Warning Signs You’re Being Targeted by an Identity Thief

Identity theft comes in many forms. Monitoring a credit score regularly and checking your credit reports often can help you spot problems.

Welcome to NerdWallet’s SmartMoney podcast, where we answer your real-world money questions. This week’s question is from Andrew, who asks, “I’ve been thinking about signing up for one of those identity theft protection services, but I’m not sure if they’re really worth it. How much am I actually at risk of being a victim of identity theft, and will these services help me avoid identity theft?”

Our take

Security experts say everyone’s at risk of identity theft, because so much of our personal information has been exposed in various database breaches. But the potential fallout ranges from minimal to horrific. If someone steals your credit card number, for example, you’re protected from having to pay the bogus charges once you report the fraud. If someone steals your identity and commits a crime, you could wind up in jail. If they get medical care or bilk an insurance company, those records could get mingled with your own with potentially life-threatening consequences.

Credit monitoring services play on that fear by advertising “identity theft protection services.” But they can’t actually protect you from identity theft. Often the best they can do is give you early warning. They also can help you take some steps to make yourself less of a target for some types of identity theft, but you can do that yourself for free:

  • File early. NerdWallet recommends people file their tax returns as early as possible to prevent refund fraud.
  • Freeze your credit reports. Security freezes will help ward off most “new account” fraud, where someone opens a credit card or gets a loan in your name.
  • Monitor your statements. Checking your bank and credit card transactions will give you early warning about “account takeover” fraud, where someone else dips into your account or makes unauthorized charges.
  • Watch your credit. Monitoring a credit score and checking your credit reports regularly can help you spot problems as well.
  • Be stingy with your information. Many companies asking for your Social Security number don’t need it, for example. The fewer places that have your data, the better.

Our tips

  • We’re all at risk. Identity theft comes in many forms, and no one should think they’re immune.
  • We can make ourselves smaller targets. Taking a few steps can make stealing our identity enough of a hassle that the bad guys move on to someone else.
  • No service can protect you against identity theft. At best, monitoring services can give you early warning and then help you after you’ve become a victim.

An in-depth look at the risks

So, just how at risk are you, and what can you do to protect yourself from identity theft? Below is a partial transcript from NerdWallet’s podcast, with hosts Sean Pyles and Liz Weston. For the entire episode, check out Apple Podcasts, Spotify, or SoundCloud.

Sean: Let’s get to this episode’s question from Andrew. He says, “I’ve been thinking about signing up for one of those identity theft protection services, but I’m not sure if they’re really worth it. How much am I actually at risk of being a victim of identity theft, and will these services help me avoid identity theft?”

Liz: The answer to the second question is no, but we’ll talk about ways that you can protect yourself and ways that you are probably more at risk than you think.

Sean: Yeah. Identity theft is one of those rare instances where we’re all pretty equally vulnerable to it, regardless of income, background, where you live, but there are some really easy steps you can take to safeguard yourself from identity theft. So in this episode of the NerdWallet SmartMoney podcast, we’re going to talk about how much you’re really at risk of identity theft, what you can do to protect yourself, and whether these services are really going to save you. Again, the answer is no.

Liz: Let’s talk about the different types of identity theft, because I think people think about credit card fraud, and they think about people opening up maybe an auto loan in their name. That’s just a part of the problem, right?

Sean: Yeah. There are a surprising number of kinds of identity theft. The pretty common one that everyone thinks of first is maybe credit identity theft, where someone uses your credit card or opens a new line of credit using your Social Security number. Those are among the most common, but there’s also child identity theft, where someone takes your kid’s information. There’s also synthetic identity theft, where people create a patchwork of identity details to make a consumer that doesn’t even exist, which is pretty creative and horrifying. There’s also taxpayer identity theft. A thief will file your tax return and steal the money that you could possibly get from the government. There’s medical identity theft. There are all sorts of kinds of identity theft, and they really are just preying on your personal information however they can get it to hopefully turn a profit for themselves.

Also, we would be remiss if we didn’t mention one of the many scams that have popped up due to the coronavirus pandemic. Some scammers are calling people alleging to be the Social Security Administration and demanding that you confirm your Social Security number or other information to get your relief benefits. That is a scam. Know that government agencies won’t just call you out of the blue like that. And if you do get a call like this, just hang up.

Liz: Yeah. And about the tax return theft, people think, Oh, well, I don’t get much of a refund, so I don’t need to worry about this. It’s important to know that the bad guys gin up those W2s and all the information so they can create the maximum refund that they’re going to steal. So even if you don’t typically get a refund, you could be at risk.

