoyment, consumers must fend offscam artists looking for an opportunity to separate targets from hard-earned savings. In short, consumers fall victim to what in many cases is figurative highway robbery from legal enterprises, then must gird their loins to protect against real robbery from illegal entities.

Anything in the news is fertile ground for construction of a scam or fraud. Keep that in mind as we move toward January 1, 2014, the day the Affordable Care Act, better known as healthcare reform, goes into effect. The closer we come to that date, the more likely you’ll see fraudsters using confusion to line their pockets with greenbacks.

I recently wrote a series of articles about healthcare reform, and interviewed a number of high-ranking government officials about the provisions of reform and what it will mean to people in various neighborhoods in my hometown of Chicago. I can tell you there is great uncertainty among the people best-versed in healthcare reform about its manifestation in 2014 and beyond, and how it will be instituted. If people actually tasked with helping implement reform are confused, you can imagine how clueless the rest of us will likely be.

That confusion should provide just the right Petri dish for the incubation of scams and frauds that will grow, blossom, and multiply as they leave people far and wide sick at heart.

The end goal of many of these nefarious acts is medical identity theft. Regular identity theft is the theft of personal information to enable commission of crimes. Medical identity theft is the theft of medical identification, such as insurance cards or Medicare numbers, to commit acts of healthcare fraud. That identification is then used to defraud insurance firms, Medicare, or Medicaid. Money that should be available to pay legitimate claims is instead being raked in to swell the coffers of the perpetrators of medical identity theft.

While much of the concern is about frauds committed against companies or the government, you can also face very real harm from medical identity theft. The obvious concern is that we all pay higher premiums when people defraud insurance companies, and that it’s essentially our tax dollars at risk when Medicare or Medicaid fraud occurs.

But medical identity theft can result in you not getting the healthcare you need if someone uses your identity to gain health care services in your place. It can also mess with your medical records, which can threaten your well-being if inaccurate medical records result in you not being able to access the right services, or being denied care.

What form does medical identity theft take? Let us count the ways. It can be done overtly, such as by stealing your purse or wallet. But the more insidious are the frauds that look authentic and are designed to tempt average folks with too-good-to-miss offers.

In one of the most diabolical, fraudsters use the premise of healthcare reform to induce potential victims to accept what the swindlers claim are free services. The claim is that the free services, whether they be free blood pressure tests, free use of equipment, or free consultations, are suddenly available to them because of the passage of reform.

It’s simply a ruse to get the victim to divulge his or her insurance or Medicare ID numbers, which can then be used to bill for services never rendered.

Another scheme involves flim-flam artists masquerading as government officials or insurance reps to learn victims’ medical ID numbers. In still another, fraudsters claim to be conducting important health surveys that require participants to provide identification.

Once state-operated health insurance exchanges are up and running after January 1, 2014, look for con artists to emerge from the woodwork with claims their insurance offers are from the exchanges, when in fact they have nothing to do with the exchanges. They’ll count on initial confusion about health reform’s provisions to peddle unauthorized insurance plans.

What can you do? Guard your insurance card as vigilantly as you would your credit cards, give out your medical identification numbers only to legitimate providers, don’t provide medical ID numbers in exchange for offers of free services, and shred your medical documents before disposing of them.

If your insurance card is stolen, contact your insurance company. If your Medicare card is swiped, call Medicare at 800-MEDICARE. Call the Federal Trade Commission’s Identity Theft Hotline at 877-ID-THEFT. Also call the Health and Human Services Office of Inspector General’s Fraud Hotline to file a fraud report at 800-HHS-TIPS.

With a bit of healthy vigilance, we can reduce medical ID theft’s ill-gotten gains.

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How safe are your passwords? If you bank online, the only thing standing between you and a financial disaster is your password (and perhaps your username). And yet many people do an astonishingly bad job of selecting secure passwords.

A big part of the problem is that secure passwords are hard to remember. When combined with the fact that most of us have dozens of online accounts (if not more), it’s tempting to just an easy to remember phrase and use that. Over and over. But that’s exactly the wrong approach.

So what makes for a secure password? For starters, it should be relatively long. All else being equal, longer passwords are harder to crack. It should also be complex, using as many different character types as possible. And it should be a random as possible, avoiding common words, names, etc.

Oh, and you should also use a different password at every site.

In general terms, you should shoot for 12-14 characters, assuming the system will allow it. Some systems don’t allow long passwords like this, which is unfortunate, so you’ll just have to do the best you can. But, all else being equal, longer passwords are harder to crack.

As far as character selection goes, the more character types you include, the more complex your password can be, and the harder it will be to crack. If you stick to numbers, you only have ten characters to choose from. Add in letters and you have 26 (case-insensitive) or 52 (case-sensitive) more options. Throw in special characters (punctuation marks) and you add yet another dimension.

You will, of course, have to stick to what is allowed, but most modern systems now allow numbers, letters, and special characters. Of course, some seemingly security-conscious websites (*cough* TreasuryDirect *cough*) use case-insensitive passwords when case-sensitivity would offer a good bit more security. But, oh well… There’s only so much you can do.

Randomness. Ah yes, randomness. In general terms, you should avoid using dictionary words, names, birthdates, etc. That being said, you can use dictionary words as long as you string them together in a random combination. But you’re probably better off using a long, completely random, and complex password. So long as you can remember it, of course.

And there’s the rub. It’s hard to remember a long, complex password — much less remember a different one for every site. That’s why I recommend using an encrypted password keeper such as 1Password, LastPass, or KeePass.

I personally use 1Password — no affiliation, I just love it. I also use the iPhone app so I have my passwords with me (but secure) at all times. Yes, you still have to remember a password, but just one.

And finally… Why should you use a different password at every site? Simple. Because if one account gets compromised, you don’t want people to be able to hit your other accounts.

Consider the case of Gawker Media. Gawker owns popular websites like Gizmodo and Lifehacker, and their password database was compromised about a year ago. And in that one event, tons of passwords (and their associated usernames) were dumped into public view.

Imagine if you had been using the same username and password for Gawker Media sites as you use for your online bank, credit card account, etc. You’d be facing a potential disaster.

Well, guess what? It’s not that uncommon for sites to get hacked and for username/password databases to get stolen and cracked. If that happens, your account may be compromised, but as long as you’re using different login credentials at different sites, the damage will be limited.

As an interesting aside, an analysis of the Gawker password database revealed an amazing lack of creativity, with shockingly frequent usage of such cryptographic masterpieces as 123456, password, 12345678, qwerty, abc123, 111111, monkey, 12345, letmein, and so on.

Note: To be completely honest, I’ve been known to use the same (relatively) easy to remember password at a number of non-critical sites around the web. But I never use this password (or the associated username) for any “mission critical” accounts.

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While paying my bills recently online through my bank, I had a sudden flash of concern. How safe was my transaction? Was I at risk of identity theft or, even worse, the pilfering of my accounts?

Although experts say online banking is safer than the traditional method of using paper statements, it turns out that my worry is not completely unfounded.

Although there are currently no reliable studies showing how much money is lost through online banking alone, there are a number of reports that have put this problem at the forefront.

Incredibly, about $3.2 billion was lost to phishing attacks in 2007, which affected 3.6 million people that year, according to a survey by Gartner, a technology research firm. Reports indicate that this is a growing problem.

The Sinowal Trojan, a virus that injects legitimate-looking pages on your browser, then steals your login credentials, compromised 300,000 online bank accounts and 250,000 credit and debit card accounts over three years, according to a study published in October by California’s RSA FraudAction Research Lab.

With the use of online banking on the rise, and the service heavily promoted by most financial institutions, this issue most likely will become even more widespread.

So how can those of us who use online banking safeguard ourselves?

Although there is no silver bullet, there are ways to bank smart online that can help minimize your risk of fraud.

Protecting your online banking info

The first rule of thumb is to confirm that the online banking site is legitimate. An easy way to do this is to log onto the site directly, not through a third party or unsolicited email. Otherwise, it’s easy to be duped by copycat websites that have been designed to capture your information.

When deciding on passwords and PINs, the more complex, the better. Never use the obvious, such as names or birth dates. The most secure passwords use a combination of letters and numbers (and special characters, if allowed). Change your passwords and PINs often, and vary your credentials from account to account.

Also, keep passwords and account information in a secure place, and don’t share them under any circumstances. This includes providing this information during unsolicited phone calls or in emails.

You should also familiarize yourself with your bank’s privacy policy, which will detail what information the bank has about you and what it shares with other companies. And be sure to confirm that your deposits are federally insured by the FDIC. The ‘About Us’ section on most bank websites will typically provide this information.

It’s best if your information is encrypted when being sent between your computer and your online bank (and back). Look for the lock or key icon in your web browser to be sure that your data is secure.

