Financial Identity Theft: Do Your Money Habits Put You at Risk?

close up shot of social security card.
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In a recent survey conducted by GOBankingRates, those who reported Social Security fraud were younger than their counterparts. Millennials aged 25-44 reported the highest rate of being victims at 24.82%, with Gen Z ranked next at 9.30%.

Steve Grobman, chief technology officer at McAfee, acknowledged that Social Security scams are on the rise. “In the third quarter of 2020, the Federal Trade Commission reported 112,776 Social Security scams. In 2021, the agency received more than 568,000 reports of Social Security-related scam attempts totaling more than $63.6 million in losses to victims.”

And in 2022? The loss is estimated at $8.6 billion. So what’s going on? Why are people falling victim to Social Security scams?

What Are Social Security Scams?

Paul Bischoff, a privacy advocate from Comparitech, broadly states that there are two leading Social Security scams. The first one is the theft of Social Security numbers (SSNs) to abuse them. “If a scammer can trick you into handing over your SSN, they can use it to apply for credit in your name, steal your benefits and sign up for utilities and other services.” 

The second type of Social Security scam is when a person poses as someone who works for the IRS or SSA to reach out to you because there is a “problem” with your account. This type of scam seems more natural when a scammer pretends to represent legal entities you trust regarding financial affairs. A similar scenario could play out in a romance scam, as well.

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It’s not just adults who must worry about their SSNs being stolen. Some thieves use SSNs that belong to children, which ruins their credit before they even have a chance to start. 

Red Flags You Should Be Aware Of

Chris Hauk, consumer privacy champion of Pixel Privacy, said the No. 1 red flag when spotting this type of fraud is to know how the legitimate entities will communicate with you if there is an issue. “The SSA will never ask for personal information over the phone or via email or text. They will also never take a threatening stance while communicating with you.”

Millennials grew up surrounded by technology and may not be aware of the proper communication channels, since they’ve personally never had to do it another way.

Speaking of email, Grobman encourages you to read through online communication to ensure you’re not responding to a phishing email. Some straightforward signs are that communication is filled with grammatical and spelling errors while asking for your SSN. Another way to spot a scammer is to see if their logo is not only correct but a current one the company is using.

Phishing always centers around links that you’re supposed to click. A few ways to check whether a link someone sent you is legitimate is to hover over the link in the email to display its URL — phishing URLs are often misspelled. Another way is to copy the link and paste it into a word processor to check for errors in the spelling there.

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Signs You May Have Been a Victim

Here are some signs that you may have fallen for a Social Security scam — or had your Social Security number compromised another way.

Changes to Your Credit Score

If you remember your credit score being higher, check your credit report. This will show if any accounts have been opened using your identity. This can also show you if an application was submitted but denied, since lenders leave hard inquiries anytime someone submits their SSN for a financial product or account.

Unfamiliar Bills and Debt Collectors

A random bill from a subscription service, utility provider or another company you’re unaware of can be a sign that someone signed up or opened an account using your SSN.

Bank Notifications for Transactions You Did Not Make

If you receive a notification from your bank that leaves you questioning, find a secure connection and check your account to see if there is suspicious activity.

Payment Is Completed in Untraceable or Irrevocable Means

Gift cards, wire transfers, cash and cryptocurrency as payment methods are a clear sign you are being scammed, because the money is difficult — even impossible — to recover if you change your mind. Payment apps like Venmo, PayPal and Cash App can also be used to transfer money from your checking to a scammer.

Steps for After Social Security Fraud

Groban advises that your first stop should be filing a police report and a Federal Trade Commission (FTC) Identity Theft Report. “This will help if someone uses your Social Security number to commit fraud, since it will provide a legal record of the theft.”

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Next, he says, call your bank. Reach your financial institution and ask for their fraud department, then notify them of your situation. A great way to prepare is to list fraudulent transactions and their amounts so that a bank representative can find them easily.

You should also call the businesses where the fraud occurred to see if they can provide additional information about the person committing the transaction. For example, if they purchased something for delivery, they might have given their personal information, such as name and address, that can help aid police in the investigation.

Don’t forget to freeze your credit with all three major credit bureaus — Experian, Equifax and TransUnion — so no one can open an account in your name. And don’t forget to reach out to the SSA and IRS in case someone uses your information to file a tax return that’s not yours.

How To Keep Your Money Safe

  • Do not share your information unless you know what it’s being used for. Signing up for a financial account in person is different from signing up for a random new bank account with someone you’ve never heard of before. 
  • Regularly check your credit and account statements. Take time at least once a week to review your account and ensure the information is correct. Scammers often charge a small amount to test the availability of funds before spending a substantial amount.
  • Utilize privacy measures. Use your PIN only if directed. You can use wallets that protect your credit and debit cards when you’re not using them. Opt for two-factor authentication. Last but not least, sign up for all notifications you can receive when there is a drop in your credit score or a transaction that leaves you with a lower balance. 
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GOBankingRates surveyed 1,141 Americans aged 18 and older from across the country between Aug. 2 and Aug. 6, 2023, asking twenty different questions: (1) Have you ever been the victim of identity theft, a financial scam or financial fraud?; (2) If you have been a victim of identity theft, which type of theft did you experience?; (3) If you have been a victim of a financial scam, which type of scam did you experience? (select all that apply); (4) If you have been a victim of financial fraud, what type of fraud did you experience? (select all that apply); (5) Have you ever been scammed making any of the following purchases?; (6) All together, how much money have you lost due to identity theft, financial scams and/or financial fraud?; (7) If you lost money due to identity theft, a financial scam or financial fraud, were you reimbursed for it?; (8) What is the most common way you are contacted by scammers?; (9) How often do you change your bank account passwords?; (10) How do you keep your money safe while traveling? (select all that apply); (11) Where do you think is the safest place to keep your money?; (12) How much physical cash do you keep at home?; (13) If you have been scammed out of money when shopping online, how much did you lose?; (14) If you are retired, have you ever experienced these common retirement scams? (select all that apply); (15) Have you, or any of your family members, experienced a Social Security scam?; (16) If you have lost money from a tax scam, how much did you lose?; (17) Have you ever experienced a student loan forgiveness scam?; (18) What type of impact do you think identity theft has on its victims?; (19) What are some ways you protect yourself from identity theft today? (select all that apply); and (20) Do you have antivirus software installed on your computer?. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.

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