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From the Experts at

Identity Theft: What You Need to Know

October 30, 2013 by Christine DiGangi

Identity Theft: What You Need to Know

Millions of Americans' identities are stolen every year, amounting to billions of dollars lost and countless hours of damage control. Betting that it won't happen to you is taking a major risk with your credit.

Of the 2 million consumer complaints received by the Federal Trade Commission in the 2012 calendar year, identity theft accounted for 18% of them, up from 17% in 2011 and 15% in 2010. It was the most common complaint category, followed by debt collection and banks.

Opportunity abounds for thieves, with so much personal information stored online and in mobile devices. Tax fraud was the most common type of identity theft reported in 2012, making up 43.4% of those complaints. That's a major jump from 2011 and 2010, when tax fraud made up 24.3% and 15.6% of identity theft complaints. But personal information can be found in numerous places and used in so many different ways.

With that in mind, it's just as important to be proactive about protecting yourself against identity theft as it is to respond properly if it happens to you.

One of the most helpful tips to follow is to never put convenience before security. This is especially true online, where companies and accounts experience data breaches on a daily basis. Password protection should be implemented whenever possible. Make the password strong, update it regularly and don't use one password for everything.

Setting a password is only the beginning. Consumers need to monitor their online accounts regularly, including banks, email and social media, because fraudulent activity will continue and become more damaging if left unchecked. You can pay for a credit monitoring service also, or monitor your credit for free using a tool like the Credit Report Card, which can alert you to any major change in your credit score on a monthly basis.

In addition to monitoring financial and online accounts, consumers should request their free annual credit reports to spot fraudulent accounts. If someone is misusing your personal information, it could show up on a credit report and damage your credit scores, as a result.

In short: Know where your information is and keep tabs on it. Most identity theft happens through email or other online portals, so you should only access your personal information from a secure computer and Internet connection --- skip the online shopping on public and unfamiliar Wi-Fi networks.

Even with security measures in place, identity theft poses a serious threat to consumers' finances. If you're a victim of fraud or identity theft, take action immediately. Notify the major credit bureaus --- Experian, Equifax and TransUnion --- check in with your financial institutions, change your passwords and notify law enforcement. Of the roughly 370,000 identity theft complaints in 2012, 32% were not reported to the police.

People of any age are targets for identity theft, though complaints most commonly came from consumers in their 20s last year (21%). Identity theft is also most common in Florida, followed by Georgia, California, Michigan and New York.

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Christine DiGangi covers personal finance for Previously, she managed communications for the Society of Professional Journalists, served as a copy editor of The New York Times News Service and worked as a reporter for the Oregonian and the News & Record.

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