Don’t use a public computer, such as those located in hotels or cybercafés, to access your accounts, and be wary of using public or unsecured wifi networks. Otherwise, it will be relatively easy for fraudsters to steal your data.

Finally, any computer used for banking should have a virus protection program and firewall that are updated regularly, and be sure to perform virus scans daily. Warning signs that your computer has been compromised include slow or sluggish response times, frozen screens, and/or an inordinate number of unsolicited pop-ups.

Closing thoughts

Given that it’s nearly impossible to completely secure a computer, the more safeguards that you implement, the better off you will be.

By being proactive, keeping a close eye on account balances and transactions, and instituting safer online banking procedures, you will minimize your risk of theft.

It’s important never to let your guard down, especially when banking online.

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There’s a special and fiery place in hell for people who would try to rip off the life savings of retirees and senior citizens. And yet we know they exist, based on countless reports of frauds perpetrated against older Americans.

These snakes (and that’s unfair to the real reptiles) presumably wake up each morning, and rather than commuting to work, ask themselves this question.

“Let’s see. How can I steal from seniors the money they’ve accumulated over a lifetime? If I go about it the right way, I can take them for all they’re worth, leaving them with no savings, possibly no home and – because they’re beyond their earning years – no prospects of ever regaining their loss.” They then gaze into the mirror, give themselves a wink and proceed with their day’s “work.”

You may or may not be close to older family and acquaintances. But regardless of your relationship with them, wouldn’t you relish thwarting the insidious plans of the cold-blooded vermin who would steal from them? If you’ve got a heart, you would.

That begins by making sure the retirees in your life know the problem exists, how it can play out and what they can do to avoid ever being taken.

According to Sally Hurme, senior project manager at Washington, D.C.-based AARP, you merely need to follow the money to understand why seniors are targeted.

Many older folks have hefty nest eggs gathered across the decades to sustain them through the golden years. Unlike Americans of later generations, these people spent part or all of their formative years watching the Depression ravage their families and communities, and were careful about not spending every last dime. Their savings, in many cases enormously swelled through years of compounding, represent prime targets for fraudsters.

Those savings might not be so vulnerable if seniors were especially savvy about money. But they’re collectively hamstrung by the same lack of financial literacy that leaves every U.S. generation on the treadmill. Y’see, protecting and growing our finances has never been part of lesson plans at our schools. (It’s only been with the dawning of the Internet that Americans have been given ready access to information on such matters as best credit cards, best savings accounts, and how to save on life insurance.)

Even sophisticated, skeptical older adults can be fooled by scams, Hurme says, stressing “how good, how deceptive, how clever the fraudsters are. There are a lot of savvy oldsters who almost get taken in by an email from somewhere that looks like it could be credible. We want people to check it out, get a second opinion, and independently verify something’s credible.”

Hurme urges older folks be advised to avoid these schemes:

The phone call or email about a younger relative in trouble

In this setup, the nephew or granddaughter has lost a passport, or been a theft victim, and need money wired to them. In almost all cases, these are total fabrications. Scams have grown so insidious that fraudsters research their pitches on Facebook, searching for family info to make them look credible. Ensure older people know enough to check with stateside family members who can discredit the hoax.

And, as Hurme says, “If they want you to wire money, it’s a scam.”

The get rich quick scam

Anyone conversant with the name “Madoff” should be leery of this one. But if you’re on a fixed income, watching costs rise around you all the time, the temptation to score a grand windfall can be tempting. That’s why older adults are the targets of these ruses. These are usually nothing more than variations of the age-old Ponzi scheme, where money from new investors pays off earlier investors, with the perpetrator pocketing the profits until he or she can vanish and resettle somewhere in South America.

Because conservatism should be part of an older person’s money management strategy, that may mean parking some cash in a savings account. Fortunately, it’s easy nowadays to find out who’s paying the highest interest on online savings accounts or offering the best rates on CDs.

Health care reform fraud

Thought you’d heard of all the swindles aimed at older folks? Be assured the fertile minds of the scam-meisters always are dreaming up new ones, some linked to health care reform. If older loved ones are hearing that they must furnish Social Security numbers to obtain a new Medicare card, Hurme assures us that these are simply crooked tricks aimed at medical identity theft, or plain old vanilla identity theft.

Check out the websites of AARP, state attorney general’s offices and fraud prevention organizations for more tips. Do your part to safeguard older folks’ life savings. Who knows? The money you save might be your own inheritance.

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Congratulations! You’ve just ordered a copy of your credit report and are well on your way to improving your score. Do you know what red flags to look on your report to keep your score safe? Today, I’ll review five things that shouldn’t escape your attention, and why it’s important to pursue a correction as soon as possible.

1. Accounts you don’t recognize

Most people are aware of how many credit accounts they have open. If you see a credit account that you don’t recall opening, however, it is something to take very seriously. Whether it’s a new credit card, a store charge account, or an inquiry for an apartment lease, you will need to take action right away.

2. Numbers that don’t add up

Credit limits can change, giving account owners a surprise if they aren’t familiar with new account terms or a recent adjustment in their borrowing power. If a loan or credit account limit seems way off, however, it’s necessary to investigate further. I also recommend that you keep a careful eye on each month’s statement so that you can quickly recall an estimated balance when you need to.

3. Employment inconsistencies

Social Security fraud and identity theft are fairly common occurrences, and a diligent review of your credit report is one of the best ways to ensure that you are not a victim. Carefully scan the employment history detailed on your report each and every time you request it. If a company or employer that you haven’t worked for appears, it’s time to make some inquiries into the matter.

4. Duplicate accounts

Once in a while, an error may be made that may cause a legitimate credit account to be listed more than one time on your report. These are fairly easy to catch, as they will appear identical. The problem is that they will contribute to the total debt owed and number of active accounts. Fixing these errors is straightforward, though it may take some time.

5. Ancient history

Negative marks on your credit history shouldn’t hang around forever. In fact, most negative information should fall off your report after seven years, giving you a fresh start to work with. If you see late payments, delinquent accounts, or collection activity after the time they should have been removed, you should follow up with the reporting agency.

Keeping your report accurate

These five errors aren’t the only things that can go wrong with your credit history. If you see anything else that concerns you, like inaccuracies, or confusing information, it’s in your best interest to dig a bit further for additional information.

Once you determine that a mistake has been made, the credit bureau will have a process in place to dispute and resolve errors. While it will take some time, the sooner you take action, the sooner you can clean up the mess.

About the author: Linsey Knerl is a staff writer for CreditScore.net. She’s written extensively about personal finance topics, while raising five home-schooled children on a farm. You can follow Linsey on Twitter @lknerl.

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Last week, I wrote about protecting your passwords and other sensitive financial data, like account numbers. Today I want to go a step further and talk about protecting electronic documents – tax returns, Quicken files, bank or brokerage statements, etc. – that you may be storing on your computer.

Going paperless

I’ve been gradually transitioning over to a paperless financial system. A big part of this transition has involved scanning in various financial documents for future reference. This has worked well, and has greatly reduced the stacks of paper that used to accumulate around the house.

But what about securing and backing up the resulting files? What would if my hard drive crashed? Or worse, if someone stole my computer? Clearly, I need to take additional steps to protect my data.

As far as backups go, I’m currently using an online backup service known as Backblaze. That’s been great for creating a comprehensive backup of everything on my hard drive, and serves as a good baseline of protection – but it doesn’t secure my data locally.

Note: While Evernote seems like it would be an ideal solution for storing and accessing your data, they don’t offer server-side encryption of your file attachments. There’s also not an option for encrypting your local copies once you put them in Evernote.

Securing your files

For security, I’ve recently discovered TrueCrypt, which allows you to create a password-protected, “virtual encrypted disk” where you can stash stuff that you don’t want anyone to access.

And just to round things out…

Try storing your TrueCrypt archive in your DropBox. In case you missed it the last time I mentioned it, DropBox is an online file storage and synchronization service that allows you to share an entire folder (and its contents) across multiple computers, your smartphone, etc.

By placing your TrueCrypt archive in your DropBox folder, you’re making it accessible from any computer you’ve hooked up to your account while still keeping your data secure. So, for example, my wife can immediately access an files that I put in there from her computer. Very slick.

Oh, and a quick tip… If your archives take too long to synchronize, try splitting them up into multiple, smaller archives. For example, one for taxes, one for financial statements, and so on. By doing this, there will be less data to transfer when you make a change.

Hat tip to Mike Piper for getting my wheels turning by bringing this up on Twitter, and then testing it out on his own setup.

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I recently ran across an interesting new story about Minnesota Vikings wide receiver Bernard Berrian, who lost his Blackberry while in Las Vegas last fall. Apparently the couple who found it were trying to extort money out of him or they would sell the phone to the “highest bidder.”

