By Kevin M

Identity theft seems to be all around us these days, and while we shouldn’t live our lives in fear, we can lower the chances of becoming a victim considerably with just some minor modifications in the way we manage our affairs.

Consider the following ten suggestions:

1. Pay cash where ever possible

We’ve all gotten very comfortable with the convenience of using plastic for most of our spending needs. But when ever we pay with a card—whether credit or debit—we create a paper trail in the form of receipts that are issued on both sides of the transaction, to both customer and vendor, opening the possibility for some of them to be misplaced. In addition, identity theft is increasingly originating from employees of the entities we’re transacting business with. Switching to using cash to pay for most of our minor transactions will reduce the potential for identity theft by reducing the number of instances in which our information is exposed.

2. Shred documents or throw them in the fireplace and burn them

Even in the computer age, paperwork that identifies us is floating all over the place. We can’t do much about paper that’s circulating within the businesses we transact with, but we can certainly do something to eliminate the flow of it from our own homes. Never throw paper in the garbage, even if it only partially identifies you. Even partial information, accompanied by an old bank statement or even a credit card offer can provide a start for a would-be identity thief. An inexpensive paper shredder can be had for under $30 and is a must in the average home. (A cheaper alternative exists if you have a fireplace.) Paper shredders aren’t just for businesses any more.

3. Scramble personal information in non-essential venues

It seems everyone we do interact with these days wants all of our information, but some of them collect it for no apparent reason. Ever go to a website to sign up for a network or other service that asks for your address, cell phone and birth date? I have and, sorry, that’s just too much information to provide to someone with no obvious need for having it. Just because someone asks for our personal information doesn’t mean we need to provide it. First ascertain why the requested information may be necessary, then proceed accordingly.

Though our name and email address should be sufficient, more typically, we can’t sign up for these services without filling the boxes with something. So go ahead and give them something—just don’t give them the REAL something! Give them scrambled information—alter your address and phone number, or reverse the numbers on your date of birth. Create a bogus information profile for these situations, and at a minimum, never provide your social security number. If they’re collecting information for a database they plan to sell to other vendors, your bogus profile may save you from unwanted email, phone solicitations or something far worse.

4. Use different usernames and passwords and don’t save them in your computer

Using the same username and/or password for all of your applications may be convenient, but it can also be an early Christmas present for a would be identity thief—one password will give him or her the keys to your entire life. Using several usernames and passwords or each with slight variations can prevent the thief from gaining immediate control of everything you’ve got.

Also, as strong as the temptation might be, avoid checking the “remember me” box for your computer to store your usernames and passwords; by doing so, your computer will provide both your user name and password with just a single keystroke. Considering that there are only 26 letters and ten numbers as possibilities to start a username or password, a thief could gain access to your sites and accounts with a single keystroke, while your computer supplies the rest.

5. Reduce the number of accounts you have

Banks aren’t giving away toasters anymore so it mystifies me that people often have multiple accounts for the same function. In my years in the mortgage business it was stunning (and I admit, a little irritating) to ask for banking information and come up with six savings accounts and four checking accounts for two people. Worse were the ones with 15 credit cards! Each one of those accounts means more mail coming to your house, more personal profiles in more databases, and the potential for mistakes. Consolidate your bank accounts (look into a ”CDARS” account at your own bank if you keep multiple accounts for FDIC insurance purposes) and eliminate little used or unused credit card accounts. The beneficial effect of unused credit lines on credit scores may be outweighed by the risk of identity theft.

6. Lower your visible standard of living

The bigger we live, the bigger the potential payoff for thieves. While there is an admittedly strong drive to live to the maximum of our financial abilities, the more prosperous we appear to all around us, the more vulnerable we are to theft, including security breaches. Avoid appointing your life with generous evidence of wealth. A big house, a premium car and lots of shiny jewelry may catch the eyes of people we hope to impress, but it will also draw the attention of those looking for rich targets.

7. Never send sensitive information in a text message or email

Emails and texts are another area of modern life which have become so common that we’ve lowered defenses when ever we use them. But understand that emails and texts can quite literally be forwarded around the globe. Only one recipient has to make an error in judgment, and sensitive information can be forwarded to an unlimited number of people. Once sent, the messages can’t be retrieved or controlled! Keep any financial information or compromising personal disclosures out of these media.

8. Never give sensitive information to an unknown phone caller

One of the worst aspects of this is that the caller usually wants our information quickly, denying us an opportunity to do some investigating before committing. Companies we do business with already have our information on file and shouldn’t be asking for it again. The fact that a vendor asks for your social security number, bank account or credit card information should trip the emergency bells and lights in your mind.

