Recently a family member asked me how to respond to a solicitation for "identity protection." The ad appealed to fear and some of the benefits were ambiguous.
Every time we open an account or do business, we expose ourselves to fraud. About three percent of us will be the victims of transaction (e.g., payment card) fraud but almost one percent of us will be victims of fraud so serious as to cause serious financial loss or crippling damage to our reputations. Therefore, I offer the following advice in the order of its importance.
- Use strong (e.g., multi-factor) authentication wherever it is offered. (Prefer Passkeys for a good balance of security and convenience.)
- Avoid doing business with those who do not offer it.
- Prefer purpose-built applications for financial activity. Avoid the use of browsers.
- Prefer mobile computers to personal computers for financial activity.
- Review all account balances and activity on a timely basis (for large and active accounts, "review" equates to online and "timely" may equate to daily.)
- Sign up for "paperless" options. (For good security these should be the default option but for reasons of "backwards compatibility," one must usually opt in.)
- Allow notifications. (Again, this should be the default.)*
- Lock your identity on all three credit bureaus. (Locking and unlocking is now easy and free but all three bureaus will take every opportunity to try and sell you "identity protection" for a relatively high annual fee. All three have had major compromises of personal data and are not reliable.)
- Use complimentary credit monitoring from AAA, American Express, or, as offered, by your bank or credit union.
- Most card issuers now permit you to "lock" your cards, using a mobile app. Balance this with the convenience of using the card but be sure to lock the card if it is misplaced, lost, or stolen.
- When buying online, prefer to pay with such checkout proxies as PayPal, Apple Pay, or Click to Pay. Avoid using debit or credit cards. However, prefer credit cards to debit cards.
- When paying at the point of sale, prefer "contactless." This resists the leakage of the Primary Account Number on the magnetic stripe. Most banks now offer such cards and both Apple and Google Pay offer.
- Do not use the option permitting the merchant to retain debit or credit card information. Checkout as a guest; avoid signing up for accounts.
- When using debit or credit cards for the convenience of frequent purchases from a merchant (e.g., Amazon) consider the use of a one-time or one merchant token number from Privacy.com.
- Consider insurance against financial loss and/or expenses related to identity theft. Such insurance is not a substitute for any of the measures above, may be redundant of protections that you already enjoy (from homeowners insurance, fiduciaries, e.g., https://www.fidelity.com/security/customer-protection-guarantee ), may be expensive, and is best purchased from insurance sources (e.g. as an optional endorsement to one's homeowners insurance). https://tinyurl.com/FTCreportidenttiyfraud
* While I have been writing this I have received notices of three legitimate transactions. This assures me that I will get timely notification of fraudulent ones.