According to the report, Berrian stores “financial and account information and his Social Security number on the device” as well as access codes to his home, photos of his daughter, and “other personal photographs and video [of himself] and third parties not intended for public distribution.

While it’s quite possible that he was most concerned about those “other” photos and videos getting out into the public eye, let’s just focus on the financial information. I can only assume that he was storing this information in the clear because, if it was properly secured, there would have be no reason for concern.

At the risk of stating the obvious, you should never store this sort of information in an easily accessible format. Whether it’s on your computer or (especially) on a smartphone, there’s a reasonable chance that your data could fall into the wrong hands due to hacking, loss, or theft.

Protecting my data

While I store all kinds of sensitive info (account #s, login credentials, etc.) on both my laptop and my iPhone, I protect it with an encryption program called 1password, which automatically syncs across platforms using DropBox, which is an onlne storage and synchronization service.

If I make a change in 1password on my computer, it automatically propagates to my iPhone, and vice versa. Either way, I’m able to manage and access this information whenever and wherever I need it without and security concerns.

What about you?

Do you have any tips for ensuring that your data is both easily accessible and secure?

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Here is a quick and easy guide to point you in the right direction.

Contact your card issuer quickly

Immediately call the credit card issuer to report your card stolen. If you don’t have the number handy, go online or grab an old credit card statement to get the credit card company’s phone number.

Be ready with the following information:

• Verification of identity (name, address, etc.)
• Account number
• Best estimate as to when your card was stolen
• Date of the last purchase you made with your card

Since time is of the essence, don’t delay in reporting it. Many companies have a 24-hour number you can call so you don’t have an excuse not to call as soon as you find out.

• MasterCard: (800) MASTERCARD / (800) 627-8372
• Visa: (800) VISA 911 / (800) 847-2911
• Discover: (800) DISCOVER / (800) 347-2683
• American Express: (800) 992-3404

MasterCard, for example, can also provide assistance if you need money while you’re waiting for a new card to process. This can come in handy if you’re on the road when your wallet gets stolen.

If you need to make purchases or arrange for a cash advance, with your card issuer’s approval, you can receive a temporary card the next day in the United States, and within two business days most everywhere else.

Report the crime

Make sure you call the police to file a report. This is an important step, as it affords you additional protection if your stolen card turns into full-blown identity theft.

Having a police report can also help you down the line if you have to untangle any problems with your credit report that might arise down the line. Speaking of which… You might also want to consider ordering a credit freeze to prevent any shenanigans.

Here are the phone numbers for the three major credit bureaus:

• Equifax: (800) 685-1111
• Experian: (888) 397-3742
• TransUnion: (800) 888-4213

As reminder, please keep all of your documents and file away notes from any conversations as well as all related paperwork and information you receive about the incident. If someone needs a copy, keep the original for yourself.

Protection against unauthorized charges

The Fair Credit Billing Act protects you if your credit card is stolen. Simply report it stolen and, even if unauthorized purchases have already taken place, you’ll only be liable for a maximum of $50. If you called before any unauthorized purchases are made, then you won’t be liable for any charges.

Be sure to double check your credit card benefits, as some companies offer $0 fraud liability. The best time to check is before you need it. If you can’t find the relevant paperwork, give you card issuer a call.

If you run into any problems, don’t hesitate to contact the FTC:

FTC Consumer Response Center
600 Pennsylvania Avenue, NW
Washington, DC 20580
(877) FTC-HELP / (800) 382-4357

Preventing the problem before it happens

As they say, an ounce of prevention is worth a pound of cure…

• Don’t carry cards that you don’t need. If you have several credit cards, keep only one or two in your wallet. Put the rest in a secure location.
• Only share your credit card information with a trusted source. If you’re purchasing online, be very careful with the sites you use.
• Double check your statements for unexpected charges. If you don’t keep tabs of where your card is at all times, at least check your statements. If you notive an unauthorized charge, you can follow up immediately.

Acting quickly and having good records are the key to minimizing the headaches associated with a stolen credit card. Nothing can guarantee that your card won’t get lost or stolen, but if you’re diligent you minimize the risks.

Have you ever had your credit card (or number) stolen? If so, how did you respond? And how did your credit card company handle the situation?

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I recently visited a major U.S. city known to attract tourists. The following Sunday, my phone rang with an automated message from my credit card’s security department about potential fraudulent charges. They wanted me to call back immediately to confirm or deny the charges.

Still half asleep, I hung up the phone and decided to worry about it later. Half an hour later, the phone rang again, and although I let it roll over to voice mail, I checked the message to find that this time a real person had called about my credit card spending.

Hmmm, I thought… Maybe I should call them back.

So I did. After confirming my identity, they asked me to confirm some charges. The first charges mentioned were from the city I’d visited, but the charges were made that very day, while I was sleeping peacefully in law-abiding Cleveland, Ohio.

I denied those charges immediately, saying I’d been home for a week and couldn’t have made those purchases. Then they asked me an unlikely question:

“Have you been to Brazil recently?”

“Unfortunately, no. That’s still on the bucket list.”

They weren’t in the mood for my banter. “Your card was used at a restaurant in Brazil, and for some sort of mobile phone service. You’re saying these are not your charges?”

“No, I’ve never been to Brazil.”

“Do you have your card with you?”

Whoa! I never even thought to look! Had my card been stolen, or did I forget it at a restaurant or something? I’m rather absent-minded; it would be like me to do this.

Nope. I still had it with me.

“That’s strange,” she said. “Usually you wouldn’t see these types of charges if the person didn’t have the card in hand. I’m going to shut down this card and we’ll send you a new one. Can I have your address, please?”

This is where I got paranoid. The woman on the phone had one of those nice, lilting voices you might imagine hearing while vacationing in the Caribbean. Exactly the type of voice a scammer would use to get my address and use my credit card! So I turned the tables on her:

“Why do you need me to tell you my address? You should already know it.”

“Sir, I need to confirm your address to send out the new card.”

“But, why? You already know my address. You send me a bill every month. How do I know you’re really the credit card company and not a thief trying to get my information in order to use my card?”

We went around like this for a few minutes, until she finally said, “Sir, you can either give me your address, or you can hang up and call the number on the back of your card to make sure you are really talking to someone from the company.”

Oh, she was crafty, this one. Using reverse psychology to try to get my address. Making me think she didn’t care whether I gave the address or not, to convince me that she really was legit and it didn’t matter whether I gave up the info. I wasn’t fooled for a second:

“Great. I think I’ll hang up and call the number on my card.”

And that’s exactly what I did.

Feeling pretty smug that I had thwarted international credit card thieves, I called the number on the back of my card… just to make sure.

Turns out it was true. Someone really had stolen my credit card number and attempted to use it in multiple locales, including Brazil. The woman with the lilting Caribbean voice was really on my side the whole time. Although one thing never was explained…

When I called the second time, they never asked for my address to send the card out; they just said I’d get it in the mail in a week or two. Which I did. And I never had to pay a penny for any of the fraudulent charges, even though the card company had the right to charge me up to $50.

(Most credit card contracts say this, but you will rarely if ever be charged anything for fraudulent charges, regardless of the card company you are with.)

Are there lessons to be learned here? I came away with these:

1. Even the closely-watched credit card can be “stolen.” Every time your card is handed over in a restaurant or store, there is an opportunity for the person holding your card to copy the necessary information to use that card fraudulently. There is little you can do about this, but…
2. Your credit card company is on your side. They are as interested as you are in stopping thieves before they make new charges — actually, they are much more interested, because the card companies are the ones that ultimately pay for fraud.
3. Paranoia is good. Yes, the calls I received really were from my card company, and my paranoia was misplaced… This time. But considering my card number was stolen while I still had the card in my possession, it was the natural and correct attitude to take in making sure the situation was as it originally appeared. If I got tricked into willingly giving up my personal information to scammers, it may have been more difficult to make the case that my card was used fraudulently.

The bottom line is that my credit card numbers were stolen and I didn’t pay a dime. For all the stories you hear or read about identity theft, there is a strong anti-theft network behind the scenes working to thwart the bad guys. This anti-theft effort is what makes the credit system work as smoothly as it does, despite the occasional scary phone call from your card company on a sleepy Sunday morning.

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» The Riskiest States for Identity Theft
» Identity Theft on the Rise
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» One Year Ago This Week (July 9th – July 15th)
» Another Identity Theft Threat
» Credit Fraud and Identity Theft Contact Info

I actually first heard about this site last May when they first launched, but promptly forgot about it. More recently, a reader left a comment about it when I wrote about identity theft rates being on the rise. Intrigued, I decided to check it out.

For starters, I did a bit of background investigation to confirm that it’s not a scam. It’s not — in fact, a variety of consumer advocates, including Clark Howard, have sung the praises of MyIDScore. With that info in hand, I hopped on over to the site to check out my ID score.

