The first step in fighting identity theft is to understand what it is. Based on the experiences of PayPal's fraud investigators, here are 5 actions that can arm you with a lot of protection.
Protect your information offline as well as online.
Think shopping online is the biggest risk? While news headlines may make it seem that identity theft is an online issue, it is important to recognize that there are also very real dangers offline.
A recent study conducted by Javelin Strategy & Research suggests that you are in greater danger from identity thieves rummaging for important papers in your trash or breaking into your mailbox. The Federal Trade Commission estimates that 14% of identity theft is a result of stolen wallets, checkbooks and credit cards.
To protect yourself effectively, you should consider shredding your old mail, locking your mailbox and emptying your wallet of anything you don't absolutely have to carry.
When you do shop online, it's still good to shop safely. Read more about how to shop safely online from Robert Chesnut, eBay's Vice President of Trust and Safety and renowned internet fraud expert.
Don't respond to emails asking for your account information.
Spoof and phishing (pronounced "fishing") are the terms coined to describe emails made to look like they've come from legitimate companies but that actually come from identity thieves. These emails warn you of account problems or other urgent issues to trick you into clicking through to a scam website. The scam website asks you to enter your user name and password or other account information. Once you do this, you've given your information to someone who might use it to do you harm.
PayPal will never ask you to enter your password or financial information in an email or send such information in an email. You should only share information about your account once you have logged in to https://www.paypal.com/ directly from your browser.
Download the SafetyBar to help block spoof emails. Learn how to spot spoof emails and websites.
Use safer types of payment when paying online.
Most people have become smarter about sharing their Social Security number but think nothing of handing a piece of paper with their bank's name, their account number, their address, and their signature to a stranger — everything written on a check. Industry analysts report that check fraud is a significant problem.
Credit cards offer a little more protection. Credit card companies have invested heavily in software that spots fraudulent transactions as they happen. The biggest concern with credit cards is that the information needed to commit fraud can be easy to get to. The credit card account number you use in a transaction is stored in a merchant's database, and as we've learned from the news, that database might be vulnerable to attack.
Online payment systems, such as PayPal, offer a safe, secure way to make a transaction. With PayPal, you can pay without the merchant ever seeing your credit card number, bank account and other financial information. This significantly limits the information that you share in a financial transaction.
Read more about other ways PayPal fights fraud on your behalf.
Protect your computer.
The key to securing your own computer is to use protective software and keep it up to date. Make sure that you install all security patches available from the developer of your operating system. Run antivirus software to check incoming emails and update the virus definitions frequently. Set up a firewall to prevent intruders from getting into your network or computer.
In addition to using protective software, you should choose strong passwords to protect accounts. Don't use your personal information as a password. Mix upper and lowercase letters. Keep your passwords for each account unique.
Read PayPal's advice on creating strong passwords.
The longer a breach goes undiscovered, the more costly it becomes. According to the Federal Trade Commission, your chances of suffering significant financial damage from identity theft are far less if you discover the breach within six months of its occurrence. After six months, you are more likely to lose money or spend hours untangling a truly nasty situation.
It pays to pay attention. Check your PayPal account and credit card balances often. Review your credit reports for unusual activity at least once a year.
PayPal members can also take advantage of a special offer for credit report monitoring.