UPDATED Dec. 13, 2017: What is identity theft? It is simply when someone uses your identity as their own. But there’s nothing simple at all about the damage left in their wake. There are close to 10 different types of identity theft, which we’ll detail below. In 2016, over 15.4 million people had their identity stolen, up 16 percent from the previous year, according to a study by Javelin Strategy & Research.
In this blog post, I will dig into the identity theft basics, including how it happens, some of the most common types of identity theft, and what you can do to protect yourself.
How Does Identity Theft Happen?
In the most basic sense, identity theft is the use of another person’s identity without that person’s knowledge or consent. Identity thieves look for important pieces of identity, especially your Social Security number, address, account numbers, medical insurance information, etc. Once they obtain this information they can use it to cause serious harm.
Armed with the victim’s details, the thieves can obtain goods or services in the victim’s name, open additional lines of credit in the person’s name, file a tax return to steal the refund, steal your health insurance benefits; the list goes on.
Identity theft can cause serious harm to a victim’s credit history. It can make it difficult to take out a loan, a mortgage, or obtain credit. This is especially true if the theft went undetected for a significant amount of time.
So how do identity thieves get your personal information? They use all sorts of tactics, including:
- Data breaches
- Mail theft
- Stealing your wallet or purse
- Shoulder surfing for credentials
- Fake job offers/employment scams
- Vishing (voice phishing)
- Dumpster diving for documents containing your personal information
Types of Identity Theft
While most people automatically associate identity fraud with hacked bank accounts and stolen credit cards, there are a number of different ways in which your identity can be stolen.
For instance, a thief who has stolen your Social Security number can apply for a job under your name; steal government benefits; or even file for and obtain your tax refunds. Insurance identity fraud involves taking advantage of your medical services—and sticking you with the bill.
Here is a look at some of the most common types of identity theft:
- Financial Identity Theft: In this most common form of identity fraud, criminals use stolen credit and debit cards, card numbers or bank accounts to make purchases. This is also called Existing Account takeover.
- New Account Identity Theft: If an identity thief gets a hold of your Social Security number, they can use it to open up bank accounts and sign up for credit cards, which they quickly max out and leave you hanging for the bill. Many times people won’t know they were a victim of this type of identity theft until they go to apply for a new mortgage, car loan or some other type of credit and are turned down because their credit score tanked. According to the 2016 Javelin report, there was a “113 percent increase in incidence of new account fraud, which now accounts for 20 percent of all fraud losses.”
- Employment Identity Theft: If someone uses your Social Security number in order to obtain a job, this is considered employment identity theft. Victims often don’t know this has happened until they receive a W-2 from an unknown employer, a Social Security statement that doesn’t match their employment history or a bill from the IRS for taxes associated with the income the fraudster earned in your name.
- Social Security Identity Theft: Criminals can “steal the personal information of Social Security beneficiaries and use that information to attempt to open a ‘my Social Security’ account on the Social Security Administration’s website. If successful, they then use that account to redirect the beneficiary’s direct deposit benefits to an account controlled by the thief,” according to an alert from the Office of the Inspector General about the fraud. Preventing identity theft is just one reason you might want to consider setting up your online Social Security account now. It’s also important to double check that the record of your annual earnings is correct.
- Criminal Identity Theft: This type of identity theft occurs when someone gives your name and information to law enforcement in place of their own. “It could be anything from a serious crime to a minor traffic stop, but the end result is that your name and data are tied to an open police matter,” according to the Identity Theft Resource Center. This is part of why it’s so important to file a police report if your wallet or purse is stolen. That way if someone down the line does try to impersonate you, you can prove your identity was compromised. Curious about how this can play out? Read a few terrifying real-life criminal identity theft stories.
- Child Identity Theft: Five percent of the identity theft victims in 2015 were under the age of 19, according to the Federal Trade Commission. Part of the problem of child identity theft comes from how long it can go on undetected, maybe even until the child is applying for student loans for college or a loan to purchase their first car. Criminals can use a child’s Social Security Number to falsely claim dependent children or welfare payments from the government, and to create fake ID documents that they can use to apply for loans or even commit crimes.
- Synthetic Identity Theft: This type of identity theft combines real information, like a person’s Social Security number, with fabricated information, such as a fake name or address, to create a new, synthetic persona.
- Medical Identity Theft: Medical identity theft takes place when a criminal uses your name or health insurance benefits in order to see a doctor, files claims with your insurance or even gets prescription medications. If a thief uses your health benefits for their own health issues and their information overwrites yours for something critical, like a drug allergy or your blood type, this could put your very life at risk.
Tips to Reduce Your Chance of Identity Theft
Taking steps to reduce the chance of identity theft is important, sure, but the best way to protect yourself is to have a restoration service in place to take care of it when it happens.
Here are some additional suggestions:
- Only give your personal information to companies that you have contacted. Never respond to unsolicited phone calls or emails requesting personal information — even if the emails appear to be from a legitimate source such as a bank or financial institution. It could be a phishing attempt.
- Guard personal documents. Shred all documents such as bank statements that have personal information before throwing them out, and avoid leaving mail in an unsecured mailbox.
- Avoid using your Social Security number as identification. When possible, use an alternative form of identification for applications.
- Keep your cards safe. Store your personal cards such as Social Security card, medical card, or extra credit cards in a safe spot. Avoid carrying extra cards that you don’t need. Here’s a primer on what not to carry in your wallet or purse.
- Monitor your credit using a free service. Remember, however, there are many types of identity theft that won’t even show up on your credit report, which is why it’s important to subscribe to an identity restoration service, which brings us to our next point …
- Sign up for an identity restoration membership like LibertyID. LibertyID provides expert, full service, fully managed identity theft restoration to individuals, couples, extended families* and businesses. LibertyID has a 100% success rate in resolving all forms of identity fraud on behalf of our subscribers.
Unfortunately, identity theft can and does still happen, even to the most diligent people. Myriad data breaches, especially the recent Equifax breach, have ensured that our personal information is the hands of identity thieves.
The best protection against identity fraud is to remain diligent, to monitor your credit report, and to subscribe to an identity theft restoration service so that should your identity be stolen, you’ll have someone to turn to who can fix the damage.
*Extended families – primary individual, their spouse/partner, both sets of parents (including those that have been deceased for up to a year), and all children under the age of 25