After clicking the “Check My Score” link near the top, you’ll be asked for your name, address, phone number, and (optionally) your social security number. You’ll then be asked some questions drawn from your credit report to confirm your identity. From there, you’ll get your score.

The possible scores range from 1-999, with higher scores indicating a higher risk of identity theft. As you can see from the image below, mine is 284, which is considered to be low.

There is a low likelihood that information pertaining to you has or will soon be used to commit fraud and your good name is probably not in danger. Although you currently show no signs of being a victim of identity fraud, no system can detect 100% of possible fraudulent activity. It is important to remain vigilant about protecting and safeguarding your personal information.

They then go on to some precautionary measures that you might want to take, including checking your credit report at annualcreditreport.com (the only truly free credit report) and reviewing info from the following public service websites:

• Identity Theft Resource Center
• The California Privacy Office
• FTC Identity Theft Site
• Identity Theft Assistance Center
• Privacy Rights Clearinghouse

At the very end, they also make a pitch for a handful of commercial services that make use of ID Analytics products, but it’s not over the top, and it’s easy enough to just ignore this info if you’re not interested.

What’s your score?

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» One Year Ago This Week (August 20th – August 26th)
» The Riskiest States for Identity Theft
» Another Identity Theft Threat
» Social Networking and Identity Theft
» One Year Ago This Week (July 30th – August 5th)

On the one hand, online payment services arguably add a layer of protection between your payment information and the vendor on the other end of the transaction. On the other hand, they don’t offer the same sort of fraud protection that is available with credit and debit cards.

Thus, if your account is compromised, someone could drain the linked bank account and you could have a hard time recovering your funds. The simple solution to this problem is to link your PayPal (or whatever) account to an intermediary bank account with no overdraft protection and a minimal balance.

While this might sound like a headache, it’s actually very easy to achieve if you bank with ING Direct. Simply create up a subaccount and link it to your PayPal account. You can move money within the bank instantaneously, so you can fund this account on an as-needed basis.

At the same time, if your PayPal account is compromised, the fraudsters are limited in what they can access.

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Well, according to a recent article in the NY Times, if you do venture online, credit cards are the safest payment medium. The reason for this is that the Truth in Lending Act caps a consumer’s maximum liability for unauthorized credit card use at $50. Better yet, when a card is used online, the maximum liability is $0.

Debit cards ranked second. The reason for this is that debit cards are governed by a different law – the Electronic Funds Transfer Act. Under this law, if you report fraudulent transactions within two days of “discovering the problem” (pretty ambiguous), your liability is capped at $50 (or $0 for online transactions).

If, however, you miss the two day window and wind up reporting the problem within the 60 day window, your liability is capped at $500 offline and $0 online. Beyond 60 days, all bets are off and your liability could be unlimited. If you’re concerned, your best bet is to check with your bank to see what their policies stipulate.

If the fraudulent activity results in overdrafts, you might also be facing penalty fees from your bank even if you’re held responsible for the actual losses. Moreover, debit card fraud means that your money (not just a portion of your credit line) has gone missing until you get things straightened out.

Coming in third place are online payment services such as PayPal, Google Checkout, or BillMeLater. These services add a layer of isolation between your payment information and the vendor, and can actually make fraud less likely. However, if your account is used fraudulently, it can be much harder to get your money back than with a credit card.

In other words… Choose your poison.

In many cases, banks have stepped up and are offering debit card protections that rival those of credit cards, but they’re not required to do so. Online payment services can be a good option as long as you jealously protect your login credentials. If your account is compromised, however, you could be in for a huge headache.

Source: NY Times

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Apparently it takes young people an average of 132 days to to detect credit and bank fraud as compared to 49 days in older age groups. Thus, once their identity has been compromised, fraudsters have over four months to take advantage of the information before young victims figure out what’s going on.

Overall, 14% of those surveyed reported having fallen victim to identity theft, a 12% increase over the past year. Not surprisingly, criminals are increasingly relying on high tech methods of capturing personal information, including phishing, SMiShing, and keylogging.

Another cautionary note is that small business owners fall victim to identity theft 1.5 times as often as other adults, apparently because they often use personal accounts when making business transactions, and also because they make more transactions than “typical” adults.

Interestingly, though identity thieves steal an average of $4,841 per victim, the ultimate cost to the victim averages $373 (median = $0) because banks usually cover most, if not all, of the losses. Identity theft can be a big time suck, though, as the average victim spends 21 hours filing claims and getting their money back.

Fortunately, I’ve never had to personally deal with identity theft. If you have, I invite you to share you experiences in the comments.

Source: Javelin Strategy via WashingtonPost.com

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» Identity Theft Tops FTC Complaints
» The Riskiest States for Identity Theft
» One Year Ago This Week (August 20th – August 26th)
» Another Identity Theft Threat
» One Year Ago This Week (July 30th – August 5th)
» One Year Ago This Week (July 9th – July 15th)

We continue to rely on methods of identity verification used by traditional lenders, but in an era of online identity theft, Lending Club is continually redefining industry best practices.

We cannot disclose our exact methodology, practices, or sources of information, as this could simply empower the fraudsters we are trying to disarm. But what we can say is that we use information gathered from social networks to help give us more confidence that a member is in fact who they say they are.

While it makes sense for them not to disclose detail of their approach, it would be fascinating (at least to me) to know how they’re implementing this. Any guesses?

Regardless of how they detect it, when they do find a case of ID theft, they say that they work with the true owner of the identity to track down and prosecute the fraudster, and they also reimburse lenders the unpaid principal balance of loans that involve identity theft.

Have any of you had any experience with a fraudulent Lending Club loan? I’ve had one default thus far, but I’m not aware of any instances of outright fraud.

Source: Lending Club Blog

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In this article, I’ve compiled a few general suggestions for protecting your personal information as well as some tips for avoiding e-mail scams.

Protecting your personal information

Be cautious with your personal documents. Keep your driver’s license, bank statements, credit and debit cards, checkbooks, etc. in a safe place. Beyond this, don’t carry your birth certificate, social security card, or passport in your purse or wallet unless it’s absolutely necessary.

Shred sensitive documents. Identity thieves have been known to go through garbage to get information about their targets, so be sure there’s nothing for them to find. Take care to shred not only financial statements, but also credit card offers, paycheck stubs, etc.

Don’t give out personal identification unless you have to. Please be careful with who you share your Social Security number with. Don’t be afraid to ask why it’s necessary to provide your Social Security number. Some doctors request your Social Security number for their records but you can often get away without providing it.

Be careful at the ATM. You can never be too careful. People in the vicinity of the ATM may be on the prowl for victims, and might be able to see your PIN over your shoulder. Beyond this, scammers have been known to modify ATMs to skim your account numbers. If something seems amiss, trust your instincts and move on.

Don’t carry passwords or login information with you. Either memorize this information or store it in an encrypted file on your computer. This makes it significantly harder for an identity thief to get their hands on your data.

Avoiding e-mail scams

Another common way for scammers to get their hands on your info is via e-mail. Remember, if it sounds too good to be true, then it probably is. Here are some common e-mails scams to be on the lookout for when checking your inbox.

Standard phising schemes. Scammers often pose as financial institutions and send messages alerting you to possible account tampering, etc. They then go on to direct you to a website to change your login credentials to protect yourself. The bad news is that the site that they send you to is fake, and you wind up providing them with everything they need to gain access to your accounts. Never click a link and hand over your information, no matter how real the e-mail looks. When in doubt, call the institution or manually type their web address into your browser.

Work from home schemes. These scams are often presented as opportunities to make a lot of money with little time and a “small cash investment.” You buy some sort of kit from the scammer and you either never hear from them, or your work get rejected for not meeting their standards.

Stimulus check scams. Many people have been contacted by individuals posing as the IRS or another governmental agency who ask for banking information so they can receive their stimulus check. If you receive something like this, please ignore it. The 2008 stimulus checks were sent out automatically, and there won’t be a second stimulus check. Instead, you’ll see a little more money in your paychecks due to reduced withholding.

Credit repair scams. In this case, scammers offer to miraculously remove negative information from your credit report. This is especially dangerous as they almost always ask for your Social Security number. Believe it or not, you can fix errors on your credit report yourself, so don’t get taken in.

Contest prize scams. You may get an e-mail claiming that you have won some money from a contest, and that you simply need to send in a “small processing fee” to claim it. Guess what? You’ll pay your money and never here from them again. Ignore these e-mails.

Of course, the ways in which identity thieves and other scammers work are constantly evolving. Thus, you need to be vigilant about guarding your personal data. And even if you’ve fallen victim to one of these scams in the past, you shouldn’t blame yourself. Instead, focus on getting your life and finances back in order.

