The Great Pretenders

Everyone thinks: Identity theft can't happen to me. But according to the FBI, about 10 million Americans have been identity theft victims and experienced collective losses that almost rival Bernie Madoff's Ponzi scheme.

All a perpetrator needs is your name, Social Security number, date of birth and current address to start hacking into your bank account and even your social network. Many people think that identity theft is a quick robbery during which the perpetrator just goes on a spending spree with your credit card. These perps, however, think long-term. Once they have your basic information, they can open a bank account and obtain credit cards and bank loans. They change the address on the accounts. Soon they start asking for credit increases. Then they stop paying bills. They move and don't leave a forwarding address. At some point, the collection agencies trace debts back to you and your life turns into hell.

You can buy identity theft insurance, but you can just as effectively protect yourself.

First, freeze your credit reports. There is a nominal fee to set up the freeze and to thaw it if you need a loan. If you choose not to freeze your credit reports, then make sure you get reports every four months. The U.S. government allows you to obtaina free copy of your credit report from all three credit reporting agencies once a year (www.annualcreditreport.com). Stagger the requests so that you get one from TransUnion, then four months later, get one from Experian, and four months later, one from Equifax.

Second, if your credit card offers alerts on suspcious activity, be sure to sign up for them. Also, periodically check your activity online. Some credit card issuers offer alerts each time the card is used. (I can see all the places my wife went shopping before she even gets home!)

Third, use Shop Safe or virtual credit card to pay bills. It's easy to set up on your computer. You lock in the amount you will pay and generate a one-time credit card number that can only be used by that vendor. You can pay your car insurance bill or for anything you order online. You still get your points.

Finally, shred every piece of paper that has your Social Security and/or account number. You can get a very good shredder for under $100.00 and it will be worth every penny.