What Is Identity Theft? Types and Examples

What Is Identity Theft?

Identity theft happens when someone uses your personal information without your permission—such as your Social Security number, bank account number, and credit card information— to gain financial benefits or commit fraud.  Thieves can use your information to access personal accounts, open up new accounts without your permission, make unauthorized transactions, or commit crimes.

Thieves can steal anything from a credit card or bank account number to a driver's license or passport. Victims of identity theft often end up with damaged credit, incorrect information added to their records, or wrongful arrest.

To protect yourself, stay informed about data breaches, report any security incidents, and consider freezing your credit.

Types of Identity Theft

There are several types of identity theft, including:

Financial Identity Theft

Financial identity theft occurs when 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

Thieves use stolen Social Security numbers to apply for credit cards and loans resulting in unpaid 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 or benefits.

Synthetic Identity Theft

Synthetic identity theft is a type of fraud in which a criminal combines real (often stolen) and fake information to create a new identity for fraudulent accounts and purchases. Synthetic identity theft allows criminals to steal money from credit card companies and lenders who extend credit to them based on their fake identities.

Child Identity Theft

Child and teen identity theft involves using a child's identity for personal gain. This is common, as children typically do not have the capability to take steps to create 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 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.

How Do Thieves Get Your Data?

Thieves can attempt to obtain your personal information in various ways. For instance, some sift through trash bins looking for bank account and credit card statements.

Identity thieves increasingly use computer technology to obtain other people's personal information for identity fraud.

They might:

• Search the hard drives of stolen or discarded computers
• Hack into organizational computer networks
• Access computer-based public records
• Use information-gathering malware to infect computers
• Browse social networking sites;
• Use deceptive emails or text messages.

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.

Examples of Identity Theft

It can be difficult to know if you've been a victim of identity theft, especially if you don't check your financial statements regularly. Some clear indicators of identity theft include:

• Bills for items that you didn't buy that you discover on your credit card statement, online account, or via invoices by email or U.S. mail
• Calls from debt collectors on accounts you didn't open
• Loan application denials despite thinking your credit is in good standing
• Bounced checks
• A warrant for your arrest
• Unfounded medical bills and explanations of benefits (EOBs) from an insurance company
• Utilities being shut off
• Difficulty signing into accounts
• Inexplicable hard inquiries into your credit report
• 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, but children and aging adults are particularly vulnerable. They may not understand specific situations or paperwork, such as bills. In addition, their care and finances are often handled by others who may not inform them of details or regularly check their accounts.

Children who are victims of identity theft may not become aware of it until they are adults. Adults who need medical care often have to provide a lot of personal information repeatedly to hospitals, clinics, caregiving agencies, and doctor's officers,  increasing the risk of data theft.

Identity Theft Protection

Preventive measures include regularly checking personal documents for accuracy and addressing discrepancies promptly.

Services Available To Help

There are several identity theft protection services that help people avoid or mitigate the effects of identity theft. Typically, such services help:

• Safeguard personal information
• Monitor public and private records, such as credit reports, alerting clients to suspicious activities
• Resolve problems associated with identity theft

In addition, some government agencies and nonprofit organizations provide resources to help prevent and address identity theft.

Many of the best credit monitoring services also provide identity protection tools and services.

How to Protect Yourself From Identity Theft

• Monitor your accounts regularly: Review your credit report for suspicious activity and check bank and credit card statements often to ensure there are no unauthorized transactions
• Use strong passwords: Avoid easy passwords that contain personal or identifiable information. Create passwords with letters, numbers, and symbols.
• Enable two-factor authentication (2FA): Activate 2FA when available on accounts to add an extra layer of security.
• Be cautious online: Limit sharing personal information on social media and try to always be connected to a secure and private internet connection.
• Stay Informed About Data Breaches: Keep an eye on news about data breaches involving companies where you have accounts and take action if your information may have been compromised.
• Watch for phishing scams: Always verify links and sources before providing any details.
• Consider Credit Freezes: A credit freeze will restrict access to your credit report making it hard for a thief to open an account with your information
  

Recovering From Identity Theft

Recovery can be a lengthy process. After filing a report with the FTC, take these steps:

1. Place fraud alerts on all of 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.
2. Freeze your credit reports. Freezing your reports prevents access to any credit information. Your credit report is removed from circulation so that a lender cannot access it. If access is denied, no account in your name can be opened.
3. Contact all of the companies involved in the identity theft. Demonstrate to them that you are a victim of such theft, that you did not open any accounts, and that no purchases of goods or services are legitimate.
4. File complaints and dispute charges. Share 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.
5. Contact all credit reporting agencies. Dispute any incorrect charges and information on your credit reports.
6. Contact your bank(s) and credit card companies. Request that they close your current credit and debit cards and issue you new ones.
7. Change all of your login and password information. Update passwords and turn on 2FA.
8. Monitor your credit reports. Keep an eye out to ensure that your personal and financial information remains secure and unavailable to thieves.
   

The Bottom Line

Identity theft is a traumatic, difficult experience and can severely damage your creditworthiness. It can leave you with bills you did not incur and cannot pay.

Regularly monitor your financial statements and credit reports for signs of fraud. If you suspect that you are a victim of fraud, there are ways to dispute the charges, fix the theft, and stop your private information from being made available to thieves. In addition, the government provides various resources to help you repair your credit standing.