As always, if you have any tips, stories, or questions, please leave a comment below. And please don’t hesitate to share this information with friends or family members.

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» The Riskiest States for Identity Theft
» Carnivals – Week of 12/18/06
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While you’re entitled to one free credit report per year from each of the three major credit reporting bureaus (see #1, below), sometimes that just doesn’t cut it. Take, for example, our run-in last year with a wayward collection agency.

When we first discovered the problem, we burned through our free credit reports trying to figure out what was going on. We then needed to monitor the situation until it was resolved, so we ended up using a free trial of TrueCredit (see #3, below) to keep an eye on things.

Given the above, I thought I’d put together a list of options for getting your credit report for free. Start at the top and work your way down.

1. Get it free, the old-fashioned way. As noted above, you can go to annualcreditreport.com and get one free credit report from each of the three major bureaus.
2. Place a fraud alert on your credit report. Whenever you file a fraud alert, all three credit bureaus will automatically send you a free hardcopy of your credit report.
3. Get it from TrueCredit. A 30 day free trial of TrueCredit provides you with access to reports from all three credit bureaus plus your credit score. Just don’t forget to cancel – here’s how.
4. Get it from MyFICO. You can sign up for a free 30 day trial of ScoreWatch from MyFICO.com, which comes with access to your Equifax credit report and FICO credit score. Here again, don’t forget to cancel.
5. Get it from FreeCreditReport.com, bay-bee! Last but not least, you can sign up for a free trial of TripleAdvantage, which access to your Experian credit report. FreeCreditReport.com has gotten a bad rap in the past, so just know this… You’re signing up for a seven day free trial. If you want a truly free credit report, be sure to cancel before it ends.

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Identity theft is on the rise. According to the FTC, an estimated 8.3 million consumers fall victim to identity theft in the United States each and every year. While simple steps such as placing a fraud alert on your credit record can go along way to protect you against financial identity theft, you have an even stronger tool at your disposal… The credit freeze.

What’s a credit freeze?

A credit freeze (a.k.a., a “security freeze”) allows an individual to lock their data at the major credit bureaus, meaning that it’s virtually impossible for an identity thief to do anything in your name that requires a credit report. The credit freeze concept has its roots in a 2003 California state law which caused many other states (40 at last count) to pass credit freeze laws of their own. As of late 2007, however, all three major credit bureaus began voluntarily credit freezes regardless of your state of residency.

Once you place a credit freeze, you’ll receive a personal identification number or password that can be used to temporarily lift or completely remove the freeze. While a credit freeze prevents the credit bureaus from releasing your information without your authorization, enitites with which you have an account (or collection agencies acting on their behalf) are exempt from these limitations.

The downside of freezing your credit

While credit freezes are for more effective than fraud alerts, which are actually ignored by some creditors, they’re not without their drawbacks. For example, while a credit freeze will stop new account applications in their tracks, it won’t do anything about existing accounts that have been compromised. Thus, if your credit cards are lost or stolen, you’re out of luck.

In addition, because a credit freeze completely prevents access to your credit report, having one in place can delay or prevent the approval of all kinds of applications. Given that your credit report is used for far more than just extending credit, this can be quite an inconvenience. If you go down this road, be forewarned that you might need a few days of lead time to unlock your credit report.

Another inconvenience is that a credit freeze will prevent automatic updates to your name or address. Thus, if either of these things change while you have a credit freeze in place, you’ll need to manually update this information with the credit bureaus.

The final downside is cost. For states without a credit freeze law, the default fees are $10 to place, temporarily lift, or completely remove a credit freeze. While many states mandate lower fees, it’s not necessarily cheap to do this, particularly if you envision needing to unlock your credit report frequently. This is especially true given that you have to lock/unlock your report at the different credit bureaus individually.

The good news is that, if you’re a victim of identity theft (and can prove it), then you can freeze and unfreeze your credit for free.

How can I freeze my credit?

So… You’ve read through this and you’ve decided that you want to freeze your credit. How do you go about doing it? Since the details vary from one bureau to the next, I figured it would be easiest to just link to the pertinent pages at each:

• Equifax
• Experian
• TransUnion

Photo Credit: weirdvis

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I started by placing a fraud alert on my credit record. We also placed one on my wife’s credit report just to be on the safe side. Fortunately, all of this happened shortly after the final credit check associated with our refinance, so the fraud report didn’t cause any problems there.

The next logical step would, of course, be to check our credit reports. Unfortunately, while we’re entitled to one free credit report per year from each of the major credit reporting bureaus (Equifax, Experian, and TransUnion), we used those up last fall when dealing with a wayward collection agency.

The good news is that, having filed a fraud report, we’re entitled to receive free hard copies of our credit reports. Instructions for requesting the free report are included with the confirmation of your fraud alert, which you should receive within a few days of placing the alert. Once that’s done, we just need to keep an eye out for any suspicious activity.

According to the FTC, the following are signs that your identity may have been stolen:

» accounts you didn’t open and debts on your accounts that you can’t explain

» fraudulent or inaccurate information on your credit reports

» failing to receive bills or other mail

» receiving credit cards that you didn’t apply for

» being denied credit, or being offered unfavorable credit terms for no apparent reason

» getting unwarranted calls or letters from debt collectors

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According to a recent blurb in Bottom Line/Personal, Bank of America was (for the second year in a row) rated better than all other ‘major’ banks when it comes to protecting customers against fraud. While the scoring criteria weren’t entirely clear, Bank of America’s security measures scored 78 out of a possible 100 points.

Other well-known banks near the top of the list included JPMorgan Chase, Washington Mutual, and Wells Fargo, all of whom scored 70/100. Citibank scored 69/100, BB&T scored 68/100, and Wachovia scored 61/100. Looking at the other end of the spectrum, Bank of the West scored 35/100, Banco Popular scored 31/100, and Comerica came in last with just 24/100 points.

Interestingly, the top-rated banks in these rankings all come out near the bottom in terms of real-life performance. Hmmmm…

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FNBO Direct, Everbank. and ING Direct have all received a four star rating from Bankrate, indicating a high level of solvency and stability. If you’d like to see the complete rundown, please check out my updated list of the safest online banks.

Beyond this, ING Direct’s parent company has received high marks in terms of protecting customers from identity theft. In talking about how well different corners of corporate America do when it comes to protecting their customers, the NY Times Bits weblog put together a rundown of the estimated annual number of “incidents” related to identity theft per billion dollars in deposits for each of the 25 largest banks in the United States.

Interestingly, ING came out smelling like a rose, with just 0.085 incidents per billion dollars in deposits, whereas HSBC came in dead last*, with 21.293 incidents per billion dollars in deposits.

Other notables included Bank of America, which was second worst with 17.646 incidents/billion, Washington Mutual (3rd worst) with 16.163 incidents/billion, JP Morgan/Chase/Bank One (4th worst) with 11.306 incidents/billion, Wells Fargo (5th worst) with 10.117 incidents/billion, US Bank (6th worst) with 9.360 incidents/billion, and Citibank (7th worst) with 7.450 incidents/billion.

One thing that you’ll notice is that, even though these data are scaled against the size of the bank, it’s still the biggest banks that are doing the worst. In fact, the seven worst banks listed above are amongst the nine largest banks on the list.

Despite ING Direct’s major online presence, ING is the fifth smallest bank on the list. This makes me wonder if there’s a meaningful difference in security practices, or if bigger banks are disproportionately targeted by fraudsters because they’re so large and well known.

*Note that this is a rating of each bank overall, and not just their online endeavors.

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Our state actually requires the credit bureaus to give us two credit reports per agency per year, but the additional reports would’ve had to come via snail mail (much like requesting a credit report for a minor). Since I didn’t feel like waiting around, I decided to find another way to access our credit reports for free.

My search led me to TransUnion’s TrueCredit service, which is a credit monitoring and credit protection service. While their service typically costs $14.95/month, they have an introductory offer that gives you 30 days for free. The beauty of this offer is that it gives you unlimited access to all three of your credit reports. The downside is that it auto-renews, and you have to call in to cancel.

In the end, I decided to sign up with TrueCredit so I could keep track of my credit record while the collections saga was unfolding. I actually ended up sticking with them for the free month plus a paid month, as I wanted to be sure that nothing ended up creeping onto my report before I was confident that this matter was settled.

Earlier this week I checked my calendar and saw that the end of the second month was fast approaching, so I dropped by the TrueCredit website to get their contact info and cancel.

In case any of you find yourself in a similar situation, I thought I’d jot down some notes about the cancellation process:

(1) Call TrueCredit at 1-800-493-2392

(They’re only open Mon-Thurs, 8AM-Midnight; Fri/Sat, 8AM-8PM Eastern time.)

