WPA2 Setup Assistance

Service: Verizon
Router: Verizon-provided

I've noticed that over the past few days someone's been stealing my internet which has caused my network to experience latency of 1500ms to 2.2k+. I confirmed this by checking the mac addresses that are connected to our network and all our devices that we currently own that use the internet (Computers, Laptops, Phones, & Consoles) and noticed two foreign addresses under the name of "IP-Host 1" and "IP-Host 2" with different mac addresses.

Due to this, I am unable to watch youtube videos without crashing my browser on any computer, or have any online games running. Skype & Aim also become obsolete due to the lag.

I've got two solutions, one of which I need assistance and knowledge in from the forum community.

1) Change the encryption from WEP to WPA1 or 2.

Spoiler

I attempted to set up a WPA encryption a year ago with Verizon's help but was told that they would not help me since they do not suggest using WPA and that they have no knowledge of how to set it up. I tried reading online on how to setup WPA encryption and upon my attempt I ended up disabling my router for a few hours and decided it isn't necessary at the time. Now that I know someone's stealing our internet, I'd like to look back into this method. Can anyone help me with a step-by-step guide so I don't mess up like last time?

2) Purchase a new router that will only allow devices to connect with physical confirmation (Or some sort of security).

Spoiler

Was speaking with a friend who told me they had recently purchased a belkin router which does the task of simply allowing devices to connect to the router so long as a physical button on the router is pressed within 20 seconds of the connection request from the device. Since I'm upgrading, I might as well purchase the best router for my family's needs. We have two laptops that primarily game on, two PS3s, and several other computers and phones that connect for basic data use. I'm not sure if the two laptops and consoles will be able to use a 5.0ghz connection, or how to set it up, but I was looking at the Netgear N900. Primary use of the router is 4 dedicated gaming lines, and a basic data line. Suggestions on router/setup?

Things I have already tried:
-Scan all computers for viruses. (They were also recently reformatted within 1 month)
-Disable router for 10minutes to 1 hour
-Cut power to router and network (including TV and Phone lines) for 1 hour
-Checked Mac Address of all connected devices

(I haven't tried blocking a device from connecting since I am unable to find the option on our network setup or my router/service does not provide the option)

 

I've moved the thread to the networking section. What is the exact model number of the router?

 

You could use WPA2 and use MAC address filtering.(really secure combo) Where you list the MAC addresses of the computers and products in your household and whitelist them. If a non whitelisted MAC address attempts to connect it will fail. Search for that feature in your routers setup page. If it is not on the Verizon one it will be on the N900,(which I would avoid) N750 is better or if it is strictly for gaming an ASUS Black Diamond Router would be good.

If you list the model Number like Johhny T said, Could give you a step by step on how to do WPA2 + MAC Address filtering. You will have to manually add new devices to the whitelist as well.

 

Setup WPA(2) AES with a min of 20 chr, all printable chr would be the best solution. MAC Filtering is not really security. Any one with a scanner will see the MAC Address and spoof it. Not all equipment supports WPS(2) or AES. Which lives you with TKIP. Some of the newer routers allow for this giving you both with the same pass phrase.