9. Do a web search on any online vendor you haven’t done business with in the past

Many online businesses operate in different countries, beyond the reach of local authorities in the event of a dispute, scam or identity collecting mission. Search the web using the vendor’s name, adding the words “scam(s)” or “complaints”. We did this once with a vendor we’d never done business with, and it turned up dozens of scam and complaint sites, including legal actions.

10. Get a post office box

The convenience of having our mail delivered directly to our homes is hard to beat, however theft of mailbox contents is very real. By opening a post office box at a local post office, we can eliminate the chance of untended mail in our mailboxes.

What other suggestions do you have to reduce identity theft?

By Kevin M

I’ve been a PayPal customer for a few years, and have become so accustomed to its advantages that I hardly notice anymore. But by definition, a service is outstanding when it is so efficient that you use it and never think about it. Perhaps that’s because you never need to think about it!

After all, it’s the squeaky wheel that gets the grease, not the one that’s functioning efficiently.

My wife and I signed up with PayPal a few years back when we wanted to begin selling our kids old toys on Ebay. It’s been a pleasant ride since.

Ease and Security

Make a payment via PayPal, and you won’t need to spend the several minutes it takes to enter your name, address, phone number and credit card information for each purchase you make over the web. An increasing number of web based businesses are using PayPal for all of the reasons I’m writing about here, and all you need to do to make a purchase is to enter your email address and PayPal password, then procede to check out. That’s all there is to it. No account numbers, no expiration dates, no secret codes from the back of your card.

There’s so much concern these days about identity theft, and it’s worth noting that every time you send a check or give out your credit card information, you’re creating an additional opportunity for a would be thief to obtain your information and identity. With a PayPal account, the merchant receives payment from you without ever knowing anything about your bank account or credit card.

Here’s another cool feature: you can send money to or receive money from anyone just by sending an email. The recipient will need to either have a PayPal account, or can sign up for one, which is incredibly easy. If you have a child living away at college or in a distant city, this can make sending money quick and easy, saving you money on bank wire transfers, credit card fees or even the postage it takes to mail a check.

Fees

Many of the services offered by PayPal are free, and others carry only nominal fees. Much depends on the plan you sign up for, and whether it’s personal or business, and which one you take should depend entirely upon your personal needs.

For starters, on the basic plans at least, there are no set up fees and no maintenance fees.

When you make a purchase with PayPal there are no fees to you as the buyer. Of course, if your account is direct linked to your credit card account, there will be the fees incurred through the issuer of the card, but none through PayPal itself.

If you send or receive money to/from another individual and the transaction is run through your bank account or from a PayPal credit balance there is no cost for the transfer. (Fees will apply if you make the same transaction using a credit card.)

See Transaction fees for domestic payments for complete details and variations. Also click on the View Cross Border Transactions Fee link on the same page to view fees on receipt of payment from foreign sales.

If You Need to Take it to the Next Level

With a large number of people starting small businesses, many of them on the web, PayPal offers outstanding benefits.

Trying to run a business without accepting credit cards can put you at a decided disadvantage, but trying to establish a merchant credit card with a bank can be difficult and maybe even impossible for an upstart business.

The application process with PayPal is pretty simple and all you need is a primary bank account, plus a secondary account (bank or credit card). PayPal will validate the existence of your account, which they’ll do immediately, then you’re ready to roll.

With a PayPal account you can easily handle international transactions—which is increasingly important—as well as accept credit card payments directly from customers who don’t have PayPal accounts. (I believe there is a current limit of two credit card purchases received per non-PayPal customer at this time.)

There are a variety of plans available for merchant accounts, but generally speaking, the fees associated with receiving payment on the sale of products or services starts out at 2.9% of the dollar amount of the sales proceeds, plus 30 cents per transaction on total sales of up to $3000 per month. So on a $100 sale, the fees will total $3.20—a small price to pay for a guaranteed payment.

Above $3000 the percentage drops on a sliding scale as volume increases. You may be able to get a better deal through a bank, but when you’re just starting out PayPal has the advantages of being simple and predictable.

And even once you’re up and running, offering PayPal will be a way of transacting business with customers who have PayPal accounts, but no credit cards, without you having to wait for checks to clear your bank.

Again, click through on the link in the above section in order to determine the plan that will work best for you and the fees associated with it.

Concluding Thought

You can go just about as far as you like with PayPal since they offer a variety of merchant accounts (with various terms), and also offer an actual credit card and even a money market account if you like.

If you have a PayPal account would you recommend it to others? If so, why?