(2) Press ‘1′ for English, then ‘2′ for cancelling service

(3) Wait while you’re being transferred (I was disconnected once at this point)

(4) Tell them that you want to cancel and wade through their pleas to keep you as a customer

That’s it.

While they do their best to upsell you, TrueCredit can actually be quite useful under certain circumstances. In my case, it was well worth $14.95 to have unlimited access to my credit reports for two months while sorting things out with the collection agency. That being said, I can’t imagine paying $14.95/month on an ongoing basis for this sort of thing.

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First off, according to an article from Bankrate.com, collection agencies can’t:

» Call before 8 a.m. or after 9 p.m.

» Talk to anyone but you (or your attorney, if you have one) about the debt.

» Threaten to garnish wages or seize property unless they actually intend to do so. Garnishment is illegal in some states, and in others requires a court order. In many cases, property seizure is not permitted. Check with your state attorney general’s office or state consumer protection office to find out what is legal in your state.

» Threaten to sue unless they are actually taking legal action. In some states, third-party collection agencies may not sue.

» Threaten you with arrest or jail.

» Use obscene language.

» Annoy or harass you with repeated calls.

» Call at work if you have asked them to stop.

» Falsely claim to be an attorney, a representative from a credit bureau or a member of law enforcement.

After digging though the FDCPA myself, I also learned that they can’t:

(1) Threaten you with violence or other criminal means of physical harm or harm to your reputation or property.

(2) Repeatedly or continuously call you with the intent to annoy, abuse, or harass you (although it seems like “intent” is a bit nebulous and hard to prove).

(3) Publish a list of debtors.

(4) Contact you (except for very specific purposes) if you notify them in writing that you want to cease further communication.

(5) Use false, deceptive, or misleading practices in connection with the collection of any debt (this includes the false threats of litigation mentioned above).

Beyond this, they also have to provide you with “validation” of the alleged debt (assuming that you ask for it in writing). Such validation includes the amount of the debt, the name of the creditor to whom the debt is owed, a statement that the debt will be assumed valid unless you object to it within 30 days, a statement that they will obtain verification of the debt or a copy of the judgment against the you if you object to the debt, and the name and address of the original creditor (again, if you object).

There are actually a number of other useful tidbits contained within the FDCPA, so I encourage you to give it a quick read if you’re ever faced with a call from a collection agency.

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» Called by a Collection Agency
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“Major credit bureaus Experian and Equifax on Thursday joined TransUnion and said they will, this year, let people in all 50 states freeze their credit histories…

The decision by all three bureaus to offer national freezes will let consumers lock down their credit histories — especially if they are victims of identity theft. Until now, a patchwork of laws in 39 states allowed consumers, to varying degrees, to protect themselves…

A credit freeze bars the bureaus from issuing your credit history, the summary of loans and payments that forms the basis of your credit score. Because few lenders will issue credit without first seeing a credit score, freezing your information means identity thieves can’t use stolen Social Security numbers to fraudulently open accounts.”

The bad news is that two of the three bureaus (TransUnion and Equifax) will charge $10 a pop to lock and unlock your credit history. They claim that they’re simply trying to cover costs, but Experian has seen fit to offer this service for free. Given that the entire business model of these companies if based on collecting and distributing our personal information, I’m hardly sympathetic to their pleas to “cover their costs” while doing so.

Nonetheless, this is a good option. And if states pass laws mandating lower (or no) fees, the credit bureaus will be forced to comply.

[Source: USA Today]

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1. Try to remember when you last had your wallet. This really goes without saying, but if you can remember specific points during the day when you definitely had your wallet, you should be able to narrow down the list of places where you might have lost it.

2. Check your clothes. Try to remember what you were wearing when you last remember having your wallet, and check your pockets. This goes for outerwear, too. Perhaps you slipped it into a jacket pocket when you normally wear it in your pants?

3. Check your car – or anywhere else you sit for length periods of time. I can’t count the number of times my wallet has fallen out during a long car ride, especially if I’m wearing pants with loose pockets. The same goes for finding my wallet on the floor behind my chair at work. Also be sure to double check when you get up to leave from the theater.

4. Enlist the help of those around you. Ask any friends or family that might be around if they’ve seen your wallet. Also consider asking them to help you look for it. You never know… A fresh (and unbiased) set of eyes might just spot it in a place where you’re sure it couldn’t be.

5. Call around and ask. Generate a list of places you’ve been since you last remember having your wallet and start dialing. Call restaurants, theaters, stores, etc. and ask if anyone has turned in a lost wallet. You might also consider checking with the police to see if anyone has turned in a wallet with a matching description.

6. Return to the scene of the crime. If you’ve been able to narrow down where you might’ve lost it, go back and have a look around. Phone calls are great, but it’s also possible that someone found it and posted a sign looking for the rightful owner.

7. Post signs of your own… And offer a reward. While you’re re-visiting spots where you might have lost it, consider posting signs of your own. You might also consider offering a reward. Let’s face it. People are lazy (and not always honest). The easiest course of action is to pocket the money in your wallet and then toss it in the trash. Offering them a bit of cash might be enough to prompt them to do the right thing and get in touch with you.

8. Go dumpster diving. If you’re hell bent on finding your wallet, you might also consider checking in dumpsters and trash cans in and around areas where you think you lost it. There’s a chance that someone picked it up, pocketed the cash, and then tossed it in the trash. Finding it, even sans cash, would be a huge time (and worry) saver. The odds are against you, but it couldn’t hurt to try.

If it still hasn’t turned up at this point, then you’ll want to proceed with damage control…

9. Start calling banks and credit card issuers. This is especially important for debit cards, which have less in the way of fraud protection and limited financial liability. But even with credit cards, it’s important to notify the issuer and get the old card numbers cancelled and have new cards issued as soon as possible. If you’re in the habit of carrying bank account numbers with you, you’ll also want to talk to the bank about that.

10. Take steps to protect your identity. Hopefully you were smart enough to leave things like your social security card at home, but… Even still, there’s a risk that you might become the victim of identity theft. Once you’ve notified your banks, you should also consider placing a security alert on your credit report. This warns potential creditors to take extra steps to insure the identity of the application when handling application with your name on it. If you suspect your wallet was stolen, you should also consider notifying the police and filing a report.

So there you have it… A set of quick tips for dealing with a lost wallet. Please feel free to chime in and leave a comment suggesting ideas of your own.

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“The problem is that people don’t realize the significance of the kind of information they are putting out on the Web and who may be accessing it. More and more consumers are signing up to these sites every day and chances are they’ll put on their date of birth, location, e-mail, job and marital status.”

He went on to say that:

“Nearly all of us can search for a name of an old friend and find all their personal details online without them even knowing. Unfortunately, the fact is that not everybody is searching for a friend.”

Equifax is thus advising consumers to limit the amount of information they make available online, especially when it comes to things commonly used for identity verification, such as birth date, mother’s maiden name (who would ever put this online?), names of kids and pets, etc. They are also advising people to make their profiles private, such that only close friends can view the information.

I guess anonymity has it’s privileges, doesn’t it?

[Source: Reuters UK]

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» Ten New Money Scams, Part 1
» One Year Ago This Week (August 20th – August 26th)

Obviously, the best way to protect yourself from check washing is to keep your checks out of the wrong hands in the first place. But failing that, is there anything else that you can do? According to an advertisement that we received that last time we ordered checks, the answer is yes…

Apparently Eberhard Faber has come out with a pen called the Uni-Ball 207 that features a “special ink” that gets “trapped in the paper,” making check washing impossible. I have no idea how well these actually work but, for what it’s worth, these are apparently the only pens endorsed by identity thief turned identity theft expert Frank Abegnale (the subject of the movie Catch Me if You Can). Of course, as online billpay becomes the norm, this will become less and less of an issue.

Have any of you used these? If so, what did you like them? Next time I’m in the market for pens, maybe I’ll try them out.

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Hi! I learned about your site thru the February New York Times article. Then I read your tip on applying for the Amex business card. I just received my new card and, when I activated it by phone, learned that it takes 8 – 12 weeks for the $100 credit to appear on your account. It’s not immediate! Just thought you and your readers might like to know about the timing on this.

So… While her point was that it’ll take a bit of time to get the $100 statement credit, the bigger point here is that it sounds like the $100 statement credit might still be alive. And don’t forget about the 5000 reward points (= $50) when you make your first purchase (this pops up when you click to “Learn More”).

The caveat here is that the signup page no longer lists the $100 credit (although the 5000 extra reward points are still definitely active). However, the offer supposedly expired back in mid-January, so if people were able to apply in mid-February and still get in on the deal, it’s possible that it’s still alive. The worst case scenario is that you get the $50 bonus, and you might get the whole enchilada.

As I’ve mentioned previously, there’s a $125 annual fee, but it’s waived for the first year.

