What's your favorite pizza topping? That's not an idle question when it comes to protecting your identity. In fact, it's one of many security questions now being used by banks to verify your online banking transactions.

Identity theft is a growing problem, with more than 217 million people affected by data breaches since 2005, according to the non-profit PrivacyRights.org. Most of these cases will go unsolved and unprosecuted. Financial institutions simply pay for the losses (passing along the costs) or put the blame on the consumer.

That makes it all the more important that you know the many forms of identity theft, along with what will — and won't — protect you. If you think it's only about credit cards, you're probably vulnerable.

A Credit "Freeze" Isn't a Solution

Some services promise to put a "freeze" on your credit report. But that really can't protect you from the most expensive types of identity theft. In fact, consumers are paying big monthly fees for something they could easily do themselves for free by going to www.annualcreditreport.com. There, you can contact each of the three major credit bureaus to order your free credit report (safely authenticated), and at the same time request a 90-day credit freeze if you want one.

But protecting against someone opening new credit in your name doesn't give you any protection against a number of identity-theft schemes. According to the FTC, credit freezes only take care of about 30 percent of the identity theft problems.

Identity Theft Dangers

Here are a few identity theft-dangers that a credit freeze won't protect against:

— Unauthorized use of an existing credit card. You're not liable for unauthorized use of your credit card, but you should check balances online regularly to avoid the hassle of disputing fraudulent charges.

— Unauthorized use of your debit card to withdraw cash. A debit card simply doesn't have the some protections as a credit card, as I've written in previous columns. If someone has your debit card and PIN, and uses it to withdraw cash, including against your line of credit, you'll be fighting it out with your bank to prove that you didn't make the withdrawal.

— Unauthorized use of your debit card for purchases. If someone uses your debit card to make a purchase at a store — either with or without your PIN — Visa will offer a guarantee against loss only if the merchant happened to send your transaction over the Visa processing network.

— Unauthorized use of your Social Security number.

Establishing a credit freeze doesn't protect you from unauthorized use of your Social Security number — if the user doesn't open any new credit. Illegal aliens often use existing Social Security numbers at work or to get a driver's license. That uninsured, illegal alien driver could create a paperwork nightmare and impact your future insurability.

— Synthetic identity theft. The credit bureaus don't want you to know about this, and I'm actually hesitant to publicize it. But simple manipulations of your real Social Security number can actually "fly beneath their statistical radar" and allow someone to use your Social Security number to establish credit under a different name and address.

— "Phishing" online scams. Amazingly, people still fall for these authentic looking e-mails pretending to be from your bank, brokerage firm or from PayPal asking you to click on a link for a message of urgent importance. Thousands of people each month "log in" to their accounts at a fake site, thus exposing their account numbers and passwords to the thieves. Never click on a link! Instead, go directly to your bank's Web site to log in and receive any messages posted there.

Pizza and Protection!

All of which brings us back to the issue of your favorite pizza topping!

Your bank has probably asked you recently to create a new and more complex password and PIN. If you have multiple accounts, the temptation is to use the same formula for each one — again exposing you to even more devastating financial consequences of identity theft!

And now they're asking you to choose new "security" questions and answers for verification of transactions or queries. Among the choices: Best friend in high school, favorite subject in school, name of your first pet, favorite type of tree or favorite season of the year — or your favorite pizza topping!

Maybe answering these questions will really improve banking security. (Or your memories!) In the meantime, be vigilant about your identity. Check online balances frequently. And don't fall for false promises of protection. Your identity is a valuable thing to lose. And that's The Savage Truth.

Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange. She appears weekly on WMAQ-Channel 5's 4:30 p.m. newscast, and can be reached at www.terrysavage.com. Her new book, "The Savage Number: How Much Money Do You Make?" has just been published. To find out more about Terry Savage and read her past columns, visit the Creators Syndicate Web page at www.creators.com.

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