Beware! It's Open Season for Identity Thieves

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Credit lost walletWhether a customer's shopping preferences run more toward Black Friday or Cyber Monday, one thing is for sure: the holidays are open season for identity thieves. While monitoring individual credit is important year-round, it's especially critical during the year end-shopping blitz.

Customers can protect themselves from identity theft by being vigilant when shopping in person or online. But as author and identity theft expert Steve Weisman points out in his latest book, "50 Ways to Protect Your Identity in a Digital Age," customer behavior and preventive measures won't protect against unscrupulous employees at retail establishments or other companies that process personal and credit information.

Monitor your credit, free of charge
In addition to keeping information out of the hands of possible scammers, it's important to regularly monitor credit card and banking statements, as well as routinely review credit reports for suspicious activity.

The Fair Credit Reporting Act provides for access to your credit report free of charge from each of the three nationwide credit reporting agencies each year. While many websites purport to offer the "official" free credit reports required by law, only one is the real deal: Annualcreditreport.com, authorized by the Federal Trade Commission.

The three credit reports don't have to be ordered simultaneously; ordering one each quarter will provide a smaller window for detecting and stopping potential theft.

Social security number? Yes. Credit card? No.
But just as potential identity thieves are adept at scamming personal information, so too are some credit monitoring companies.

Many of these outfits offer a free credit report as a hook for a monthly credit monitoring service. Less reputable ones are a gateway to the very identity theft consumers order their credit report to thwart.

While paying for a monthly credit monitoring service can be a useful strategy for at-risk individuals or anyone concerned about possible identity theft, handing over personal information and agreeing to a monthly or yearly contract with a dubious provider or without full knowledge is never a good idea.

Customers will always have to disclose their social security numbers when ordering a credit report, but if you're providing credit card information, you're most likely signing up for a monitoring service.

Freeze tag for adults
As an extra security measure, you can put a security freeze on your credit reports. Freezing credit won't impact credit scores or the regular use of credit cards or bank accounts. It will, however, block new credit inquiries -- both fraudulent and legitimate -- until the freeze is lifted or "thawed."

The major credit reporting agencies warn that freezing personal credit can have negative consequences. But Weisman says those concerns are exaggerated. "Thawing a person's credit usually takes about 24 hours. Sometimes it can take a little longer," he says. "But the only real downside is that you'll have to plan a day or two ahead for major purchases that require a credit check, like buying a new car or applying for a mortgage. And most people don't make those decisions spontaneously."

Laws concerning security freezes are managed at the state level. While everyone can freeze their credit report, the fees and eligibility for fee waiver vary widely by state. Most states permit victims of identity theft to freeze their reports for free; others allow fee-free freezing for senior citizens and/or spouses of identity theft victims.

A security freeze must be done with each of the reporting agencies to be in total effect, and any applicable fees must be paid at each agency. The fees for freezing, unfreezing and temporarily lifting the freeze can vary from free to $20. Most states charge $5 or $10 to place the freeze. Some states require a charge for each action on a frozen account.

The Consumers' Union has a complete state-by-state guide to requirements and fees, as do the reporting agencies.

Motley Fool contributor Molly McCluskey writes about personal finance, investing and budget travel. Follow her on Twitter @MollyEMcCluskey or on Facebook.
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