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First up, let’s tackle the issue of why you should review your credit report. This is actually something that I used to do once per year but, with the availability of free credit reports, I’ve actually started doing it more frequently. Since you get one free report per year from each of the big three credit bureaus, you can now monitor things more regularly by requesting a different report every four months.

With that said, let’s get to the issue of why should you even bother?

(1) Confusion over your name. Do you sometimes go by a shortened version of your name? If so, and if you’ve ever used the different versions when applying for credit, then your report might have some errors. Unless I’m missing something, this isn’t a particularly big deal. Sure, it might cause some stuff to be missing from your report (although it shouldn’t if the bureaus are doing their job). But it’s unlikely to be a source of erroneous negative information.

(2) Wrong person. This is a very real, and potentially very damaging possibility. In fact, it happened to my sister-in-law awhile back. She checked her credit report and discovered that someone with a similar name had defaulted on their car loan in a different state, and it was showing up on her report. Fortunately, this wasn’t a case of identity theft, but it was still a pretty major occurrence in terms of the impact that it had on her apparent credit-worthiness.

(3) Bureau error. Apparently some credit bureaus transcribe your information from tapes or other written records. If the individual doing the transcribing mis-reads a number, or otherwise makes an error, it will show up on your credit report.

(4) Creditor error. I know this may come as surprise to some of you, but creditors are human, too… And they’re not above making honest reporting mistakes, and sending erroneous data to the reporting bureaus.

(5) Incomplete data. The three major credit bureaus don’t share information, so certain information may be reflected on only one or two of your reports. While this could cause positive data to be missing from one or more of your reports, a bigger problem is that you could have negative data on a subset of your reports that you might otherwise miss if you don’t regularly check all three of them.

To this, I would add one of my own:

(6) Identify theft. Keeping track of credit inquiries and what sorts of accounts are being reported in your name is a great way to detect whether or not you’ve been the victim of identity theft before angry creditors come calling.

With the exception of #6, which is always important, it’s most important to protect against #1-#5 if you’re planning on applying for credit in the near future. Maybe you’re planning on buying a house, and need to apply for a mortgage. Or maybe you’re in the market for a new credit card — either because you simply need one, or because you’re hoping to take advantage of a special offer for a 0% balance transfer, free credit card miles, or a cash signup bonus. Whatever the reason, it’s best to know that your credit report is clean before applying.

[Source: Ultimate Guide to a Better Credit Score]

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(9) Safeguard your financial identity. Put your outgoing letters in a post-office collection box instead of leaving them in your mailbox for pickup. A thief might beat your mail carrier to the door. Get your name removed from offers for preapproved credit cards and insurance by going to www.optoutprescreen.com or calling 888-5-OPT-OUT. (You will have to provide your Social Security number, but the service, operated by the major credit bureaus, is legitimate.)

Don’t carry your Social Security card in your wallet. Photocopy the front and back of every card that you do carry. Keep your copies in a secure place in your home. If you lose your wallet, you’ll be able to cancel those cards quickly.

(10) Draw up a durable power of attorney. Your financial life might be the very picture of simplicity while you’re healthy enough to make your own decisions. But all of your hard work could blow up if you don’t take this final step and hire a lawyer to draft a durable power of attorney for you. A DPA will permit someone you trust to safeguard your assets and pay your bills if you get sick and can’t manage your own money.

My thoughts on these:

(9) Great advice. See also my tips for protecting your privacy and protecting yourself against identity theft.

(10) Done. I would also recommend writing a will. While you won’t be around if/when it comes into play, it’ll certainly simplify your finances for whoever has to deal with what you leave behind. And if you have kids, you should seriously consider setting up a testamentary trust.

See also: Part 1, Part 2, Part 3

[Source: ConsumerReports.com]

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Use strong (and unique) passwords:

Use different passwords for every account, and avoid using easily available information such as your mother’s maiden name, your birthday, part of your social security number, your phone number, your street address, a series of consecutive numbers, etc.

You should also make your passwords lengthy — 8 characters minimum, even better if it’s 12+. And be sure to combine upper and lowercase letters, numbers, and symbols. Using letters and/or numbers only makes it easier to break, and thus you need to make it even longer if you choose to do so.

If you’re curious about what makes for a good password, check out one of these password checkers: Microsoft or Surveillance-Video (there are many others). And don’t write your passwords down! Yes, they’re hard to remember. That’s why I use a password encryption program to store everything on my PowerBook.

Secure your personal information:

Keep sensitive information away from prying eyes (roommates, service people, potential buyers when selling a home, etc.). Lock up financial statements and other sensitive documents in a filing cabinet, drop off outgoing mail that contains sensitive info in a secure USPS mailbox, and be sure to pick up your mail promptly.

Opt out of everything that you can and, when travelling, have your mail held until you return. Shred your credit card receipts, all credit offers (tearing them up doesn’t necessarily work), insurance paperwork, bank statements, etc.

Think carefully before writing a paper check to unknown individuals, don’t include unnecessary information on your checks, and take care when ordering new checks.

This should go without saying, but don’t give out personal information on the phone or over the internet unless you’re the one that initiated the contact. Don’t respond to unsolicited offers. If you’re interested in a particular soliciation, confirm that you are dealing with a legitimate entity – manually type their url into the address bar of your browser (it’s easy to cloak web addresses in e-mails) or call customer service using a known contact number (from your statement, the back of your credit card, etc.).

Don’t carry your social security card in your wallet, and don’t give out your SSN unless absolutely necessary. Ask to use something besides your SSN on your driver’s license and insurance cards, and don’t include your SSN or driver’s license number on checks. Don’t carry extraneous credit cards when you go out, and don’t leave your purse our wallet lying around (like at work).

On the computer:

Keep your operating systems, anti-virus software, and anti-spyware programs up-to-date. If you want to avoid many of the headaches associated with viruses and spyware, use a Mac… I’m only partly kidding when I say this — I use a Mac and pretty much never have to think about such things (though that might eventually change). Use a firewall, or even turn off file-sharing to prevent network access to your computer. Only submit sensitive information over secure connections (look for the little lock icon in your browser window) and don’t allow your browser to save your important passwords – instead, store them in a secure encryption program.

Monitor your credit report:

As many of you know, you are now entitled to one free credit report per year from each of the three major credit bureaus (go here for immediate access). I recommend spreading these out over the course of the year and checking one every four months such that you can detect problems as they occur. I personally wouldn’t bother with any of the paid credit monitoring services out there.

So what else can you think of? Please leave a comment if you have any further suggestions.

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» Carnivals – Week of 12/18/06
» Carnivals – Week of 02/19/07
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Just think of all those pre-approved credit card offers that you’ve received over the years. What if they fell into the wrong hands? And guess what? Even tearing them up into tiny pieces isn’t enough to keep the fraudsters at bay…

So what’s a guy (or gal) to do? Simple — just follow these three simple steps and you’ll be well on your way to stemming the tide of unwanted contact.

Step 1: Drop by the Direct Marketing Association’s Mail Preference Service (MPS) and opt out of unsolicited consumer mailings by doing one of two things… Either fill out their online form or print out and mail a hardcopy of the request. The hardcopy should go to:

Mail Preference Service
P.O. Box 282
Carmel, NY 10512

The only downside to doing this is that they charge a $1 fee to verify your registration and protect against fraud. This is true whether you file online (where you’ll pay with a credit card) or via mail (requires a check or money order).

Step 2: Head on over to the National Do Not Call Registry and click the link to register a phone number. Punch in your phone number, enter an e-mail address (required for verification) and click submit. Within seconds you’ll have an e-mail containing a verification link. Click that link and you’re done.

Step 3: Finally, hop on over to OptOutPrescreen.com, which is the official website for opting in or out of pre-approved (firm) credit offers. It’s operated by the major credit bureaus, so it’s legit (more details here).

Simply click the button at the bottom of the front page and you’ll be presented with three options: opt-in, opt-out online or opt-out via hardcopy. Online requests are dead easy — just enter your name, address, birthday, and SSN and then click submit. Unfortunately, such requests are only good for five years. Hardcopy requests, on the other hand, are permanent. Lame distinction, but it is what it is.

Here’s a tip: if you select the hard copy option, it’ll file the request online and then present you with a printable form to sign and mail, so you’ll end up killing two birds with one stone (and a stamp).

This is where you should send the form if you choose to do the hardcopy:

Opt-Out Department
P.O. Box 2033
Rock Island, IL 61204-2033

Bottom Line: It takes just a few minutes to do all three steps, so do it. Now. Seriously.

