Identity theft topped the list of consumer complaints for the 12th year in a row in 2011, according to the Federal Trade Commission. About 15 percent of the complaints were about identity theft. Of those, almost a quarter were related to tax- or wage-related fraud.
"It's a quite frightening type of identity theft," says David Torok, director of the division of planning and information at the FTC.
To carry out tax- or wage-related fraud, a thief uses a victim's personal information and Social Security number to get a job. Any tax obligations from the thief's employment are attributed to the victim. Or a fraudster files a tax return in the victim's name and steals the victim's tax refund, Torok says.
"People discover it as they file their taxes," Torok says. "There's a real spike this time of year."
The first step to protecting against identity theft is safeguarding your Social Security number, says Steven Toporoff, an attorney in the division of privacy and identity protection at the FTC.
"You shouldn't carry it around with you. Be cautious anytime you use it," he says.
Toporoff also recommends checking credit reports regularly, monitoring bank and financial statements for accuracy, using strong passwords to access financial accounts, changing passwords regularly, and shredding financial documents before throwing them out.