My experience with fraud

A few years back, I was scrolling through my credit card statement absent-mindedly. Not expecting to find anything abnormal, I did a double take when I saw a few hundred dollars in charges from Nordstrom, spent just a few days previously. I shop at Nordstrom every once in awhile – had I forgotten a massive purchase?

Once I dug a little deeper, it confirmed what I already suspected – my identity had been stolen. Thankfully I was able to reverse the charges, freeze my credit and prevent a catastrophe. But imagine if I hadn’t checked my bank statement that day?

The scary part was, I hadn’t lost my wallet, visited an unfamiliar country or done anything out of the ordinary. In the course of going about my regular routine, someone had managed to steal my information and use it to go on a shopping spree.

In the wake of the Equifax data leak, now is a good time to get up to speed on how scammers operate, how your data can be compromised and how to protect yourself. Read ahead for the full scoop.

Freeze your credit

freeze creditIf you think your identity has been stolen and are worried about people opening credit cards in your name, you can freeze your credit report. When you apply for a new type of credit, lenders look at your credit report to determine if you’re eligible. If your credit is frozen, they can’t look at your report and will deny your request.

You can freeze your credit by contacting each of the three major credit bureaus – Equifax, Experian and TransUnion. They may charge between $5 and $10 to freeze your report. A freeze lasts as long as you want it to, although you can temporarily lift a freeze any time if you do want to apply for a new loan or refinance your house.

A credit freeze won’t affect your credit score, and current lenders will still be able to access your report. The Federal Trade Commission has more information on credit freezes here.

Opt out of pre-approved offers

pre-approved offersEver get those letters in the mail saying you’ve been preapproved for a new credit card? Do you ever wonder what happens to them if you throw them away? Sometimes scammers will go through your trash to find these offers and sign up for the card. They’ll run up a balance before you even find out what’s happened.

Fortunately, you can opt out of those offers for free by calling 1-888-5-OPT-OUT (1-888-567-8688) or going to www.optoutprescreen.com. You can choose to opt out for five years or permanently. Some people opt out not just for financial protection, but also to limit the amount of tempting credit card offers they receive. Opting out won’t hurt your credit at all and is a free service. If you change your mind, you can go to the same site and opt-in.

Examine emails and phone calls closely

Examine emails and phone calls closelyThe other day, I got a phone call from a number in Ireland purporting to be a customer service representative from PayPal. I use PayPal regularly, but I’ve never gotten a phone call from them. I asked the woman to give me more information about why she was calling and said I needed proof she was indeed from PayPal before I continued the conversation.

She agreed and sent over some emails that proved she was from PayPal and not a scammer. I felt a little silly for putting her through the ringer, but in the end, I realized I was being smart for not immediately acquiescing to her request.

You should be wary anytime you get an email or phone call from a financial institution asking for sensitive information. These scams are some of the most common ways that hackers gain access to your financial accounts.

Sometimes, they’ll send an email that looks as though it’s from a legitimate company that you do business with, asking you to log in or change your password. Suddenly, they have access to your account without you ever realizing something is wrong.

If you’re unsure whether or not an email is legitimate, forward it to the customer service email you find online. They’ll be able to verify it. If you’re on a phone call, ask them to send you an email. A legitimate company will always be happy to assist you, so if the person gets irritated or angry, it’s a likely bet they’re a scammer hoping you won’t catch them.

Shred documents

Shred documentsThis is the oldest fraud protection trick in the book, but it still bears mentioning. If you have sensitive information in the form of paper documents, put them through a paper shredder or cut them up finely with scissors before throwing them away. Many scammers still dig through trash cans, hoping to find anything with personal information on it – social security number, bank information, phone number, name and address for example.

This can include a variety of common documents, such as ATM receipts, bills, credit card statements, expired credit card, IDs, visas and passports.

Look at statements carefully

Look at statements carefullyWhile credit cards protect you from fraud, there is a time limit on how long you can wait before reporting a transaction. In general, you can be liable for up to $50 in charges if you wait two billing cycles before reporting.

Debit cards are even less forgiving. You only have two days to report a fraudulent charge before you can be on the hook for up to $500 in charges. That’s one reason to rely on credit cards, because even if you don’t catch the charge in time, you won’t be responsible for as much money.

Apps like Mint aggregate your financial information so you can quickly scan through to see what the new charges are. If you have multiple credit cards through various issuers, using an app like Mint can make it easier than logging in separately.

Try to log in once a week to go through your transactions and flag any that you don’t recognize. Keep all your receipts in one place so you can go through and match them up with your bank or credit card statements.

Be careful where you swipe

Be careful where you swipeIn the last decade, scammers have found a new favorite tool – credit card skimmers. These little fake credit card readers fit right over the top of an existing card reader, often looking almost indistinguishable from the original after installation. But instead of feeding your information to an ATM or cash register, it sends your card number into the eager hands of a scammer. Often, there will be a hidden camera nearby to record you entering a PIN.

Spotting these devices is fairly simple, as long as you know at what to look. If the reader looks obviously tampered with or otherwise compromised, that’s all you need to know. You may also notice that the card reader is a different color from the rest of the unit, or otherwise seems to have a different design aesthetic. The card reader might seem overly bulky or misaligned. If you’re at an ATM or kiosk with multiple card readers, you can compare them all to see if there are discrepancies.

Unfortunately, sometimes scammers work in cahoots with people behind the cash register in a service capacity – or they’re running the operation themselves. It’s much harder to detect this kind of fraud, since the clerk will often be taking your card and swiping it themselves. Often they’ll have a card skimmer below the register or otherwise out of view, so losing sight of your card while they’re ringing you up should be a red flag. If you feel genuinely uncertain about the trustworthiness of an establishment, you can always pay with cash to take credit cards out of the equation.

Use better passwords

Use better passwordsAdmit it – your passwords probably aren’t as secure as they should be. Maybe you use the same key phrase for every password. Maybe you just use the word “password”.

As our financial data and personal information become more and more inextricably linked with our internet identities, it has become incredibly important to have complex passwords that are hard to crack. That means using upper and lower case letters, using numbers and symbols and never, ever reusing passwords. Store your passwords on a piece of paper in a safe or other secure location with your other important documents. Lastly, treat a password like a mantra – never tell it to anyone but your computer screen.

The bottom line

Unfortunately, there’s no foolproof way to protect yourself from financial fraud. I learned that the hard way when my identity was stolen, despite feeling like my information was secure. But the truth is, I wasn’t doing all the things listed here. I am now, and my personal information has been secure ever since.

Scammers and fraudsters are always trying to stay a step ahead of consumers, so you need to stay abreast of the latest information and best practices. For now, following the advice in this article is probably enough – but that can change very, very quickly.