The easiest way for identity thieves to steal your identity online is by getting hold of your passwords. In order to safeguard your identity, password protection online is essential. If you want to keep thieves away from your identity, password protection must be a part of your online security measures. Failing to keep your passwords safe is like handing the keys of your house to a thief.

When you use the Internet you will be in danger of losing money if a sensitive password such as the one you use for payment processing transactions becomes known to a thief. If your password is discovered by a crook, it will be an easy matter for the contents of your e-gold account (or other online account) to be whisked away before you even realise anybody managed to get hold of your password. Having emptied your e-gold account, the thief will most likely check to see if you have a PayPal account where the same password is used.

You should also consider the further dangers posed by identity thieves. If an identity thief breaches your password protection measures, you stand to lose more than just the contents of your online payment processing accounts. An identity thief can use your personal details to make purchases online using your credit card, obtain credit facilities and take out loans in your name. The identity thief might leave your bank account and credit card untouched, so you have no reason to suspect anything untoward has happened until months have passed by. You will only be alerted to the situation when debt collection agencies begin to pursue you for debts you did not incur. By this time, your credit rating will have been damaged and court proceedings might already be pending.

The online identity thieves use various methods to get through your password protection security measures. Two of the most common methods of password theft are keystroke logging and phishing.

Keystroke logging can be performed either by use of a piece of hardware plugged into a computer or with a software program. Keystroke logging hardware will be a danger if you use a computer with public access, eg at work or in an Internet caf?. The hardware will be inconspicuously plugged in between the keyboard and the processor.

The other method is by use of software that you might even install on your computer yourself. There are many great free resources available on the Internet but every time you download a program, you are at risk. A harmless-seeming screensaver can carry spyware hidden within its program and you would not be aware of it.

Phishing involves you being tricked into providing your password or other sensitive information. The most common way this is done, is for a thief to send you an email purporting to be from a trusted source (eg your bank). The email will ask you to click a link and log in to update a piece of information (eg your phone number). Sometimes the email caries a warning that a third party has attempted to access your account and tells you your account will remain frozen until you log in to restore access. This is a ploy designed to scare you into taking action without stopping to consider whether the email really is from your bank. The link provided in the email will be fake and, if you try to log in, your ID and password will be recorded by the crook who sent the email.

You can take steps to avoid theft of sensitive information by keystroke loggers phishing emails but there is another way for thieves to get hold of your personal details and this is entirely beyond your control. This theft occurs when thieves hack into the database of a website where you have an account. You can't prevent this but, by changing your passwords frequently and using a different password for each program you use, the extent of the damage can be minimised.