What Is Identity Theft?

Identity theft occurs when someone steals your personal information and uses it without your permission. This can include accessing your financial accounts, opening new bank and credit card accounts, filing tax returns, and more. In 2023 alone, the Federal Trade Commission (FTC) received over 1 million reports of identity theft.

While it’s impossible to completely protect yourself from identity theft, being aware of how your information can be at risk and what fraudsters can do with it can help you safeguard your data and act quickly if your identity is stolen.

Types of Identity Theft

Identity theft can take many forms, but three of the most common types are financial, medical, and child identity theft.

Financial Identity Theft

This involves unauthorized access to existing financial accounts or the creation of new accounts in your name. For example, a thief may steal your wallet and use your credit card to make purchases or obtain your bank account details to drain your accounts.

Medical Identity Theft

With medical identity theft, a criminal may use your personal information to see a healthcare provider, buy prescription drugs, or submit insurance claims without your permission.

Child Identity Theft

Identity thieves use the personal information of minors to obtain credit, find employment, or engage in other illegal activities. This type of theft can go undetected for years because children typically do not check their credit reports.

How Does Identity Theft Happen?

Identity thieves can obtain your personal and financial information in several ways, including:

• Data breaches: Unauthorized access to an organization’s consumer data.
• Unsecure browsing: Sharing information on unsecure websites.
• Dark web marketplaces: Selling stolen information on the dark web.
• Malware: Malicious software designed to steal your data.
• Credit card theft: Using stolen credit card information to make unauthorized purchases.
• Mail theft: Stealing documents from your mail that contain personal information.
• Phishing and spam attacks: Using email or text messages to steal your information.
• Wi-Fi hacking: Eavesdropping on public network connections.
• Mobile phone theft: Stealing and unlocking your smartphone to access your information.

How Do I Know if My Identity Has Been Stolen?

Signs of identity theft can vary, but common indicators include:

• Unrecognized credit card charges or bank account withdrawals
• Unfamiliar credit accounts on your credit reports
• Bills for accounts you didn’t open
• Collection calls for debts you don’t owe
• Recent credit inquiries when you haven’t applied for credit
• A sudden drop in your credit score
• Unfamiliar medical bills or explanation of benefits letters
• Missing expected mail
• Duplicate return alerts when filing your tax return

How Identity Theft Can Affect You

Identity theft can have severe impacts on your credit and financial situation. Here are some potential effects:

• Open fraudulent credit cards: Your credit suffers as thieves rack up debt in your name.
• Access your financial accounts: Unauthorized charges or withdrawals from your accounts.
• File phony health insurance claims: You receive medical bills for services you haven’t received or are denied treatment.
• File fraudulent tax returns: Your tax refund is delayed.
• Obtain employment using your information: You’re liable for taxes on income you didn’t receive.
• Steal your child’s identity: Your child’s credit is ruined.

What to Do if Your Identity Is Stolen

If you suspect identity theft, take immediate action to limit the damage. Here are some steps to follow:

• Contact your bank or credit card issuer: Report unauthorized purchases and lock your accounts if necessary.
• Review your credit reports: Check for unusual activity and dispute fraudulent accounts.
• File an identity theft report: Contact the FTC for guidance and paperwork to file reports.
• File a police report: Report the crime to your local law enforcement agency.
• Freeze your credit or set up a fraud alert: Notify lenders that you’ve been a victim of identity theft.
• Protect your child’s identity: Check if your child has a credit report and consider adding a fraud alert or security freeze.

How to Protect Yourself from Identity Theft

While you can’t completely prevent identity theft, you can take steps to make it harder for criminals to access your information:

• Safeguard your devices: Use strong passcodes and biometric authorization, and install regular software updates.
• Use a password manager: Ensure your login credentials are strong and unique for each account.
• Protect personal documents: Opt for electronic statements and shred documents with personal details.
• Watch out for phishing scams: Be skeptical of emails or texts asking for personal information.
• Don’t share information over the phone: Verify the caller’s identity before providing any details.
• Check your credit reports regularly: Use free credit monitoring services to watch for unfamiliar activity.
• Be vigilant when online: Use a VPN on public Wi-Fi networks and check website URLs for security.
• Consider identity theft protection services: These services can help you spot signs of identity theft early.

Conclusion

Recognizing the signs of identity theft and taking steps to prevent it can save you heartache, stress, and financial loss. By monitoring your credit regularly, watching out for suspicious transactions, and acting quickly when something is off, you can catch identity theft early and minimize its impact.

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