Do not be confused by the headline. I am still writing about financial topics, not sexual ones, nor have I subleased this space to Dan Savage. It’s to drive home the point that not being cautious about your financial data can be almost as dangerous as unsafe sex.

What Can Go Wrong

Financial fraud can take many forms, but they all have something in common. Someone has to obtain information about you that should be private, and use it claiming to be you.

Stealing a credit card (or “finding” a lost one) is the easiest form of fraud, but the thief must move quickly because he knows the card may swiftly be voided. You know, after all, if you were pick-pocketed or mugged, and would most likely notice if that extra card were no longer in your sock drawer. You also have the best legal protection in these situations. Under Federal law, you are liable for no more than $50 of fraudulent charges on any credit card, and none after you give the card issuer notice. Many issuers will waive the $50, too. Debit cards operate under similar, but slightly less generous, rules.

Even if your credit card is maxed out, be sure to report a theft or loss. The thief cannot put charges on it, but a valid card is a useful “breeder” document for identity fraud.

Stolen checks are a little bit different. In theory, your bank can pay out only on your written signature, and they are responsible for comparing the signature on your check to what they have on file. Quaint and old-fashioned, and rarely done unless you are at the counter withdrawing cash. Many banks do not even notice if a check presented through the clearing system is entirely unsigned. Indeed, as banking becomes more electronic, unsigned documents are common and often appropriate. If you have a car loan or insurance that is paid automatically from your bank account, the payee is effectively issuing a check on your behalf, stating that your signature is on file. The same holds true if you go to a creditor’s Web site and use that to pay your bill.

If your bank does pay out money against a forged signature or fake electronic authorization, be prepared for a fight unless the forgery is really, really obvious, for example, if the forger signed a name other than yours. Otherwise, they will try to somehow make it your fault, perhaps insinuating that you were negligent for not keeping your blank checks in a locked safe.

The really nasty situations occur, however, when the crook is able to do a partial or whole identity theft. By running up debts in your name, they can not only ruin your credit, but also cause you to be arrested for their financial crimes. At their worst, these situations can take years, and many thousands of dollars in legal fees, to clean up.

Keep It To Yourself

The best form of protection is to keep most vital information on a need-to-know basis, and recognize that many people will ask for information they do not need to know.

You cannot prevent computer hackers from stealing credit card data, or a dishonest employee of a legitimate business from filching credit card slips. But you can make sure you do not discard credit card receipts where they can be easily found. Take them home and tear them up. If you do not keep your paid credit card bills, bank statements and cancelled checks, tear them up before you throw them away. A home shredder is probably not necessary, but, whenever you get a new credit card, put the cut-up pieces of the old one out in two different bags of trash.

Be careful with on-line purchases, and extremely selective about which Web sites you let keep your credit card information on file. If you don’t really know the merchant, using Paypal puts a respectable buffer between the merchant and your information. Or, if that is not an option, many credit card companies will issue a virtual account number, which is a one-time-use number that prevents the merchant from seeing the real number.

How many checks do you really write away from home? I have not carried a checkbook in over 10 years, so no one can steal checks with my wallet. I either use a credit card or pay cash. Not writing checks in stores also prevents the clerk from having on one piece of paper (the check) most of the information needed for identify theft: your name, address, bank account number, and driver’s license number which they carefully write down after glancing at the photo. The only other information an identity thief could want is your Social Security number.

Protecting that number is vital. Years ago, states commonly put your Social Security number on the driver’s license, and many banks encouraged printing them on checks so that you would not have to copy it over for the store clerk. I still see this occasionally, and shudder when I do. Even the Internal Revenue Service has caught up with the risk and no longer puts your Social Security number on the preprinted tax return labels that they mail out. Is your Social Security card in your wallet? Take it out now, and only carry it if you’re starting a new job and need it.

Check It Out.

Just as self-examination is the best early detection system for breast and testicular cancer and several sexually-transmitted diseases, watching your data can stop problems. Make sure you know where the cards you don’t regularly use are. Check your banks statements and credit card bills each month for bogus transactions. And, once a year, get your credit reports and check them over for mistakes.

Are there money or tax questions you would like to see discussed in this column? Let me know, at 2835 N. Sheffield, Suite 311, Chicago, IL 60657, or call 773/525-1778 (888/525-1778 toll-free outside the Chicago area) or e-mail greg@gregmermel.com.

Greg Mermel is a certified public accountant whose clients in the arts range from individual performers to major theatre companies and suppliers. He also sometimes produces theatre.

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