Printed Tax Form on Work Desk with Calculator and PenConstantine Johnny/Getty Images

Sean: Exactly. And that’s part of why we implore people to file as soon as they can, so that they can prevent people from using their Social Security number, which is probably floating out there on the Internet anyway. I think that we should all realize that our information is probably accessible if people really want to get their hands on it.

Liz: And think about the Yahoo breach, where people’s emails were taken. People think, Oh, you know, who cares? It’s just my email. Think about all the information that flows through your email account about your health, about your finances, about your situation at work. All that information can be used to cause lots and lots of havoc. So identity theft and these breaches are something you’ve got to take seriously. Oh, and let me add the medical part. That’s one that’s super, super scary, because if somebody is getting medical care under your information, those files could be mixed in with yours, which means in an emergency, a medical provider could think that you have one condition when you don’t have that or vice versa.

Sean: Right. And this is why folks like Andrew and a lot of other people might be shepherded toward signing up for one of these services, thinking that these things are going to be my savior, when that’s not exactly the case. There are some pretty simple things that you can do to protect yourself from having your personal information used in ways that are going to hurt you down the road.

Liz: Let’s talk first about the idea that you can prevent identity theft because I think a lot of these services are pitched that way—that somehow this will keep the bad guys from your door, and that’s not true at all. Right?

Sean: Not really. Because as we mentioned, your information is out there and they can’t really stop anyone from using it. What these services actually do is let you know if that has happened, but they can’t prevent it, of course, because they don’t know where these people are. They’re not the ones saying, “Hey, don’t grab that Social Security number.” It’s just available out there, so there’s no way they can really stop anyone from using it.

Liz: It’s an early alert system. And the things that you can do on your own will not absolutely prevent identity theft, but I’m going to quote Avivah Litan, who is a security expert at Gartner Research and basically says, “What you want to do is to harden your situation, basically make it difficult enough so that the bad guys go and pick on somebody else.” It’s similar to what you do when you’re trying to burglar-proof your house. You cannot burglar-proof your house. They can get in if they’re determined enough, but you just make it enough of a pain in the tuchis that they will go and bother somebody else.

Sean: One thing that’s really easy to do is freezing your credit profile, as this is now free to do, thanks to the Equifax hack and the ensuing fallout from that. And it takes, what, 10 minutes to do, Liz? How long does it take you to freeze your credit?

Liz: Yeah, it doesn’t take very long at all. And unfreezing it is also very, very quick. We’ve refinanced our mortgage several times in the past few years, and I was always worried about putting on a freeze because I had heard it was very difficult to thaw the freeze. That’s not true at all. I mean, it can be done in seconds. Maybe it takes minutes, and as long as you keep track of the information, which it depends on the bureau, but you have a log-in and a password or you can have a PIN number. You got to keep track of that information because if you lose that, that is a pain. But in terms of putting it on and taking it off, it’s really super easy. And it’s one of those simple things that you can do that will prevent a ton of identity theft.

Sean: For those who aren’t familiar with what freezing your credit is, it’s basically a way to restrict access to your credit report. It prevents lenders from seeing your information, which typically keeps them from opening new fraudulent accounts in your name. Note that this won’t help with medical, tax, or other noncredit forms of ID theft, but since credit identity theft is the most common kind, these easy steps that you can take to protect yourself are really worth doing.

Security Cardkreinick/Getty Images

Liz: I also want to talk about limiting exposure, the number of people who have your Social Security number. We’ve got a really screwed-up system where the Social Security numbers become the all-purpose identifier. That’s never what it was meant to be. And now we’ve seen through the Equifax breach and so many others, the vulnerability of that system. So you do need to do what you can to keep that Social Security number out of as many places as possible. But a lot of times it’s hard. There are a lot of people demanding your Social Security number that have no right to it. But if you kick up a fuss, you don’t know what’s going to happen in terms of, like, your doctor’s office. I mean, they don’t really need your Social Security number. The government probably does. Anything that’s credit-related or identity-related, frankly, probably does need your Social Security number. But you got to be careful about when you’re handing it out. Your veterinarian does not need your Social Security number, and mine has asked for it. It’s, like, that’s ridiculous.

Sean: You know, and one thing that people have turned to in lieu of asking for Socials is your phone number. And that’s a nice alternative, but there are risks with that as well because people can do SIM swapping if they have your Social and your phone number, and they can basically take over your phone for their own purposes. So be careful with anything you’re giving out because you don’t know whose hands it could fall into. Maybe it’s OK for the first month or a year. But think about all the things you signed up for five, ten years ago at this point, and you punch in all of your information, and it’s probably still sitting on a server somewhere. I got a little paranoid about this stuff, so I try to limit my information as much as possible because of that.

