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The coronavirus pandemic has slowed some types of identity fraud, but other forms have cropped up.
“Scammers continue to find new ways to connect with victims and steal their personal information,” says John Buzzard, lead fraud and security analyst at Javelin Strategy & Research.
That's why it's still important to put a credit freeze on your accounts, which can prevent someone from accessing them and ripping you off.
“It’s the single most important thing you can do to protect against fraud,” says Christina Tetreault, manager of financial policy at Consumer Reports.
But a credit freeze alone can't protect you from everything. A criminal could still obtain your Social Security number or driver's license information, steal your tax refund, take out loans in your name, or hijack other accounts.
That's why you need to take additional steps to minimize the risks from hackers and thieves, says Ted Rossman, an industry analyst at Creditcards.com. We've outlined a number of ways to protect yourself below.
Even during the pandemic, identity theft remains a huge problem. Last year 49 million consumers were victims of identity fraud, with losses totaling $56 billion, according to a recent study from Javelin. Many of those losses were caused by scams often conducted through email, calls, and texts.
Resolving identity theft issues may mean spending a few hours on the phone with banks, the police, and government agencies. But for complex cases, the process could take months or even years.
And it could prove costly because of legal fees and other expenses to clean up the fraudulent accounts, says Eva Velasquez, president and CEO of the Identity Theft Resource Center (ITRC), a nonprofit group that helps fraud victims.
The good news is that setting up a credit freeze is free and relatively easy to do. Once it’s in place, most lenders are blocked from seeing your credit history, and scammers won't be able to open new accounts or loans in your name.
Yet despite the importance of credit freezes, most consumers don't bother to take that step. As a 2020 survey by CompareCards.com found, almost half of cardholders said they were notified that their personal information was exposed in a data breach over the past year, but only 9 percent had frozen their credit.
But even if you do put a freeze on your credit, there are plenty of ways criminals can come after you. Here's a look at the risks you still face and what you can do about them.
What a Freeze Doesn't Cover
As a result of data breaches both large and small, hackers may have gained access to key pieces of your personal information, such as your birth date, driver’s license number, Social Security number, and more. That gives them opportunities to scam you in ways that aren’t easy to block.
Here are a few of the more common fraud categories that are reported to identity theft experts:
Tax Refunds. By using your Social Security number, scammers can file false income tax returns in your name and claim refunds. The IRS has been cracking down on refund fraud, with reported cases dropping by 80 percent between 2015 and 2019. Starting this year all e-filers can obtain an Identity Protection PIN, which will block scammers from using your info to claim a refund. You must opt in, however.
Health Insurance. Identity thieves can use your information to fraudulently claim healthcare benefits from private health insurance, Medicare, or Medicaid. In some cases, they may use your insurance information for coverage, but in others, they may tell a provider to send the bill to your address, Velasquez says.
Driver’s License. If fraudsters gain access to your driver’s license number, they can create fake licenses, which can be dinged with their moving violations. By adding in other personal information from data breaches, identity thieves can design bogus checks to pay a cashier who is conned into verifying the shopper’s identity by writing your license number on the counterfeit check.
P2P Scams. When you use a peer-to-peer (P2P) payment app you generally lack the fraud protections that you get with a credit card, which means you may not be able to recover money sent to the wrong person or a scammer. As payment apps have grown in popularity, incidences of P2P fraud climbed 700 percent between 2015 and 2019, according to Javelin.
Cell Phone Account Fraud. This crime occurs when thieves open a phony mobile phone account in your name, then use it to access your bank account, sign up for credit cards, or sell the number for other criminals to use. Last year 18 percent of identity fraud victims had mobile phone accounts opened in their name, Javelin found.
Child Identity Theft. Identity thieves may get hold of a child’s Social Security number and use it to apply for government benefits, open bank and credit card accounts, or rent a home. The fraud may not be discovered until the victim is older, perhaps because he or she is rejected for a loan or credit card due to damaged credit.
ID Theft Protection
If you think your information has been stolen or may be exposed, you can get free assistance from the Identity Theft Resource Center, which helps victims resolve a wide range of scams, fraud, and other forms of ID theft.
The ITRC also provides an app that enables fraud victims to document the costs of resolving ID theft, such as bills for phone calls, lost wages, and the like. This record may help in the event of a legal settlement.
As additional protection, you might consider purchasing identity theft coverage. Depending on the level of coverage and the particular offerings, these services can monitor your identity, scan the dark web for your information, and help you restore your identity. Costs for this coverage may run from $10 to $30 a month.
To be clear, ID theft protection won’t prevent fraud, and you can do many of these tasks yourself, such as setting up account alerts, as we explain below.
But if you’re trying to resolve an issue and you're feeling overwhelmed, having someone help may be useful, says Javelin's Buzzard.
Be sure to check the terms of coverage so that you're getting the features you want and you aren’t paying for those you don't want, Velasquez says.
Before you sign up, check to see whether you might already have some form of this service free. Identity theft coverage is sometimes offered as part of an employer’s benefits package or a credit card benefit, or it might be included in your homeowners insurance.
How to Protect Yourself
By creating your own safeguards, you can greatly reduce your risk of fraud or identity theft. Here are three key steps:
1. Sign up for account notifications. Many financial services firms will let you set up notifications via text and email that alert you about activity in your account. That way, you'll get a heads-up that unauthorized transactions are taking place. Make sure you have your alerts turned on and review your statements regularly.
2. Check your credit report. Keeping tabs on your credit file will help you spot any accounts that aren't yours and identify and correct errors that might hurt your credit score.
Due to the pandemic, you can get a free weekly report from each of the three major credit bureaus through April 20, 2022. (Usually you can get one free report from each credit bureau annually.) You can access each of your reports via annualcreditreport.com.
3. Add extra layers of security. A growing number of companies, including tech firms and brokerages, offer two-factor authentication, which requires you to validate your identity before accessing your account. You may have to enter a code provided by text or email, for example, or use a physical security key or security tokens.
Editor's Note: This article has been updated with new information and additional advice.