You are careful with your credit cards, keep your passwords longer than four characters, and always know that your well-meaning long lost family member in Nigeria may not actually have a $10 million inheritance to pass on to you. But with all the resources available to financial criminals, are you doing enough to protect your finances?
Though the odds of being targeted by a financial crime are fairly low, it is still a very notable concern. According to the Federal Trade Commission, approximately 1.8 million incidences of identity theft were reported in 2011, their number one complaint for the twelfth consecutive year. But if you do find yourself in that minority statistic, the headache and work involved to recover can be a nightmare. Here are some of my favorite tricks to help protect oneself from unwanted data breaches.
Protect Yourself from Unwanted Data Breaches
- Strengthen your passwords: If your password is your pet’s name, your birthday, or your son’s middle name, it’s time for a change. If you use the same password for everything, then you make it that much easier for a hacker to get even more of your information. Your passwords are only as secure as the spreadsheet or notepad that you save them on, so do not write down your passwords. One of the best options out there is to use an encrypted password service like 1password or LastPass (the former is my favorite). These sites help users generate complicated, unique passwords for all websites, hidden behind one very strong master password. Note: since these services require a master password, I wouldn’t recommend it for anyone who has trouble remembering a single, more complex password.
- Trust the “S”: When you go to a website to order something or send a private file, check to make sure that the site you are visiting has “https” rather than just “http.” That “s” stands for secure, and it helps keep unwanted eyes from accessing the data you are sending. If you do not see the “https,” I would avoid entering any private information (especially credit card numbers).
- Go paperless: If you elect to receive all of your financial data electronically, you reduce opportunities for mail fraud and statement theft. You save the hassle of having to shred any private documents, with the added bonus of saving trees. I created a folder in my Gmail account to receive all of my statement notifications, trade confirmations and notices so that everything
is searchable in one secure place.
- Digitize and back up your data: Make sure your financial life is securely available in more than one place, in case of an emergency. An external hard drive is great for this, but an online service like Dropbox.com can be even better. This keeps important financial documents (insurance papers, brokerage statements, tax returns, wills, etc.) accessible in case they are damaged at home or your hard drive crashes. Having them in the cloud also means they are available while on the road.When I get an email notification from my bank or custodian that a new statement is available, I download the statement and put it in my Dropbox folder. This way, even if my email is hacked, Dropbox serves as a separate and extra layer of protection. This also allows you to have statements for a longer period of time than what is offered by banks and brokerage houses.
- Protect your credit: I am not a big fan of expensive credit monitoring/identity protection services, mainly because I feel like you can get pretty good options for free. Sites like AllClearID.com, Quizzle.com and CreditKarma.com provide basic credit/identity monitoring at no cost. You can check your credit score without triggering a hard credit inquiry.You are also entitled to one free credit report a year from each credit bureau through annualcreditreport.com. Do not be fooled by gimmicky sites like freecreditreport.com that claim to offer free credit monitoring. You may get one free report, but you have to enter in your credit card information so that if you go beyond their trial period, they can start charging you regularly.
If you have had issues with identity theft in the past, freezing your credit may be your best option to avoid unwanted activity (there are some costs and inconveniences associated with this, so it may not be for everyone). Books can be written on identity theft alone, but if you would like more information on how to protect yourself further, here is a great guide put together by The Wall Street Journal, as well as this one from the Federal Trade Commission.
Take Steps to Protect Yourself
Even if you’re doing everything right, there’s no guarantee that you won’t be the victim of financial crime, but the more you can do to protect yourself the better you off you are. There are many more options that you can utilize to make your finances even more secure, but this should serve as a good start. Investigate solutions that make the most sense in your life, and implement them sooner rather than later so you can avoid becoming another statistic.