And if you’re an over-achiever, feel free check out bonus step #4:

Bonus Step 4: Register for the DMA’s E-mail Preference Service to (potentially) reduce your load of unsolicited commercial e-mail. I haven’t actually bothered with this one, as virtually none of the spammers that target my e-mails addresses are the sorts of folks that would pay attention to such requests. In fact, I wouldn’t be surprised if adding your name to such a list would actually result in an increase of spam if the list fell into the wrong hands. Here again, registration is good for five years, and you’ll need to click a link in a verification e-mail in order to get your address added to the list.

A few things to keep in mind:
- These measures will only affect ‘legitimate’ companies that play by the rules.
- It’ll take awhile to notice the full effects of your requests, but this stuff does help. A lot.
- Opting out can cause you to miss out on potentially profitable credit card offers.
- And remember… If you move (like we did) you’ll need to do this all over again.

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» Are You at Risk of Identity Theft?
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When Smith requested a copy of his work history, he discovered that the government believed that he was working two jobs — his regular job plus another job at a nearby chicken plant. As it turns out, an illegal immigrant named Nohe Gomez Hernandez had used Smith’s social security number to get a job at the chicken plant, and this apparent second job forced Smith into a higher tax bracket, thereby generating the income tax shortfall.

As an interesting aside, Hernandez’s attorney is arguing that he shouldn’t be prosecuted under Georgia’s identity theft law since he didn’t use the information to pilfer Smith’s bank account or rack up credit cards charges. Rather, he used Smith’s social security numebr solely to secure a job. Not surprisingly, the prosecution disagrees.

[Source: Access North Georgia]

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Well, last night I learned that I had been invited to participate, so I signed up to see what it was all about. Not long ago I received a welcome e-mail, and shortly thereafter I received two messages about ads being available for my feed… The problem was that, while one of these messages was meant for me, the other was clearly intended to go to Jim of pfBlueprint.

When I contacted Jim about this glitch, I learned that FeedBurner is having trouble keeping their publishers straight. In fact, he told me that when he logged in, MY payment information (including things like my social security number) came up in HIS account. Nice. Really nice. FeedBurner has now officially shared my sensitive personal information with at least one other person. Fortunately, I know and trust Jim, and I’m not particularly worried that he’ll try to steal my identity. That being said, I’m still more than a little bit pissed off right now. And I’m still not sure how many other people got this information.

After reporting this to FeedBurner I received a prompt reply thanking me for my patience while they look further into this matter. Guess what? I’m not feeling particularly patient right now.

Update: It’s still not clear what happened, but apparently it’s a glitch in the FeedBurner system, as the signup process is totally automated — thus, there’s no room for a simple data transposition. The only thing that Jim and I have in common (aside from our stunningly good looks and the fact that we run two of the best personal finance blogs in existence ) is that we both signed for the FeedBurner Advertising Network at roughly the same time last night. I should also note that the folks at FeedBurner have been very responsive and are working hard to sort out what went wrong.

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[Via: The Checkout]

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Hello, identity theft! If only they had better timing — say, sometime during or shortly after tax season rather than the middle of December — they’d probably hook an awful lot of people. In case you’re curious, here’s what the message looked like (although it also had a graphical IRS header):

You filed your tax return and you’re expecting a refund. You have just one question and you want the answer now – Where’s My Refund?

Access this secure Web site to find out if the IRS received your return and whether your refund was processed and sent to you.

New program enhancements allow you to begin a refund trace online if you have not received your check within 28 days from the original IRS mailing date. Some of you will also be able to correct or change your mailing address within this application if your check was returned to us as undelivered by the U.S. Postal Service. “Where’s My Refund?” will prompt you when these features are available for your situation.

To get to your refund status, you’ll need to provide the following information as shown on your return:

Your first and last name
Your Social Security Number (or IRS Individual Taxpayer Identification Number)
Your Credit Card Information (for the successful complete of the process) [Note: Grammar was decent until here.]

Okay now, Where’s My Refund? [Note: Link to phishing site removed.]

Note: If you have trouble while using this application, please check the Requirements to make sure you have the correct browser software for this application to function properly and check to make sure our system is available.

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This web site is a joint venture by Equifax, Experian, Innovis and TransUnion, and it allows you to opt out from receiving firm offers for either a period of five years or permanently. You can also opt back in if you change your mind in the future and wish to start receiving these offers again.

Note that, while they ask for your social security number, you don’t have to provide it to have your request processed. Now before you rush over and opt out, keep in mind that doing so may cause you to miss out on juicy 0% balance transfer offers, etc.

From my perspective, the upside of not having pre-approved credit applications waiting to be stolen from you mailbox is well worth the loss of a few deals.

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[Source: ABC News]

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First off, keep the obituary short and sweet. The less info you give, the less a crook has to go on. Second, request a copy of the decedent’s credit report and check it for nefarious activity. Then have their report flagged with a “deceased” alert — and be sure to contact each agency individually, as they apparently don’t share death information amongst agencies. Who else should you notify? Start with the Social Security Administration, credit card companies, banks, stockbrokers, loan/lien holders, mortgage companies, etc. Note that while the federal government keeps a ‘Death Master File’ that gets transmitted to financial institutions, it can take awhile for information to trickle down to the appropriate entities, and not everyone makes it onto the list.

Note that you can even get your loved ones off mailing lists putting them on the Direct Marketing Association’s deceased ‘do not contact’ list. If nothing else, this can help people deal with the loss of their loved ones without constantly being reminded of the death by telemarketers and junk mailers. More info on the list can be found here.

What if someone you love falls victim to post-mortem ID theft? Well, you can usually clear things up pretty quickly with a copy of the death certificate. However, sorting all of this out while dealing with their death can be quite a burden, and it would certainly be best to avoid it in the first place.

For an exhaustive list of precautionary steps, as well as what to do if you suspect fraudulent activity, check out this page from the ID Theft Center. They even have sample form letters for contacting the credit bureaus, etc.

[Source: MSN/Money]

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Note that the original article in which I found these tips was targeted at small business owners. I’ve simply abstracted out those tips that are likely to be of use to an everyday-Joe. If you’re interested in a few additional tips on how to better protect your business, then you should check out the original article.

Anyway, back to the topic at hand…

First off, when writing the numerical check amount, start as close to the dollar sign as possible to prevent someone from inserting an additional number.

Next, when writing the check amount in words:

-start at the far left of the space allotted for the purpose and capitalize only the first letter,
-hyphenate all numbers from twenty-one to ninety-nine,
-use the word “and” between the dollar and the cent amount,
-following the cent amount, draw a line all the way to the right of the space

If you’re writing a check for less than a dollar:
-write the word “only” before the amount, then write the amount in words
-cross out the word “dollars” that is on the check
-circle the amount that is to the right of the dollar sign (although I’m not really sure why this would necessarily help)

Also make sure that the dollar amounts agree in both fields of the check. If there is a discrepancy, many banks will favor the numerical amount written over the words.

If writing a check to an individual who at a company, always include the person’s title or the name of the company such that the person can’t easily deposit the check into his or her own account.

If you make a mistake when writing a check, do not correct it. Rather, write “void” on the check and either file it or destroy it. Also be sure to write “void” in your check register to help your accounting records.

And finally… Never, and I mean NEVER, write a check in pencil (or erasable pen). Always use indelible blue or black ink.

Actually, if you’re dumb enough to write a check in pencil, then you probably deserve to be the victim of check fraud!

[Source: National Federation of Independent Business]

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Credit Bureau Fraud Departments:

Equifax Consumer Fraud Division
P.O. Box 740241
Atlanta, GA 30374-0241
Phone: 800-525-6285
Fax: 770-375-2821
TDD: (800) 255-0056
Web: www.equifax.com

Experian National Consumer Assistance
P.O. Box 2104
Allen, TX 75013
Phone: 888-397-3742 (i.e., 888-EXPERIAN)
TDD: Use relay to contact number above
Web: www.experian.com

TransUnion Fraud Victim Assistance Department
P.O. Box 6790
Fullerton, CA 92634-6790
Phone: 800-680-7289
Fax: 714-447-6034
TDD: (877) 553-7803
E-mail (fraud victims only): fvad@transunion.com
Web: www.transunion.com

See also the ID Theft Victims Guide.

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Related Articles at fivecentnickel.com:

» One Year Ago This Week (July 9th – July 15th)
» Identity Theft Tops FTC Complaints
» Are You at Risk of Identity Theft?
» Lending Club Using Social Networks to Help Verify Borrower Identity
» From the Archives (July 8th – July 14th)
» Identity Theft on the Rise
» Identity Theft After Death
» More Credit Card Customers at Risk for Fraud

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Related Articles at fivecentnickel.com:

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» Think Before You Write That Check
» Here We Go Again… More Financial Data Compromised
» From the Archives (June 17th – June 23rd)
» Check Writing Tips
» Your Secret Credit Scores
» Dealing With the (Possible) Theft of Your Personal Data