Keep Your Identity Safe With These Six Strategies
Jim Wang and Kimberly Palmer

How to Avoid the Latest Tax Scam

If you get an E-mail from the IRS asking you to visit a website because of a problem with your tax return, ignore it: It's a scam.

Reports of this kind of "phishing fraud" have popped up throughout the country in recent weeks, according to computer security company McAfee. The company reports that about a month ago, a series of fraudulent websites were created and they're now being used to trick people into sharing personal information online. Consumers who use the IRS's online payment system appear to be most at risk, McAfee reports.

This kind of scheme is a common one, according to Sandy Botkin, tax expert and author of Lower Your Taxes: Big Time! He says taxpayers often receive phone calls, E-mails, or letters that appear to be official and inform them that the IRS owes them a refund. In order to get it, the taxpayer needs to provide his Social Security number, mother's maiden name, and other pieces of personal information. Of course, the entity soliciting that information turns out to be a fraudster, not the IRS. (The IRS lists dozens of other tax scams on its website and urges taxpayers to report them.)

How can you tell the difference?

The real IRS never asks for this kind of personal information over the phone, by letter, or in an E-mail, Botkin says. That means taxpayers should always be wary when approached by anyone claiming to represent the IRS, and should never share information on a website that they are directed to by an E-mail message.

Here are six more ways to keep your identity safe:

Securely dispose of mail.

Have you ever heard of Dumpster diving? Thieves love to dive into dumpsters and discover unshredded documents containing sensitive information they can use for their nefarious identity thieving deeds. That's why it's important for you to shred everything with a cross-cut shredder, which chops paper and plastic into little pieces, making a document nearly impossible to put it back together. We are all usually acutely aware of how to cancel a credit card, but then we take that card and toss in the trash. Shred everything.

Opt out of junk mail. OptOutPrescreen.com is a website set up by the credit reporting industry to let you opt-out of firm offers of credit. By signing up and opting out, you will not receive unsolicited offers of credit, such as new credit cards, and you'll reduce one of the most common ways your identity could be stolen: through your mailbox. This doesn't stop your current credit card company from sending you offers; it only stops "unsolicited" offers. To do that, call your credit card company and ask to opt out of their internal marketing campaigns. If you want to stop other forms of junk mail, this PrivacyRights.org page has a lot of great tips.

Use a P.O. box.

A post office box is a great way to add a layer of anonymity to your everyday activities and get the added benefit of securing your mail, if your mail isn't behind lock-and-key. Many people use their P.O. box as their permanent address for accounts that permit it, which makes it harder for an identity thief to discover your name and your actual address, since most of your documents will list your P.O. box. If your mailbox doesn't have a lock, you might want to get a P.O. box simply because they are more secure (or buy a lockable mail box). P.O. boxes vary in size, are accessible around the clock, and can be very cheap. The U.S. Postal Service has this page to help you find out rates in your area.

Review your credit reports.

Remember to review your credit reports annually. If you are the victim of identity theft, you want to detect it as early as possible so you can limit the damage. By reviewing your reports every year, you can catch suspicious accounts and new addresses listed, both signs of identity theft, as quickly as possible. It's also a good idea to review your reports for honest errors as well. Fixing them can often take several weeks, if not months, so you want to fix them as they appear.

Use fraud alerts.

You can call any of the credit bureaus and put a fraud alert on your account. Once you call on a credit bureau, it will notify the other two and the fraud alert will be active at those bureaus as well. The fraud alert warns a potential creditor to do additional due diligence before extending credit. The idea is that credit reports with a fraud alert have already been compromised, so the creditor should do extra work to ensure that they are giving credit to the right person. The bureau isn't required to do this, but they probably will because ultimately, they could lose money.

Credit score monitoring.

Some say credit score monitoring isn't necessary, certainly not one with a monthly fee, but you can use free credit score monitoring from Credit Karma as an early detection sensor for fraud. Credit Karma doesn't give you a the official FICO score -- it's a TransUnion credit score using TransUnion data -- but if you notice unexplained changes in your score, it might be a sign that someone is stealing your credit. With these techniques, you can do what many of the monthly identity theft monitoring and protection providers do, without the monthly fees. This also has the added benefit of reducing your junk mail, which is a boon to you and the environment, and helping you sleep better at night knowing your information isn't floating around for someone to steal.

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