How to prevent identity theft

As online commerce has boomed over the past decade, so too have opportunities for identity theft. In response, the Federal Trade Commission publishes advice for consumers on how to spot identity theft, how to protect yourself from it and what to do if it happens to you.

According to the FTC, signs of identity theft include familiar clues like bank withdrawals from your account that you can not explain, unfamiliar charges on credit or debit cards and calls from debt collectors regarding bills you don't recognize. There are other signs though, according to the FTC, such as a notice from the IRS that more than one tax return has been filed in your name or if you suddenly stop receiving bills or other mail.

To protect yourself, the FTC recommends being extra careful with your personal information. Carry only the identification and cards that you need, so that you'll minimize the potential for damage if your belongings are lost or stolen. The FTC also advises consumers to shred personal documents and information, including credit offers, insurance forms, physician statements and the labels from perscription medication bottles, to foil dumpster-divers.

If you suspect your identity may have been taken, the first step is to create a fraud alert on your credit report with one of the three major credit reporting companies. All three companies are required to share such alerts with each other. Once the alert is placed, you're entitled to receive a copy of your credit report from all three companies, which you can then check for signs of fraud and identity theft. If you have an idea of how or where your identity was used, you can follow up directly with a fraud department at that company or office.

The third step is to create an identity theft alert with the FTC, which gives you important rights and can help you recover some or all of what you've lost. The FTC also recommends extending your fraud alert, if needed, as well as setting a credit freeze with the three major credit reporting companies.