Liz: Yeah. I wrote about SIM swaps, and they’re absolutely terrifying. Basically, they’re used to kind of get around the verification, the authentication systems that a lot of financial institutions use. The financial institutions for a long time used security questions, and some of them still do, and that’s absolutely stupid because it’s really, really easy to circumvent a security question or to find the answer to it.

Sean: The mother’s maiden name.

Liz: Yes. Good Lord. You go to ancestry.com. In case you didn’t know, if you need to research somebody’s maiden name, it’s super easy to find the answers to these things. So security questions are not secure. So then the next step is two-factor authentication. Two-factor authentication is having two steps. So you have something you know and something you have. Something you know is typically the password. And then something you have is either one of those little fobs that generates numbers or an app that generates a number, or you’re texted a code. Now the problem with texting a code is, again, if your phone is taken over, if there’s one of these SIM swaps, the bad guys can get that number. And some of the bad guys are simply calling up and pretending to be the bank and saying, “You were just texted this number. Can you tell me what it is?” And people will comply. You know, it’s like, don’t do that. Don’t do that. Anyway, that’s a little bit of a tangent, but SIM swap is kind of scary and you should know about it.

Sean: It’s getting more and more common, so people should be aware of it, because they think, Oh, if you’ve got a text code, it’s this standard form of security. I can just go ahead with that. And it’s not the case anymore, which is even scarier.

Liz: Yes.

Sean: But I do want to turn to the second part of Andrew’s question now on whether these ID theft protection companies, as they like to call themselves, can actually prevent ID theft. So, as we said, the answer is no. They can’t prevent bad actors from exploiting your personal information. Their services really fall under three main categories. As I mentioned before, monitoring—they’ll let you know if your information appears on the dark web, and then they’ll alert you to that, which is the second part of their service. And some offer recovery as well. So if your personal information is used to get access to your bank account or open lines of credit, they’ll help you resolve that matter. And that’s a pretty valuable service, I will say.

But for the first two things, you can pretty much do that on your own if you want to do the work for that. But there is a word of caution here I would throw out around signing up for these services. They will often offer a lower-tier service that’s around $10 a month to monitor a single credit bureau, but that’s not sufficient. You really need to have all three bureaus monitored, or frozen is really the easy way to do it. Otherwise, it’s like locking only one door in your house. If you still have your back door open, someone could still get in there and use your credit information for whatever malevolent purpose they have. So you have to pay probably around 30 bucks a month to get all three bureaus monitored. And that adds up really, really quickly. And so you might want to think to yourself, OK, do I want to pay for the service to do the work that I don’t want to do myself? Or am I OK just logging in, freezing my credit, and making sure that I’m secured?

Liz: It’s not a lot of work to do the basic monitoring. At NerdWallet, we have a free credit score. If you sign up for that, at least you’ll be alerted if there’s a big problem. If your credit score suddenly drops, you’ll be notified. You can rush in and see what the problem is. So that’s a monitoring service that’s free, that’s easy to set up. We also recommend you go check your actual credit report at AnnualCreditReport.com. We have a version on NerdWallet, but you can get the full file directly from the bureaus at that AnnualCreditReport.com site. And by the way, make sure you’re going to the right site because there’s some look-alike sites.

Sean: All right, Andrew. So to answer your question, ID theft is a threat that we all face, but you are likely your own best defense against it. If you really want peace of mind, I say freeze your credit. Do the steps that you can do pretty easily and for free to protect yourself. But if you want that extra peace of mind and you don’t mind spending 30 bucks a month or so for one of these services, knock yourself out. Do what you need to do to feel protected.

Liz: All right. And with that, let’s get to our takeaway tips. Takeaway tip number one: Identity theft comes in many forms, and we should assume we’re all at risk.

Sean: Next up: You are your own best defense against identity theft. Freeze your credit profiles, monitor your billing statements, and be conservative about where you give your personal information.

Credit card lockImage Source/Getty ImagesLiz: And finally, if you’re thinking about signing up for an identity theft protection service, know that they can’t actually prevent ID theft, but they can alert you when it happened. Weigh the pros and cons before signing up since these services are not cheap.

If you have a money question, text or call NerdWallet’s SmartMoney podcast at 901-730-6373, or email [email protected]. To hear previous episodes, head to the podcast homepage.

Next, check out these 26 secrets an identity thief doesn’t want you to know.

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Liz Weston is a writer at NerdWallet. Email: [email protected]. Twitter: @lizweston.

Sean Pyles is a writer at NerdWallet. Email: [email protected]. Twitter: @SeanPyles.

The article “SmartMoney Podcast: Is Identity Theft Protection Worth It?” originally appeared on NerdWallet.