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The new digital world makes it easier to stay more engaged and informed. It also puts consumers at risk for identity theft.

The IRS told Beasley to fill out an affidavit, send in her identification information and include a police report if she had one.

“It was almost like going to Walmart and returning something,” Beasley says.

That was only the beginning. Beasley’s problems snowballed, leaving her to piece together her finances.

When Beasley decided to go back to college for another degree, she was told that she was not eligible for in-state tuition because records show that Beasley, who is a Florida resident, is married and lives in California. The issue still isn’t resolved.

Victims like Beasley have learned the hard way that “identity theft is a crime that keeps on giving,” says Adam Levin, chairman and co-founder of Credit.com and Identity Theft 911.

Identity fraud incidents continue to increase. Last year, 12.6 million Americans were hit by fraudsters, who stole more than $21 billion, according to a new report by Javelin Strategy & Research.

Unfortunately, we are living in a society where people are all too willing to give away their information, Levin says. The new digital world makes it easier to stay more engaged and informed. It also puts consumers at risk for identity theft.

Starting in 2011, Javelin research found that users of LinkedIn, Google+, Twitter and Facebook have the highest incidence of fraud. And in 2011, 7% of smartphone users were victims of identity theft, a higher rate than the general public, Javelin says.

The financial industry and the government are trying to combat identity theft. For example, the IRS, the Department of Justice and local U.S. attorneys this year have intensified a crackdown on identify theft suspects. And the IRS has proposed making permanent its pilot program that requires a truncated version of nine-digit Social Security numbers be used.

Even so, it will it not be easy to eradicate identity fraud. Fraudsters are getting bolder, more technologically savvy and more knowledgeable about the financial system and credit reports.

A recent credit card fraud ring netted at least $200 million. During a multiyear scam, thieves were able to dupe credit card issuers with fake identities they had created out of stolen or fabricated personal information.

Consumers may not be able to totally protect themselves from fraud, but at least they can try to limit their damage says John Ulzheimer, president of consumer education at SmartCredit.com.

How to minimize risk:

 

• Instead of throwing your financial statements, tax returns and other paperwork with personal information into the garbage, you should shred them, Ulzheimer says.
• File your tax return as early as possible so identity thieves don’t beat you to the punch, says Trey Loughran, president of Equifax Personal Information Solutions. Keep in mind that the IRS does not contact taxpayers by e-mail to request information.
• Be careful about using free Wi-Fi in public spaces, such as coffee shops, to check on your bank balance or pay a bill, says Doug Clare, vice president of fraud solutions at FICO. Fraudsters are skilled at setting up dummy open networks to ensnare personal information, such as banking passwords.
• Ask why when someone says they need your Social Security number. “Most of the time they don’t and the fewer places that have your Social Security number, the better,” Loughran says.

 

Although you can take precautions, many things are out of your control. Cybercriminals can crack into company and government networks to pilfer data. For example, intruders last year hacked into South Carolina Department of Revenue to steal Social Security numbers.

It’s important to know if your identity has been compromised. To do that, closely examine your financial accounts and billing statements to make sure there are no unexplained charges.

Be sure to check your credit reports. To get a free copy of your credit report from the three credit bureaus go to freecreditreport.gov.

If it seems that someone has misused your personal or financial information, start to resolve the problem by filing an Identity Theft Report to the Federal Trade Commission. The report will help you contact credit reporting companies, debt collectors and any businesses that gave the crooks an account or credit. For more information go to the FTC’s website.

Contact one of the three credit reporting bureaus and ask to have an initial fraud alert placed on your credit report, which will also be passed on to the other bureaus. The fraud alert is free and can make it more difficult for an identity thief to open more accounts in your name. The alert lasts for at least 90 days and can be extended.

You also can place a credit freeze on your credit file. It generally stops access to your credit report. “That makes it impossible for any lender to issue credit in your name,” Ulzheimer says. Many states have enacted a credit freeze law, although the procedures differ and some may cost a fee.

Identity monitoring services are available, and some of them are free. When Richard Barnhill, a retired snowbird who lives part of the time in Phoenix, found that his home in Oregon was burglarized, his insurance company, MetLife, immediately provided him with help from a fraud investigator at Identity Theft 911.

“I didn’t have any idea what I was to do,” Barnhill, 79, says. “They gave me all the forms and notices for credit bureaus, put alerts out, and it was super.”

Experian and TransUnion also offer free credit monitoring services for their own bureaus.

Meanwhile, Beasley has learned how to deal with identity fraud on her own. And that has sparked her to start a blog that offers information about websites and forms to other victims.

“I have people every day asking me different questions about how to handle this,” she says. “I am not trying to be an expert. But I thought it would be good to put information in one place and also give other people the opportunity to have somewhere to share their story or rant about it.”

Source: Christine Dugas. USA Today. April 2013. http://www.usatoday.com/story/money/personalfinance/2013/03/31/identity-theft-prevention-taxes-irs/1962301/