Identity theft occurs when someone illegally obtains your personal and financial information for the purpose of using your identity to open new credit cards and other financial accounts to charge purchases or withdraw money with you being unaware of what is happening but ending up being responsible for these transactions. Often, multiple accounts are involved.

In 2021, approximately 42 million U.S. consumers lost a total of $52 billion through identity theft, a dramatic increase from the prior year. Unfortunately, identity theft is occurring more and more, plus the bad guys are growing increasingly sophisticated in how they use various methods of new technology to obtain your personal information through the Internet, including social media.

Today, most instances of identity theft take place in a low-tech manner when someone gets the details of your personal and financial information through obtaining it covertly at your workplace, raiding your mailbox or stealing your purse or wallet. Another common method is called “dumpster diving” where someone obtains cancelled bank checks, discarded credit card applications and bank, credit card and utility statements by going through your garbage.

An increasing amount of identity theft is now taking place on the Internet through a practice called “phishing” (pronounced “fishing”) where e-mails are used surreptitiously to obtain your personal and financial information. These e-mails are made up to look as if they are coming from a legitimate financial institution and give a phony reason for requesting you to provide personal information, such as your Social Security number, bank account number, credit card account number and birthday. In these e-mails, you are asked to click on a link that takes you to another official-looking site where you are requested to enter this information.

Another version of phishing is to send you a similar e-mail that is designed to look as if it originated from a company where you have an online payment account, such as PayPal. These usually say that you must provide certain personal information in order to maintain your account there. “Spear phishing” is when you receive an e-mail requesting personal information that appears to have been sent by someone in the human resources or payroll department of your own organization.

Criminals now use phishing attacks to install ransomware on your computer (or those of your organization’s computer network) that encrypt your data and freeze all the files on your computer. Typically, these exploits result in a demand for payment to give you the keys that restore your files. Hospitals, government departments, large law firms, corporations of all types and non-profit organizations have all suffered from such ransomware attacks. Avoid clicking on file attachments or web links in any e-mails from suspect or unknown users. Increasingly, hackers are directing their phishing at social media, taking advantage of the tendency for people to be much more trusting when they use their social media accounts on sites as Twitter and Facebook.

Take the following measures to protect yourself from identity theft:

In the event you discover you are a victim of identity theft, act fast to call the police and the fraud departments of your bank, credit card company, any online payment companies you use, and any other companies where you make regular monthly payments, such as utilities. Keep a log of all the parties you report this matter to, any promised action on their part, and the date and time of each call.

Also, contact the fraud departments of the major credit bureaus to let them know what has happened. Order a copy of your personal credit report from one of them so you can check it over ASAP and get back to all of them about any discrepancies. In most cases, your bank and credit card company will ultimately reimburse you for any losses as long as they are not able to prove that you have been negligent in disclosing your personal information.

The most common instances of personal fraud are when someone makes unauthorized purchases on your credit card account or withdraws money from your bank account without your permission using a stolen ATM card and PIN or a forged personal check. Other instances of fraud occur when you are induced to make a donation, investment or payment on the basis of false claims and information.

Stolen personal information used to commit fraud against you can be obtained by hackers breaching your computer with viruses, keystroke loggers or spyware that exploit weaknesses in software without your knowledge. Such infections often occur when you are using public access computers.

Hackers also gain access to your computer through “phishing” when you are careless and gullible in responding to unsolicited e-mails by opening links or attachments on them as requested. Sometimes, these e-mails are made up to look as if they are coming from legitimate financial institutions. These ploys enable hackers to harvest the existing data on your computer or log keystrokes as you enter passwords, credit card numbers and bank account numbers. They also often damage your computer’s filing system and slow down its functionality.

Here are some steps to take to minimize your exposure to personal fraud as well as to reduce the piracy of your personal information:

Elderly persons are especially vulnerable to fraudsters using personal information to ask for money via a phone call or e-mail, e.g., “Mrs. Smith, your grandson John Smith needs your help. He’s been arrested in Miami for drug possession. I’m prepared to act as his lawyer and I know the arresting policeman so I can get him to drop the charges but John doesn’t have any money to pay my $5,000 fees. Can you send me a money order for this amount and I’ll take care of everything? By the way, John does not want anyone telling his parents about this situation.” Such appeals are always bogus.

Another scam is to tell someone that you have won a large sum in a lottery or have inherited a significant amount from a long lost relative. All you have to do to receive this money is to send an upfront fee and your personal banking information so the amount can be deposited in your bank account. Warn your elderly family members that such scams are becoming increasingly common and urge them never to send money to any type of stranger or organization, regardless of what the circumstances are, without first discussing it with you.

There are literally millions of different scams that have been perpetrated over the ages. While scams come in all sizes, shapes and colors, they all have the same goal — to separate you from your money by taking advantage of your gullibility, lack of experience and yes, often stupidity. Many scams are disguised as “investment opportunities” that are presented to you through e-mail spam, unsolicited phone calls or newspaper ads.

These recommendations will help you avoid becoming a victim of some of the more common scams related to making investments:

Be extremely careful about investing in a business with a friend or associate, including those where you are going to be involved in running the business as a partner. While such situations are usually not scams, they often end in grief and disappointment. If you feel absolutely compelled to make this type of investment, make sure beforehand that the company is legally incorporated with a defined number of common shares constituting its equity and that a proper shareholders agreement is drawn up that offers you some protection in terms of your rights as an investor, including what happens if you and your partner end up having a major disagreement about the business. Always have an independent lawyer look over this agreement on your behalf. And, keep in mind that at some point in time you are going to want to exit from your investment. Think about how you are going to be able to do so.

Another source of common scams involves big ticket transactions, such as the sale of vehicles or the renting of apartments or houses, often listed in classified ads including Craigslist. To minimize your chances of getting ripped off in these situations, deal in person with local buyers, sellers and renters as opposed to someone in a far away location, especially those in another country.

Be extremely wary of any offers that are priced considerably below the current market if you are buying or renting, in other words that look too good to be true. If you are the seller, be on guard against receiving stolen or counterfeit money orders and checks, including bogus cashier checks. Ask your bank to verify their authenticity before you agree to accept them.

Always carefully check and note down the details of the identity of the person with whom you are dealing. If you are buying a vehicle, ask to see proper documentation on its ownership. In the case of renting a property, verify that the individual is legitimately representing the landlord.

One type of scam occurs when someone takes over an apartment when the tenant is away for an extended period and rents the property to multiple persons, securing a deposit and the first month’s rent from each of them. Usually, a tip-off of such a scam is when you are not asked to fill in a rental application or provide any details on your credit standing.

When the other party seems to be in a hurry to complete the transaction, this is often a sign that something is not legitimate. Another indication of trouble is when payment has to be wired to or from another country via Western Union or another money wire service.

An increasingly common scam is being committed by remotely located buyers who express an interest in purchasing your vehicle or other goods sight unseen, then “by mistake” send you a check or money order for much more than the price, and shortly afterwards ask you to wire the difference back. After you do so, your bank finds out that the check or money order you received is bogus and you are now responsible for making up the difference.

When you become suspicious about doing a transaction with someone, take steps to protect yourself and do not be hesitant about walking away from a deal if your instincts tell you that something is not right about it. After all, it’s your money.

You can obtain more information about protecting yourself from scams involving Craigslist at https://www.craigslist.org/about/scams. Also see Keep Financially Fit in the Citizen of the World Guide, What’s Really Important at www.COTWguides.com.