- Identity theft is a type of fraud in which a person uses your personal information to impersonate you.
- Most identity theft is committed for financial gain, but it comes in many different forms.
- As a victim of identity theft, you're entitled to a 90-day fraud alert from credit bureaus.
Identity theft sounds like a crime that happens to someone else. Yet, it's ubiquitous, with the Federal Trade Commission recording best identity theft protection services, but you don't necessarily need to immediately reach for the heaviest identity security you can find. Identity theft is often a crime of opportunity. Even just learning about vulnerabilities will go a long way toward protecting yourself. Here's everything you need to know about identity theft and what to do about identity theft if you think you're a victim.
What is identity theft?
Identity theft occurs when someone steals another person's information for financial gain or to assume that person's identity. The Identity Theft and Assumption Deterrence Act of 1988 made identity theft a federal crime, though most cases are handled on the state level. Federal courts only get involved if a massive amount of money was stolen or if a fraudster was stealing multiple identities.
Because perpetrators of identity theft act under the victim's identity, the victim can be held responsible for anything the perpetrator does. Paige Hanson, cyber safety consultant and former chief of cyber safety education at NortonLifeLock, says that because all of the fraudster's activities were done under someone else's identity, "we think of identity theft victims as guilty, and they have to prove themselves innocent."
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Types of identity theft
Identity theft can be done with several pieces of information to a number of ends.
Financial identity theft
The most common type of identity theft is when a fraudster uses your information for financial gain. This can be as simple as using your credit card information to make purchases online or in person, but it can go as far as using your Social Security number to open a new credit score.
Hanson recommends using a credit card to make purchases instead of a debit card because credit cards have more protections in place. "If a fraudster went on a spending spree out of your debit card account and spent whatever the balance was, you're left without any money until the bank reimburses you, which can be up to, you know, five to 10 business days," she says.
Medical identity theft
In this type of debt, a fraudster uses your medical insurance information to get reimbursed for their medical expenses. Alternatively, an insurance holder can commit fraud by giving their insurance information to someone so that person doesn't have to pay for their medical expenses. Medical providers may also commit fraud by claiming they performed medical procedures that never happened to get reimbursed.
Medical identity theft can hurt your credit but can have more severe consequences if the fraudster's actions create medical records under your name. This can lead to false medical information, leading to complications during medical procedures.
Criminal identity theft
In these instances, the perpetrator committed a crime, something that can be as innocuous as a speeding ticket, and gives someone else's information (such as a driver's license) instead of their own, so that person is held legally responsible for the perpetrator's actions.
Child identity theft
Children are appealing targets for fraudsters because their credit history is blank. If a person has a credit history associated with certain geographical areas, a fraudster attempting to open a new line of credit in that person's name in a completely different area will set off red flags. Yet if someone doesn't have a credit history, like a child, there's no prior activity pattern that will trigger those red flags, so the fraud goes unnoticed.
These cases are usually instances of familiar fraud, where the victim knows the fraudster personally, usually a friend or family member. "In those cases, the young adult doesn't necessarily want to press charges against their parents or aunts or uncles, somebody within their familiar circle. And so they're left with poor credit," Hanson says.
Synthetic identity fraud
Synthetic identity theft is a relatively new way to create a false identity by creating a profile using bits and pieces of other people's information, making it hard to detect — since this person doesn't exist. A fraudster will start by stealing a Social Security number and then add false information around it, such as a fake name and address, until a whole fraudulent profile is created. Fraudsters can use this identity to build credit, take out a loan, and disappear.
Though the identity is a mix of information from different people, Hanson says that the owner of the Social Security number is usually held accountable. "But it's not necessarily on [their] credit report because all of the other information wasn't matching," she says.
How to protect yourself from identity theft
Hanson says that being aware that your identity can be stolen is a good starting point toward security freeze, this restricts access to your child's credit history. You will have to verify both your child's identity and your identity and that you are a parent or legal guardian of the child. You will also have to do this with all three credit bureaus.
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What to do if you're the victim of identity theft
If you find that your credit score is fluctuating because of lines of credit that you didn't open or you're receiving collection notices on debt that you didn't rack up, there's a good chance that your identity has been stolen. Though it can be a harrowing experience, you have certain rights as a victim of identity theft. You need to take several steps once you realize your identity has been stolen.
Report the fraud to relevant companies
First, you should notify the companies involved in the identity theft. For most cases, such as credit card fraud, you can report the fraud, dispute the charge, and get a new credit card. You're not held responsible as long as you do that within the allotted time since the fraud occurred — usually between 60-90 days.
In most states, you are not liable for new lines of credit opened due to fraudulent activity. You also have the right to challenge debt collectors if they contact you to repay any debt you're not responsible for.
Report fraud to the FTC
After reporting to relevant companies, you'll want to file a report with the FTC. You can report identity theft over the phone at 877-438-4338, but you will only receive an identity theft report if you make a report online. An identity theft report can be useful documentation when reclaiming your identity.
Report fraud to credit bureaus
You need to call one of the three credit bureaus — Experian, Equifax, or TransUnion — that your identity has been stolen. The credit bureau you report it to is required by law to notify the other two bureaus. While contacting your credit bureaus, you're entitled to a Fraud Alert Hub
Even if someone has your Social Security number, it is difficult for them to use it. "Usually what we find is that [fraudsters] just move on to the next security number because you've made it harder for them to just easily more freely use," Hanson says.
Go to local law enforcement
There are certain instances in which you should go to your local law enforcement agent, such as if you know the person who stole your identity. You should also report the incident to law enforcement if the fraudster passed your information off as theirs to the police. Lastly, certain companies may require a police report when you're reporting fraud.
Strengthen your digital security
If you weren't signed up for identity theft protection before an incident of theft, you should sign up for one afterward, as victims are often targeted more often after the first incident.
In extenuating circumstances, such as if your life is being threatened or your Social Security number is constantly being used to steal your identity, you may be eligible for a new one. You can apply for a new one online through the Social Security Administration.
Frequently asked questions about identity theft
What are the three types of identity theft?
The three most common types of identity theft, according to the FTC, are credit card fraud, bank fraud, and fraud involving leases and loans.
How do thieves steal identities?
Thieves steal identities using methods like phishing, credential stuffing, data breaches, and theft of personal information.
What should you do if someone has stolen your identity?
If someone has stolen your identity, you should take these three steps: report, recovery, and reinforcement. Report the instance to the relevant authorities, contact your bank, recover your identity, recuperate any monetary damage if possible, and place fraud alerts on your credit reports. Read our full guide on how to report identity theft.
What are the first signs of identity theft?
The first signs of identity theft should be fairly obvious. Maybe you'll notice an entire line of credit you don't recognize on your credit report. There may also be unexplained charges on your accounts, money missing from your bank accounts, or an unexpected denial of credit.
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