Strategies to safeguard your identity against identity theft and tax fraud:
Identity Fraud presents a substantial concern for taxpayers and the IRS, with the risk escalating during the summer months. This surge could peak in the year 2024, as consumers have reported most identity theft incidents happening during the summer, when spending tends to be high.
As per the Javelin Strategy & Research 2025 Identity Fraud Study, consumers collectively lost over $27.2 billion due to identity fraud in 2024, an increase of 19% compared to the previous year. This rise in identity fraud, which encompasses new-account fraud, account takeover fraud, and existing card fraud, can be attributed to a surge in cyber attacks and data breaches, particularly those involving cloud service providers and data brokers.
The escalating identity fraud statistics can be alarming, but increased awareness can help mitigate the risks. By understanding the precautions to safeguard yourself, you can lower your chances of becoming a victim of identity theft and tax-related identity fraud. Here are 15 practical tips to protect yourself:
- Public Wi-Fi networks can expose your data to potential cyber threats. Be cautious when using such networks, preferring cellular data or VPNs if available. In public Wi-Fi situations, avoid sensitive transactions like online banking until a safer connection can be found.
- Be mindful of private documents, such as credit card statements, bank receipts, and copies of tax returns. Ensure secure storage and proper disposal of unnecessary documents to prevent unauthorized access.
- Keep your mailing address current by updating it with financial institutions, credit reporting agencies, and tax authorities when you move. Inform the IRS by filing Form 8822, Change of Address, or utilizing your new address on your tax return. Also, don't forget to inform the US Postal Service of your move.
- Regularly examine your bank and credit card statements for any suspicious activities. Swiftly report any unusual transactions and double-check transactions you are unsure of.
- Be selective with the information you provide online. Share only the necessary details while making purchases or signing up for newsletters. Check the website's privacy policy to determine how your information may be shared with other companies.
- Create secure passwords and update them regularly. Avoid using easily guessable or common passwords. Utilize a password generator to create strong, unique passwords and consider using a password manager to keep track of them.
- Opt for multi-factor authentication when offered as an added security layer for online accounts. This process typically requires a password and an additional step, such as entering a code from your phone or an app.
- Exercise caution when participating in games, quizzes, or memes that request personal information. These activities can potentially expose out-of-wallet information used to guess your password or breach your accounts.
- Be wary of phishing attempts and other scams, primarily via unsolicited emails that appear to be from trusted sources like banks, credit card companies, or government agencies. Confirm the legitimacy of such emails before clicking on any links or sharing personal data.
- Safeguard your Social Security Number by carefully evaluating the necessity of sharing this sensitive information. Use it only when required, and avoid providing it unnecessarily online or in-person.
- Monitor your credit report to identify any unauthorized activities. According to law, you are entitled to a free credit report annually from each of the major credit bureaus (Equifax, Experian, and TransUnion) for a total of three reports every year. Access your free reports via www.AnnualCreditReport.com or by calling 1.877.322.8228.
- Set up fraud alerts with your bank or lender, if offered, to receive notifications of suspicious transactions on your accounts.
- Freeze your credit to prevent anyone from accessing your credit report and opening new accounts in your name. The process is free, but only after you apply through each of the three major consumer credit reporting agencies (Equifax, Experian, and TransUnion).
- Establish a fraud alert to prevent identity thieves who have already accessed your account from making fraudulent charges.
- Consider designating a trusted contact with your bank or financial institution to receive notifications if they see suspicious activity in your accounts. This step can be particularly helpful for seniors who may require assistance monitoring accounts.
While there's no foolproof way to avoid identity theft entirely, implementing these precautions significantly reduces the risks, keeping your personal and tax-related information secure. If you suspect your data has been compromised, act promptly to mitigate any potential damage to your credit or accounts. Contact your financial institution, consider placing a fraud alert or credit freeze, and, if necessary, file a complaint with the FTC at identitytheft.gov or contact the IRS regarding tax-related identity theft.
References:[1] https://www.dhs.gov/fakeid[2] https://myaccount.usps.com/mailing-address-change[3] https://www.mastercard.us/en-us/consumers/articles/consumer-news/tips-to-protect-against-travel-scams.html[4] https://www.ftc.gov/consumer-information/scams-frauds/identity-theft[5] https://www.identitytheft.gov/
Cybersecurity measures, such as using VPNs and password managers, are essential ways to protect oneself from cyber threats like tax fraud, identity theft, and identity scams that may occur as a result of increased technology use. Be aware of scammers and their tactics, like phishing, to safeguard personal information and reduce the chances of account takeover fraud and new-account fraud. By staying vigilant and following best practices for cybersecurity and identity fraud protection, individuals can significantly lower their risk of becoming victims.
