How to Protect Your Identity in the Gig Economy

If you’re a gig worker, freelancer, or independent contractor, your identity may be at risk. Companies you barely know want you to give out your personal information, and if you don’t, you lose the client. Here’s what you can do to protect yourself.

1. Know who you’re dealing with.

Think about stranger danger any time you interact with someone new.

  • Were they vetted by a gig platform or referred by someone you trust?
  • Do they have an existing website with an email address tied to that domain name?
  • Do they have an active social media profile or local business reviews?
  • Is their business registered with the state or local government?
  • Do they have a verifiable physical address?

Depending on what type of work you do, the expectations may vary. The point is to pay attention and think things through before you give personal information to random people off of Craigslist.

2. Know their tax obligations.

Since your tax information is likely your most sensitive information, it’s important to know who needs it and who doesn’t.

If you work on a gig platform, the platform generally takes care of tax reporting. This reduces how many people you need to give your tax information to. If your individual clients ask for tax information, they may not understand how things work or they may be scammers.

Another way to avoid giving out your tax information is to use an invoicing service such as QuickBooks, Square, or FreshBooks. When you collect payments electronically, the payment processor is responsible for reporting your income on Form 1099-K. Individual clients should not send a 1099-NEC and therefore don’t need your tax identification number.

3. Get an Employer Identification Number.

You can and generally should get an Employer Identification Number to use in place of your Social Security Number when doing business. If you’re a sole proprietor, the IRS matches the EIN to your SSN so they know income reported under your EIN is your personal income. However, your EIN is much less useful to identity thieves than your SSN since they usually can’t apply for credit with it.

The IRS issues EINs directly. It only takes a few minutes to fill out the form and get your EIN for free. There is no need to use or pay third-party services to do this for you.

4. Understand the Risk of Data Breaches

Some people may take the approach that they trust their clients so worrying about identity theft is overly paranoid. They may also worry about offending or upsetting their clients.

All businesses are at risk of data breaches. In fact, identity thieves are increasingly going after non-financial businesses to try to find employee, contractor, and customer data. If you have a lot of clients, there’s a good chance at least one will get breached. That’s why it’s important to limit what information you give out as much as possible.

5. Monitor Your Credit

Since you’re at increased risk of identity theft because of your freelance or gig work, it’s more important to regularly monitor your credit. It’s much easier to get a new account shut down as soon as it hits your credit report than it is to find out that a thief has put you thousands of dollars in debt with multiple negative marks on your credit report.

MyFico and Credit Karma both offer ongoing credit monitoring. You may also want to periodically check the three major credit bureaus — Experian, TransUnion, and Equifax.

6. Sign Up for Identity Theft Protection

Identity theft protection provides additional guards on your identity such as checking whether your information has been breached. The difference between this and credit monitoring is that you can find out identity thieves have your information even if they haven’t opened credit products in your name. You may also receive insurance that protects against the financial costs of identity theft.

Identity Guard and LifeLock are two common providers of identity theft protection services.

Top Credit Monitoring and Identity Theft Protection Services

If you’re looking for credit monitoring or identity protection, here are some of the top options.

Credit KarmaTransUnionLifeLockmyFICO
Best ForFree credit reportsCredit scores right from the sourceIdentity protection backed by support if something happensReal FICO credit scores — what 90% of lenders use
Credit MonitoringYesYesYesYes
Identity Theft InsuranceNo$1 millionUp to $1 million$1 million
Phone Takeover MonitoringNoNoDepends on planNo
Alerts on Crimes in Your NameNoNoDepends on planNo
401(k) and Investment Account Activity AlertsNoNoDepends on planNo
Credit Bureaus CheckedTransUnion and EquifaxTransUnionAll three with the Ultimate Plus Plan or Equifax only for other plansAll three with Advanced and Premier, Experian only with Basic
Credit ScoreVantageScore 3.0VantageScore 3.0Vantage 3.0Multiple FICO scores including for mortgages, auto loans, credit cards, and more
CostFreeFrom $24.95/moFrom $7.50/moFrom $19.95/mo
Sign UpCreate Your AccountCreate Your AccountView PlansView Plans

Conclusion

If you’re an independent contractor, you need to be careful with what information you give out, but you can’t avoid all risks. Using credit monitoring and identity theft protection services can protect you if something goes wrong.