Don't get scammed by ID thieves

NEW YORK (CNNMoney.com) -- There's a reason consumers are worried about protecting their credit- and debit-card information.

The feds said Monday that one alleged master scammer stole data involving more than 130 million credit cards. In fact, Albert Gonzalez may be responsible for the largest case of identity theft on record, according to federal prosecutors.

Meanwhile, other hackers are working their way into the computer systems of major retailers across the country, experts say.

As the bad guys get savvier, identity theft has become more common. Last year, the number of incidents of identity fraud in the United States increased 22% over 2007, according to the most recent survey by Javelin Strategy & Research.

Identity theft occurs when someone uses your information to open credit cards or bank accounts, write bad checks or take out loans. Victims can be left with countless charges, years of bad credit and endless aggravation.

Some 10 million Americans were victimized in 2008, up from 8.1 million in 2007, Javelin said.

"Let's face it, these scammers are extremely intelligent people," said Bill Hardekopf, CEO of LowCards.com and author of "The Credit Card Guidebook." But, "there are certain things that you can do to protect yourself."

What can you do to keep it from happening to you?

The most effective weapon against identity theft is to safeguard your personal information: birth date, Social Security number and credit card numbers.

Shredding your mail, using unpredictable passwords and secure networks, keeping careful tabs on your bank statements and monthly bills and monitoring your credit report regularly are the best ways to prevent identity theft.

"The key word vigilance," said Linda Foley, founder of the Identity Theft Resource Center.

Consumers are entitled to one free credit report a year from each of the three credit bureaus -- Equifax, Experian and TransUnion. Hardekopf recommends staggering the reports so you'll get one every four months.

To get your report, go to annualcreditreport.com -- the official site set up by the three credit bureaus to comply with federal law.

The three major agencies each offer ID protection services for about $15 a month as well. That includes monitoring your credit report and notifying you of any changes plus a few fancy extras.

Equifax's ID Patrol searches suspected underground Internet trading sites for your personal information and includes identity theft insurance up to $1 million with no deductible.

Other credit monitoring services are available from your bank. Bank of America's Privacy Assist service costs $12.99 a month for unlimited credit checks. For $9.99 a month, Chase's Identity Protection will also reimburse up to $100,000 of identity fraud expenses.

But keep in mind, most services can only warn or insure you against ID theft after the fact. Monitoring services can only throw up red flags at the first sign of trouble and help limit losses, which Foley says is "reactive, not proactive."

Even after paying for credit monitoring and insurance, experts agree that no identity theft prevention service is foolproof.

"As a consumer there is only so much you can do," Foley said. "But you can lower your risk somewhat."