Protect Your Identity: Create These Accounts Before Someone Else Does
As U.S. tax season draws to a close, everyone should stay vigilant against scams and identity thieves. There are a few accounts that every U.S. worker should create as soon as possible, even if they don’t think they need them yet. Registering these accounts, and following a few other steps, provides a good defense against identity theft.
my Social Security
Younger workers might not think much about Social Security, the federal entitlement program that might provide them some cash in retirement — unless it runs out of money 10 years from now. If you don’t have a my Social Security account yet, register for one now. This account helps you verify that all your income has been reported as expected, and it prevents an identity thief from registering for your benefits. It also lets you download your annual Social Security statements, so that you won’t get them in the mail.
In the early days of the COVID-19 pandemic, there was a flood of new unemployment claims from workers who were laid off. Opportunistic scammers helped themselves to at least $646 million in fraudulent unemployment claims in 2020 in just my home state of Washington; in addition to other disputed claims in Washington, and fraud in other states, the total fraud was well into the billions. I found that a scammer had already set up an account at the Washington Employment Security Department (ESD) to make a fraudulent claim using my personal information, and many of my coworkers were also affected. After reporting the fraud to the ESD, I was able to reclaim my identity and put it under my control.
As a defense against unemployment fraud, see whether your state offers an online account for unemployment benefits. Even if you’re currently employed, and even if you’re not sure whether you would qualify for unemployment, sign up for a free account. This prevents someone else from exploiting your personal information for their own fraudulent gains.
Creating an IRS Online Account can be complicated. I created mine at a time when ID.me, the only identity provider that the IRS supported, required applicants to show their identity documents to a human attendant on a videoconference call. After a bipartisan backlash to ID.me’s use of facial recognition technology, the IRS last year announced that it would allow an alternative. Earlier this year, after a disappointing delay, the IRS said that it would offer an alternative sign-in using Login.gov.
Once you’ve created an IRS Online Account, you can log in to view and pay your income taxes, view official notices that the agency has sent you, and verify your balance due for prior years (hopefully, it’s $0).
The IRS also lets you request an Identity Protection PIN (IP PIN), a six-digit number that is required for taxpayers to file a return. If you’ve been the victim of identity theft in the past, the IRS might send you an IP PIN automatically. If you don’t have a PIN, it’s easy to request one. Be sure to include it in your tax software when you file your return; once you’ve received an IP PIN, the agency won’t accept your return without it.
All your financial institutions
It might seem obvious to create an online account for your bank — this is a common step when depositors open a new checking account online, for example — but there are cases where you might have to create a financial account manually. For example, I’ve had mortgages that have been sold and re-sold, and each time, I may have to register a new account with the new company that services my mortgage.
Use a password manager, like the open source Bitwarden, to generate and save unique passwords (and, perhaps, unique usernames) for each of your financial institutions. Use multi-factor authentication (MFA) as much as you can. Download, save, and back up your statements regularly; if your online account becomes disabled or your account is closed, you might lose online access immediately.
Managing your credit
Keep your credit report frozen at the major bureaus, and temporarily lift the freeze only when you need to open a new account, apply for a loan, or do something else that requires unfrozen credit. You can find info about major bureaus’ credit freeze services here:
- Equifax: https://www.equifax.com/personal/credit-report-services/credit-freeze/
- Experian: https://www.experian.com/freeze/center.html
- Innovis: https://www.innovis.com/personal/securityFreeze
- TransUnion: https://www.transunion.com/credit-freeze
Run your credit report for free, every few months or immediately before you apply for a credit card or mortgage, at AnnualCreditReport.com. This is the only site authorized under federal law to provide free access to your Equifax, Experian, and TransUnion credit reports. In the past, each report could be run only once per 12 months (so I recommended running one report every 4 months, rotating across bureaus), but during COVID-19, you can run reports for all three bureaus as often as once per week. If you find anything that looks incorrect, such as an account that you don’t remember opening or past-due payments that you are confident you made on time, the report should include information about how to correct it. Be sure to run another report after some time has passed to verify that the incorrect info has been removed.
Use a credit monitoring service, but don’t feel required to pay for one. If you are included in a data breach, you may be entitled to a year or more of credit monitoring at no cost to you. Some financial institutions offer credit monitoring as a free service for their customers; at least two institutions that I use do this. You can enroll in alerts in your email or on your phone. There are plenty of standalone services for credit monitoring and identity theft alerts, but I don’t have any recommendations for them, since I get enough peace of mind from my regular credit reports and my bundled credit monitoring services.