What Is Identity Theft?
Identity theft is the crime of obtaining the personal or financial information of another person to use their identity to commit fraud, such as making unauthorized transactions or purchases. Identity theft is committed in many different ways and its victims are typically left with damage to their credit, finances, and reputation.
- Identity theft occurs when someone steals your personal information and credentials to commit fraud.
- There are various forms of identity theft, but the most common is financial.
- Identity theft protection is a growing industry that keeps track of people's credit reports, financial activity, and Social Security Number use.
Understanding Identity Theft
Identity theft occurs when someone steals your personal information—such as your Social Security Number, bank account number, and credit card information. Identity theft can be committed in many different ways. Some identity thieves sift through trash bins looking for bank account and credit card statements.
More high-tech methods involve accessing corporate databases to steal lists of customer information. Once identity thieves have the information they are looking for, they can ruin a person's credit rating and the standing of other personal information.
Identity thieves increasingly use computer technology to obtain other people's personal information for identity fraud. To find such information, they may search the hard drives of stolen or discarded computers; hack into computers or computer networks; access computer-based public records; use information-gathering malware to infect computers; browse social networking sites; or use deceptive emails or text messages.
Victims of identity theft often do not know their identity has been stolen until they begin receiving calls from creditors or are turned down for a loan because of a bad credit score.
Types of Identity Theft
There are several types of identity theft including:
Financial Identity Theft
In financial identity theft, someone uses another person's identity or information to obtain credit, goods, services, or benefits. This is the most common form of identity theft.
Social Security Identity Theft
If identity thieves obtain your Social Security Number, they can use it to apply for credit cards and loans and then not pay outstanding balances. Fraudsters can also use your number to receive medical, disability, and other benefits.
Medical Identity Theft
In medical identity theft, someone poses as another person to obtain free medical care.
Synthetic Identity Theft
Synthetic identity theft is a type of fraud in which a criminal combines real (usually stolen) and fake information to create a new identity, which is used to open fraudulent accounts and make fraudulent purchases. Synthetic identity theft allows the criminal to steal money from any credit card companies or lenders who extend credit based on the fake identity.
Child Identity Theft
In child identity theft, someone uses a child's identity for various forms of personal gain. This is common, as children typically do not have information associated with them that could pose obstacles for the perpetrator.
The fraudster may use the child's name and Social Security Number to obtain a residence, find employment, obtain loans, or avoid arrest on outstanding warrants. Often, the victim is a family member, the child of a friend, or someone else close to the perpetrator. Some people even steal the personal information of deceased loved ones.
Tax Identity Theft
Tax identity theft occurs when someone uses your personal information, including your Social Security Number, to file a bogus state or federal tax return in your name and collect a refund.
Criminal Identity Theft
In criminal identity theft, a criminal poses as another person during an arrest to try to avoid a summons, prevent the discovery of a warrant issued in their real name or avoid an arrest or conviction record.
Warning Signs of Identity Theft
It can be difficult to know if you've been a victim of identity theft, especially if you're not always checking your financial statements.
Some clear indicators of identity theft include bills for items that you didn't buy; these can be seen on your credit card or received via email or other means, calls from debt collectors regarding accounts that you didn't open, and your loan applications being denied when you believed your credit is in good standing.
Other warning signs include bounced checks, a warrant for your arrest, unexplainable medical bills, utilities being shut off, inability to sign into accounts, hard inquiries into your credit report not caused by your actions, and new credit cards in your name that you didn't apply for.
Potential Victims of Identity Theft
Anyone can be a victim of identity theft. Children and aging adults are particularly vulnerable to identity theft as they may not understand specific situations, bills, and their care and finances are handled by others.
Children may be victims of identity theft but not aware of it until they are adults. Seniors often provide a lot of information to hospitals, caregivers, and doctor's officers, where information can be obtained by those seeking to commit fraud.
Identity Theft Protection
Many types of identity theft can be prevented. One way is to continually check the accuracy of personal documents and promptly deal with any discrepancies.
If you believe you are a victim of identity theft, start by going to IdentityTheft.gov, a website administered by the Federal Trade Commission (FTC). It provides directions on how to help you recover your identity and repair any damage you have experienced.
There are several identity theft protection services that help people avoid and mitigate the effects of identity theft. Typically, such services provide information helping people to safeguard their personal information; monitor public records and private records, such as credit reports, to alert their clients of certain transactions and status changes; and provide assistance to victims to help them resolve problems associated with identity theft.
In addition, some government agencies and nonprofit organizations provide similar assistance, typically with websites that have information and tools to help people avoid, remedy, and report incidents of identity theft. Many of the best credit monitoring services also provide identity protection tools and services.
Recovering From Identity Theft
Managing identity theft can be a painstaking and long process. Once you have determined that you have been a victim of identity theft and filed a report with the FTC, there are other steps that you need to take.
You can start by placing fraud alerts on all of your credit reports as well as freezing your credit reports. Fraud alerts are an added layer of protection in that lenders must confirm your identity before opening an account, usually via phone. Freezing your reports prevents access to any credit information. Your credit report is removed from circulation so that a lender will not have access to it. If they don't have access to your report, they cannot open an account in your name.
Once you've managed the above, you need to contact all of the companies involved. Demonstrate to companies that you are a victim of identity theft, that you did not open these accounts, and that your accounts should be frozen.
You can demonstrate that you are a victim of fraud by filing complaints, disputing charges, and showing any other reports you have filed, such as police reports or reports with the FTC. The Fair Credit Billing Act and the Electronic Funds Transfer Act work in your favor. You must also dispute any incorrect charges and information on your credit reports as well.
This should be done once you have the report that you filed with the FTC. Banks and credit card companies should close your old cards and send you new ones, and you should change all of your login and password information.
From there, continue monitoring your reports to ensure that your information is no longer available for thieves to use.
What Do You Do If Someone Has Stolen Your Identity?
The first step to take if someone has stolen your identity is to report the theft to the Federal Trade Commission (FTC) at IdentityTheft.gov. You can also call them at 1-877-438-4338. From there, you can freeze your credit reports, file a police report, and change all your login and password information. It would also be wise to close your current credit and debit cards and receive new ones. Check your credit reports for false accounts and dispute these with the credit agencies once you have a report from the FTC.
What Are the First Signs of Identity Theft?
The first signs of identity theft are unexplainable charges on your credit card or debit card statements, new cards that you did not apply for, incorrect items on your credit report, medical bills for doctor's visits that you did not have, and collection notices for accounts that you did not open.
What Are the 3 Types of Identity Theft?
The three main types of identity theft are medical identity theft, financial identity theft, and online identity theft.
The Bottom Line
Identity theft is a traumatic and difficult experience and can severely damage your creditworthiness and leave you with bills that you did not incur. It's important to always monitor your bank and credit card statements as well as your credit report for any signs of fraud.
If you have detected that you are a victim of fraud, there are ways to dispute the charges, fix the theft, and stop your information from being available to thieves. The government provides many resources to help you get back to a good credit standing.