Identity theft is a major concern for many Americans these days with data breaches, ransomware attacks, and other invasive crimes on the news daily. Other people aren’t even aware identity theft exists or what it is. Because of our increasing reliance on technology and a world connected by information, you need to know the dangers and how to protect yourself.

What is Identity Theft? 

Identity theft is when someone acquires and then uses your personal information for financial gain. Access to your name, address, phone number, email address, bank account information, social security number or other details can start the ball rolling, and from there, disaster can occur. 

Sometimes thieves steal your identity to open up lines of credit, bank accounts, obtain loans, or make purchases that you are now responsible for. Others use it to commit crimes to mask their own identity. And, recovering from it could be impossible, it could ruin your reputation and future

The ramifications of identity theft are widespread. Not only can it ruin your good name, but it can also damage your credit rating, pose problems with getting financing in the future, create a mess that you have to clean up, drain you of all your financial assets, and even get you in trouble with the law. Avoiding identity theft is easier than fixing it after the fact. 

Different Types of Identity Theft

Identity theft is not a single crime but a category of fraud wherein a criminal uses someone else's personal information for personal or financial gain. The methods and goals of thieves vary widely, making it crucial to understand the different forms it can take to better protect yourself.

1. Financial Identity Theft

This is the most common form of identity theft. It occurs when a thief uses another person's information for financial benefit.

• How it works: The criminal uses personal details like your Social Security Number (SSN), bank account, or credit card numbers to make unauthorized purchases, open new credit accounts, take out loans, or drain existing bank accounts.
• Common Signs: Unfamiliar charges on your statements, bills for accounts you didn't open, calls from debt collectors about debts that aren't yours, and sudden drops in your credit score.

2. Criminal Identity Theft

This type involves impersonating someone else during an investigation or arrest to avoid prosecution.

• How it works: When cited for a violation or arrested, the criminal provides the victim's name, address, and date of birth. This can result in warrants, convictions, or a criminal record appearing under the victim's name.
• Common Signs: Being denied a job due to a background check, unexpectedly having your driver's license suspended, or being arrested for a crime you didn't commit.

3. Medical Identity Theft

This occurs when someone uses your personal identity to obtain medical services, prescription drugs, or to make false insurance claims.

• How it works: The thief uses your name and health insurance information to see a doctor, get surgery, or buy prescription drugs. This can lead to erroneous information being added to your medical records.
• Common Signs: Bills for medical services you didn't receive, collection notices for unknown medical debts, or finding errors in your medical records that could affect your future care (e.g., wrong blood type, incorrect diagnoses).

4. Child Identity Theft

Criminals target children's SSNs because they are a "clean slate" and the theft often goes undetected for years.

• How it works: A thief uses a child's SSN to apply for government benefits, open bank accounts, or take out loans. The crime is often discovered years later when the child applies for a student loan, their first job, or their own apartment.
• Common Signs: A child receives pre-approved credit card offers or bills in their name, or is denied government benefits because they are already being paid to another account.

5. Synthetic Identity Theft

This is a sophisticated and growing form of fraud where criminals create a new, fictitious identity using a combination of real and fabricated information.

• How it works: The thief takes a real SSN (often from a child or someone who doesn't use credit) and pairs it with a fake name, address, and date of birth. They then build credit history for this synthetic identity over time before "busting out" with maxed-out loans and disappearing.
• Common Signs: It is very difficult for the victim to detect. You might only notice if you are notified that your SSN was used with a different name or if you encounter issues with government benefits.

6. Tax Identity Theft

This happens when a thief uses your SSN to file a fraudulent tax return and claim your refund.

• How it works: Early in the tax filing season, the criminal files a return using your stolen information and has the refund sent to themselves. You may not discover it until you try to file your legitimate return and have it rejected by the IRS for being a "duplicate filing."
• Common Signs: You are unable to e-file your return because a return has already been filed under your SSN, or you receive an IRS notice about activity in an account you never created.

7. Account Takeover Fraud

This involves a thief gaining access to your existing financial accounts.

• How it works: Using stolen login credentials obtained through phishing, data breaches, or malware, the criminal logs into your bank, credit card, or social media accounts. They then change passwords and contact information to lock you out.
• Common Signs: You are unexpectedly logged out of your accounts, receive notifications of password or contact information changes you didn't make, or see unauthorized transactions.

How to Protect Yourself

• Freeze Your Credit: This is the most effective way to prevent anyone from opening new accounts in your name.
• Monitor Statements: Scrutinize bank and credit card statements monthly for any unauthorized activity.
• Use Strong, Unique Passwords: Employ a password manager and enable multi-factor authentication (MFA) on all important accounts.
• Be Wary of Phishing: Do not click links or open attachments in unsolicited emails or texts.
• Shred Documents: Destroy any documents containing personal and financial information before discarding them.
• Review Your Credit Reports: Check your free annual credit reports from all three bureaus (Equifax, Experian, and TransUnion) for suspicious activity.

Understanding these various types of identity theft is the first step in building a robust defense against this pervasive threat. Vigilance and proactive monitoring are key to protecting your financial and personal well-being.