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Identity theft doesn't have to happen to you

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Susan Walsh/AP/File

(Read caption) This picture shows the exterior of the Internal Revenue Service (IRS) building in Washington (2013). The IRS issued $4 billion in fraudulent tax refunds last year to people using stolen identities, with some of the money going to addresses in Bulgaria, Lithuania and Ireland, according to a Treasury report released Thursday.

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The world is changing quickly. Technological advancements give us access to all manner of information with the swipe of a finger. But the information revolution comes with costs, too: It is increasingly difficult to keep our financial (and non-financial) lives private.

Online databases, apps, spyware and cookies constantly collect and store data about all of us. This makes it possible to quickly find what we’re looking for on Google or Facebook, but it erodes our privacy as well.

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The more we share, the more easily information can be gathered — and the more educated and aware we must become to protect ourselves.

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Understanding your exposure

 According to Javelin Strategy and Research, an American becomes the victim of identity theft once every two seconds. That’s scary!

The first step to maintaining your privacy is to understand how your personal information or identity can become compromised. Let’s start, then, with the most common avenues of identity theft:

  • Financial: When someone runs up fraudulent charges on your credit or debit card, opens a bank account in your name, or uses your identity to get a loan or line of credit, it can create havoc on your credit report and with your credit score. This is the most prevalent type of identity theft.
  • Taxes: Identity thieves can use your information to file a tax return in your name and grab a refund, creating a nightmare for you when you file your own return. The IRS says tax fraud is one of the biggest issues facing the tax agency.
  • Medical: This occurs when someone uses your information to file false claims for insurance reimbursement. Not only is it a hassle to fix the problem, it can also lead to an incorrect medical diagnosis and unnecessary treatments.
  • Social Security: Someone who knows your Social Security number can inflict serious financial damage, opening accounts in your name.
  • Driver’s license: When your license is lost or stolen, someone could use it during traffic stops or other encounters, potentially getting you in a lot of trouble. If this happens, you’ll need to request a license number change.
  • Personal data: Big trouble can ensue when your email or social media accounts are compromised.

Safety tips

The recent news of hackers gaining access to the Social Security numbers, birth dates and addresses of federal employees underscores just how little control we have over data held by third parties that store sensitive data. But there is still much we can do to protect our privacy and prevent identity theft.

Some tips to help keep your information safe:

  • Update computers. Check that the security on your computers and mobile devices is current by regularly installing updates to your browsers, apps and saoftware.
  • Use strong passwords. Passwords such as “123456” or your birthday are weak and easily guessed. Use at least six characters and a mix of upper- and lowercase letters, numbers and characters. Do not store your password in a document on your computer. Instead, use a password manager (such as LastPass or Keeper) that is secure and can be accessed from any device.
  • Use two-step authentication when available. With this security measure, you receive a code in a text to your phone every time you log in to a bank account or other site. You must enter the code to gain access — so even if a crook knows your password, that person can’t access your account without having your phone in hand. Two-factor authentication is recommended for all financial accounts, cloud storage and even social media sites.
  • Protect mobile devices. Tablets and smartphones have the same security issues as computers. Use a reputable marketplace such as Apple’s iTunes Store or Google Play to download apps. Be careful with the permissions you allow on apps because they often track your location.
  • Never use public wi-fi. It’s not secure. Free, yes. Secure, no. Instead, create a virtual private network (VPN) of your own.
  • Freeze your credit. You can freeze your credit file at each reporting bureau. When your file is frozen, no one can see it unless you lift the freeze with a personal code. This can prevent someone from opening accounts in your name. Be aware that credit bureaus can charge a fee to place or lift a freeze.
  • Enroll in credit monitoring. You can request to be alerted to suspicious activity on your credit report.
  • Watch for encryption. When you must share sensitive information online, make sure the website has an address starting with “https” rather than just “http.” The “s” lets you know it is secure.
  • Protect cloud storage. Use a strong password and install two-step authentication to protect documents and files.

The work required to guard your personal information can seem overwhelming at first, but it’s worth tackling for peace of mind. For more information about protecting your identity online, computer security and other privacy best practices, check out resources fromNerdWallet, the Federal Trade Commission and others.