How banks can help with identity theft protection

Two words can send a chill down any consumer’s spine: identity theft.

In an increasingly digital world, as more and more transactions are processed online, a growing number of people have become victims of identity theft fraud. An even larger number are familiar with the tales of financial loss and the weeks, months, or even years of effort it may take to undo the damage done.

What is identity theft, specifically? It’s when someone (often a cybercriminal) steals personal credentials—like your name, social security number, or credit card information—to commit fraud or other illegal acts.

Incidents of identity theft continue to rise

The Federal Trade Commission (FTC) said nearly 1.1 million cases of identity theft were reported in 2023. In fact, identity theft is the largest category in the agency’s Consumer Sentinel Network—a secure database containing consumer reports about marketplace problems. Although the total number of identity theft cases reported was down from a 2021 peak—when identity theft cases spiked to over 1.4 million—the volume was almost double the pre-pandemic total: 649,390 cases in 2019.

“I think skyrocketing is probably even too soft of a word,” says Eva Velasquez, president and CEO of the Identity Theft Resource Center (ITRC), an organization in San Diego that provides free resources to individuals dealing with identity fraud. “During the pandemic, we saw the rates increase at such a magnitude. It was already growing. It’s been steadily growing. It’s been the number one fraud type complaint to the FTC for 20 years.”

Identity fraud causes painful financial damage—an estimated $43 billion in losses in 2023, according to financial research firm Javelin. But the emotional toll of identity fraud can be just as serious. “That feeling of isolation is only getting worse as the crime rates rise,” says ITRC chief operating officer James E. Lee, who added that some people they speak with experience symptoms of depression as a result of these crimes.

Velasquez adds: “The playing field where vulnerabilities exist that someone can exploit has grown significantly and keeps growing.”

How banks are helping with online security awareness

It’s critical to know how to protect yourself from identity theft. The good news is that as hackers become more sophisticated, technology follows suit. And with assistance from your financial institutions, you can take steps to protect your financial information online. The most straightforward tips include using unique, complex passwords for different accounts and investigating unsolicited communications from a financial institution, no matter how realistic they appear.

“We always say, ‘Go to the source,’” says Velasquez. “Not the number in the email, not the number left in your voicemail, not the number on the text, but the known number or email address or URL if you’re doing it online. Use the contact information you already know and trust to reach out to that organization.”

Your bank is also a strong ally in the ongoing battle to detect and prevent fraud. Discover^®, for example, offers a suite of online security features designed to help protect your identity and financial information.

“Banks play a very important part in protecting consumer data, and I think that role spans the life cycle of identity,” says Mary Ann Miller, fraud and cybercrime executive advisor and vice president of client experience at Prove Identity, a digital identity solutions provider in New York. “Whether it’s preventing identity theft from happening in the first place, detecting it if it’s happened, or helping consumers recover, I think banks can help their customers feel more confident in the system.”

Here are some of the ways your bank may offer additional identity theft protection:

Account alerts

Alerts are easy to set up and provide real-time monitoring of your accounts. For example, they help banks automatically notify you of suspicious activities, such as large withdrawals or changes to your contact information. Alerts can be particularly helpful in spotting potentially fraudulent activity on your debit or credit card.

“I always encourage people to set their alerts to a dollar, just so you see everything coming in and out of your account,” says Velasquez. This granular insight is increasingly important as card-not-present transactions (like online shopping) remain popular. 

Tip: If you have a Discover account, you can customize alert preferences in the mobile app or through online banking.

Account freeze features

If your credit or debit card is lost or stolen, or you suspect fraud, you may be able to freeze the card to prevent further purchases or ATM activity. Most other account actions—like previously scheduled and recurring transactions, internal and external transfers, and online bill payments—will continue. You can freeze or unfreeze the card online, via phone, or through your bank’s mobile app.

If you suspect someone stole your identity, you should also freeze your credit by notifying the three major credit bureaus: Equifax, Experian, and TransUnion. Doing this can prevent new credit or loan accounts from being opened with your stolen information. “A credit freeze is the most protective thing you can do if someone has misused your financial resources,” Lee says. You may also want to place a fraud alert on your credit file. This alert notifies creditors to take extra steps to verify your identity before extending credit.

Two-factor authentication

Most bank websites will require two-factor authentication if suspicious activity is detected, such as an unfamiliar device or IP address being used to sign in to your account. In that case, the bank will send you a one-time passcode—either by text or email—that you must use before any further activity is allowed. This feature is becoming increasingly automated and cannot be opted into or out of on secure websites.

“Banks want to validate whether you just got a new phone or whether there’s actually someone trying to log in with a stolen password and User ID,” says Miller.

Biometric security measures

At present, biometrics—like fingerprint and facial recognition—are device-centric measures that prevent unauthorized users from accessing your laptop, phone, or tablet. Biometrics can also be used to access your banking app, but the institution must offer that feature for use.

There are other steps you can take to protect your financial information. For example, you can link your credit or debit card to a digital wallet, such as Apple Pay^®, Google Pay^®, or Samsung Pay^®.¹ Digital wallets use tokens, so your card information is never shared with a merchant.

How to help prevent identity theft before it happens: online privacy protection

Despite all your best efforts, your personal identity information remains at risk. “We continue to see new ways that individuals’ identity credentials, foundational identity documents, and identity in general is misused,” Velasquez says. Lee goes even further: “The information’s already been stolen,” he says.

Whether or not you’re aware that your information has been compromised, you should closely monitor the activity on all your accounts regularly. You can also sign up for an online privacy protection service, many of which are offered for no charge. These services periodically scan people-search sites to determine whether any of your information is publicly available. If your information is found, the service also will assist you in submitting opt-out requests to remove your data from the site. For more robust and comprehensive coverage—including daily monitoring of your credit report and thousands of websites—Discover offers Identity Theft Protection for a monthly fee.

Recovering from identity theft

If you become a victim of identity theft, all is not lost. Federal law generally limits losses from use to $50 for credit and debit cards, provided the bank is notified within two business days. Separately, most card networks, including Discover, offer a policy of “$0 liability for unauthorized debit card purchases” as a safety measure for their customers. In addition, the FTC’s IdentityTheft.gov website provides step-by-step advice on how to limit the damage from identity theft and repair your credit.

Recovering from identity theft can be a long and challenging process, so you should take every precaution possible to avoid it from happening in the first place. Your bank and its technology and resources will be an important partner in this process.

From account alerts to paperless statements, Discover is committed to equipping you with tools to stay safe from identity theft and other fraudulent attempts. Learn more at our Online Banking Security Center.

Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.

¹ Apple Pay^® is a trademark of Apple Inc. Samsung Pay is a registered trademark of Samsung Electronics Co., Ltd. Google, Google Pay, and Android are trademarks of Google LLC.

For a list of compatible Apple Pay devices, see https://support.apple.com/en-us/HT208531. Apple, the Apple logo, Apple Pay, Apple Watch, iPad, iPhone, Mac are trademarks of Apple Inc., registered in the U.S. and other countries.

Apple Pay is a service provided by Apple Payments Services LLC, a subsidiary of Apple Inc. Neither Apple Inc. nor Apple Payments Services LLC is a bank. Any card used in Apple Pay is offered by the card issuer.