Smith told a Parliament and the Internet Conference in Westminster that real names and addresses posted on social networking sites "can be used against you" and that internet users should only provide their details to trusted websites, such as those created by the government.
He said: "When you put information on the internet do not use your real name, your real date of birth.
"When you are putting information on social networking sites don't put real combinations of information."
Smith argued that online fraudsters collect a lot of their information from social networking sites and Google.
Helen Goodman, Labour MP for Bishop Auckland and shadow culture minister, told the BBC that Smith's advice was "totally outrageous".