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Young, savvy and vulnerable

Editor’s note: This guest post is by Nick Farina, who blogs at Money in English, the one-stop source for young people to learn the basics of personal finance.

It was my friend Brian’s* first time applying for a credit card. He was 19, and his parents thought it would be a good idea for him to start building his credit history. As Brian and his parents discussed his application with the banker, they were both surprised to learn that he already had a credit card — five, in fact.

They were also surprised to learn that he never paid his bills and had an affinity for expensive jewelry.

Brian, of course, was a victim of identity theft. Several years later, and despite professional help, he still hasn’t managed to clear his name.

He’s not alone. Identity theft remains a huge problem, with the Federal Trade Commission recording more than 273,000 complaints about it in 2009. It is a crime that can affect any person at any age. However, the virtual lifestyle of most young people places them at an increased risk, and they must take extra precautions to avoid becoming victims.

For most young people, the world of personal finance is a scary place — and the recent financial crisis has only deepened those feelings. However, they feel quite at home in the virtual world of social networking.

The reality is that the world of social networking is far more dangerous to your financial health than any credit card company could ever be. And according to new research on identity theft, it isn’t the social networks that are the problem — the overall rate of fraud amongst its users is no higher than the average consumer — it’s the willingness of young people to expose crucial data that is the core problem.

Brian’s first mistake was signing up for a “Free iPod” advertisement that he saw on a Web site. Fooled by a fake security seal, he gave out his name, birthday and Social Security number. He didn’t get a free iPod, but the identity thieves certainly did get a lot of free things.

In my experience, this is the biggest mistake that my friends make: signing up for “too good to be true” offers — the ones you see on Facebook all the time — and divulging far too much information.

My rule of thumb is this: if you haven’t heard of the company, don’t give them any personal information.

Another problem is that young people are more apt to give out personal information while participating in social networking sites.

According to the Javelin Report on Identity Fraud, 18- to 24-year-olds are almost twice as likely to list sensitive information during their daily interactions on social media. Fixing this is easy: don’t give out any personal information on any of your profiles, or during any of your interactions. It’s as simple as that.

Finally, young people suffer not only from increased exposure to identity theft, but they take too long to clean it up — nearly twice as long as the average. As a young person myself, I can see why this is. Most of my friends don’t have any idea where to start with regard to repairing the damage done by identity theft. Still, that’s no excuse to wait. If you notice fraud, freeze the affected accounts immediately and report the fraud.

While it’s true that fraud can happen to anyone, if you take the proper precautions as a young person, it will be far less likely to happen to you.

5 tips for young people to avoid identity fraud:

1. Check your credit report annually — Your credit report is your financial reputation, and will alert you to any fraudulent activity.

2. Be uncomfortable with technology — Don’t include personal details, such as your date of birth or address, on any of your public profiles.

3. Use caution when buying stuff online — Only purchase from reputable brands, and use services such as PayPal whenever possible.

4. Act fast — If you are a victim of identity theft, act quickly. The sooner you respond to fraud, the easier it will be to fix.

5. Put your trust in online banking — Online banking is one area in which technology has made banking safer. Use online banking and check your account regularly.

* Name changed to — of course — protect his identity.

See related: Web savvy, but still suckers: Millennials more likely to have IDs stolen,

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  • Jennifer

    Ouch! I know that when I was 19, it would never have occurred to me to check my credit rating for things like identity fraud. How sad that we now live in a society where this has become the norm.