What Causes Identity Theft and How to Prevent It

by Mike on February 25, 2015

in VPN

Identity theft is something that many people think involves stealing the identities of the deceased to be used by illegal immigrants. Or stealing a rich person’s credentials to get into his or her bank account. But it actually happens for other reasons, and to ordinary people. And it happens much more often than you might think. Here we will look at tax fraud, how taxpayer identities are stolen, and how to protect yourself from becoming the next victim.

How Identity Theft Happens

Identity theft happens when your name and other personal details are used by other people. This can mean signing up for accounts or charging services, and many other types of fraud. So how does it happen? Sometimes the companies and agencies with whom we share our information do not take proper steps to secure it. The government also does not do enough to make sure identity fraud does not easily happen. There are really many steps along the way, but suffice to say, the buck stops with you. That’s right, we as the individuals who run the risk of identity theft also need to take responsibility for leaking our personal information. Otherwise we lose control, and we are the ones who will suffer.

Over a billion records of consumers have been stolen in the past ten years, not including those taken by the NSA and other government agencies. These files have the personally identifying information of over a billion consumers. The records were taken from a wide variety of companies, including health related establishments, which are under stronger regulations to protect customer information. Data breaches are happening everywhere, and they are becoming more frequent and more severe. This means that the businesses and groups that we deal with have paid no attention to the cyber security threats that they have been warned about for years. These threats have increased in both number and intensity, yet the groups that hold our data, even those who are held responsible for it by law, couldn’t care less. Even when breaches are discovered by the public, all they care about is protecting their reputations.

Identity thieves and their hacker associates are continuously gaining access to consumer data because the records of our names, phone numbers, addresses, birthdays, social security numbers, emails, job histories, and other personal and private information is being stored on databases that have weak encryption, or no security in place at all. With all this data, a single individual like you can be exposed to a wide range of scams on top of the inevitable identity theft that could lead to huge losses due to anything from paying for fraudulent subscriptions and loans to getting medical treatment in your name, or authorizing bank transactions from your account, committing crimes that are traced back to you, and of course the less known tax fraud.

Tax Fraud and Identity Theft

It is tax season once again, and identity thieves are on the prowl for every few dollars they can scam out of honest taxpayers. Paying taxes is a pain for many people for different reasons, but the biggest pain is getting our identity stolen and having tax refunds going to someone else’s account. It’s a big business, tax fraud, and you could be a victim without even realizing it. Here’s a striking example. TurboTax, a system that is used by many to file state taxes, had to be shut down because it was being used to file numerous fraudulent electronic filings amounting to millions of US dollars. The fraudsters were using stolen identities to do it. It is lucky that these filings were detected as fraudulent because many more are not.

Identity thieves do not only steal your data, but are also involved in additional scams to support their activities. They have been known to impersonate IRS employees to extract more information from taxpayers. Sometimes these scammers will go as far as to request immediate payment by phone with a debit or credit card, perhaps offering some kind of discount or future benefit. Sometimes the call will be about a tax debt that they urge you to pay immediately to avoid overblown penalties. Honest taxpayers are easy targets for these criminals because they are less likely to sniff out a scam, trusting that this government office is taking care of them; and they will be embarrassed by this debt, seeing it as a failure to do their duties properly.

You Can Stop Identity Theft

We can continue to blame companies and the government or not securing our data, but this is not going to save us from identity theft. We have to do our part to limit the amount of personally identifiable information that we are allowing to be spread over the Internet and other channels. The government and the institutions we trust do play a part in failing to properly secure our data, and in some cases we cannot control this situation. There is just some information that must be provided to them and entrusted to them. But research shows that the highest risk for data theft still comes from our own inability to keep information private.

The TurboTax incident is a symptom of a greater disease in our world. It is not the disease of cyber crime, but the sickness of choosing convenience over security. People use TurboTax and other online services because it is easier. Sadly, this also makes it easier for identity thieves to commit tax and other types of fraud. We, the owners of the data so craved by these criminals, are the weakest link in the greater security chain that tries desperately to protect us.

First, we must stop using personal devices and unsecure networks for sensitive transactions. Personal devices are rarely secure because of the myriad free apps on them that are notorious for leaking data. Free WiFi is simply not secure, period. BYOD practices are included here, since the professionals that handle our data are involved in leaking data. For example, a surveyed 88% of medical providers have BYOD yet only 38% were using active security policies, and most of these are inadequate for protecting data.

Second, we need to stop sharing information by technological and traditional means alike, as if we were in control of who can see it. When we use our mobile phones and the Internet, we must always assume that someone else is listening and watching. This is not paranoia; the reality is that most of the time, someone is. There are many tools that can help us keep our information secure, like firewalls, VPNs and data shredders (or even a match and a tin can). But we still need to take care by not sharing any information that is not required. We should also never provide any information over any channel if we have not verified the recipient. Often, it does not take much to confirm the source of the request. And when in doubt, ignore all calls, emails or other communications.

Third, usernames and passwords must be kept as secure as we would keep cash or jewels. Would you keep your cash on your desk or trust an app to hold our jewels for you? Apply the same caution to how and where you store these credentials. And make sure that these credentials are unique and as close as impossible to crack or guess as you can make them. This means not using emails as usernames or simple phrases as passwords, especially when they contain bits of information that anyone can pick up from a social media profile. Identity thieves are professionals; they are very good at piecing information together.

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