The FTC spelled it out with 3 Ds. Deter. Detect. Defend. According to Get Rich Slowly blog,

a study conducted for the FTC [PDF], in 2005, 3.7% of the U.S. adult population were victims of identity theft. Though the median value of the damage caused was $500 per victim, ten percent of victims reported that the thief obtained $6,000 or more. The median time to repair the damage was four hours, but ten percent of victims spent at least 55 hours resolving their trouble.

Deter

The first step is to deter identity thieves by safeguarding your information.

• Shred financial documents and paperwork with personal information before you discard them.
• Protect your Social Security number. Don’t carry your Social Security card in your wallet or write your Social Security number on a check. Give it out only if absolutely necessary or ask to use another identifier.
• Don’t give out personal information on the phone, through the mail, or over the internet unless you know who you are dealing with.
• Never click on links sent in unsolicited e-mail. Instead, type in a web address you know. Use firewalls, anti-spyware, and anti-virus software to protect your home computer, and keep them up-to-date. OnGuard Online is a government-sponsored site to help you guard against internet fraud.
• Don’t use an obvious password like your birth date, your mother’s maiden name, or the last four digits of your Social Security number.
• Keep your personal information in a secure place at home, especially if you have roommates, employ outside help, or are having work done in your house.

Detect

Detect suspicious activity by routinely monitoring your financial accounts and billing statements. Be alert to signs that require immediate attention:

• Bills that do not arrive as expected.
• Unexpected credit cards or account statements.
• Denials of credit for no apparent reason.
• Calls or letters about purchases you did not make.

Defend

If you suspect that you may have been (or may become) a victim of identity theft, you can file a “fraud alert” on your credit reports. This alert tells creditors to follow certain procedures before they open new accounts in your name or make changes to your existing accounts. The three nationwide consumer reporting companies have toll-free numbers for placing an initial 90-day fraud alert; a call to one company is supposed to be sufficient:

• Equifax: 1-800-525-6285
• Experian: 1-888-397-3742
• TransUnion: 1-800-680-7289