What Is Identity Theft?
Identity theft, or ID theft, occurs when someone steals another person’s personal information and uses it to commit crimes. Usually, these crimes are focused on some form of monetary gain, such as acquiring someone’s credit card to make purchases, but other times, they can be focused on more complicated things like forming an entirely new identity.
Most Common Types of Identity Theft
Identity theft can come in many forms, but 7 of the most common types are:
- Medical Identity Theft – using someone’s medical information (e.g., health insurance number) to receive medical treatment or prescription drugs through their health insurance plan.
- Synthetic Identity Theft – combining someone’s personal information with fake information to form a new identity (i.e., pairing someone’s social security number with a new name). This growing form of ID theft can be very difficult to catch.
- Criminal Identity Theft – when someone uses another person’s name when they are arrested or taken into custody.
- Tax Identity Theft – fraudulently filing taxes under someone else’s name to receive tax refunds.
- Unemployment Identity Theft – claiming unemployment benefits under someone else’s name.
- Financial Identity Theft – using someone else’s personal information, such as bank account numbers or credit card numbers to secure loans, apply for new credit cards, withdraw money, or reap other financial benefits.
- Child Identity Theft – stealing a child’s personal information to commit various forms of fraud. Children are especially prone to identity theft because they are easier to fool, and often won’t realize they have been a victim until they reach adulthood when they start applying for loans and credit cards.
In the coming years, identity theft is only suspected to become more prevalent in the United States as cases have tripled in the last decade. Today, it is estimated that there is a victim of identity theft every 22 seconds and that nearly one-third of Americans have experienced an identity theft attempt in their lifetimes.
According to the Federal Trade Commission (FTC), which handles identity theft across the nation, in 2022:
- They received 5.7 million total reports of fraud (up 20% from 2021), with 1.4 million specific to identity theft.
- Cybercrime losses were estimated to be $10.2 billion, up nearly 50% from 2021.
- The average loss to victims of fraud was roughly $500.
- Identity theft is 3x more likely in the United States than in other countries.
- Consumers aged 30 – 39 were most likely to be victims of identity theft.
How Does Identity Theft Happen?
Identity theft can happen in many ways, from someone seeing you enter your login information to not shredding a confidential document that someone later finds, but some of the most common ways it occurs include:
- Theft of physical documents and personal items such as mail, credit cards, social security papers, wallets, bank statements, phones, laptops, etc.
- Phishing emails and text messages that get someone to open a dangerous link or download a file that contains malicious software (malware).
- Telephone scams that convince someone to share personal information.
- Data breaches to a company’s consumer information.
- Sending unsecured emails.
- Dark web marketplaces that sell people’s personal information.
- Wi-Fi hacking on a public network such as at a coffee shop or library.
Warning Signs That You May Be a Victim of ID Theft
Identity theft can take time to realize, especially with the hustle and bustle of everyday life. To help you detect early signs of ID theft, here are some things to look out for:
- Purchases on your credit/debit card statements that you don’t recall making, especially if they are out-of-state or out-of-country.
- Receiving loan and credit card acceptance notices that you didn’t apply for.
- Withdrawals from your bank account that you didn’t make.
- Bills for medical services you didn’t receive.
- Significant drops in your credit score.
- Notices from the IRS and other government organizations for committing crimes you didn’t commit.
- Alerts and notifications from your identity theft protection company that you may be at risk of identity theft.
Consequences of Identity Theft
The consequences of identity theft can be significant for an individual and their family, both financially and emotionally. It can result in issues securing loans, hundreds of hours of paperwork and phone communication with banks, paying tens of thousands of dollars in legal fees, and in worst-case scenarios, lead to getting falsely arrested and charged with crimes you didn’t commit.
At MSIG, this is an issue we take very seriously as one of our agents, Mario Racanelli, was a victim of identity theft. Mario spent over a decade working with banks, lawyers, and the police to get his identity fully restored. He can tell you firsthand how hard and painstaking the process is. To learn more about his story, read his article on becoming a victim of identity theft.
How to Prevent Identity Theft
To protect yourself from identity theft, you must prevent strangers from accessing your personal information. Here are some helpful tips you can follow to better protect your information:
- Store key documents such as birth certificates, social security cards, and healthcare information in a safe place, and avoid carrying them when possible.
- Be hesitant to share your personal information over the internet, email, phone, or mail, and if you do, ensure it is sent securely and you trust the recipient.
- Check your credit card, debit card, and bank account statements frequently, as well as your credit score.
- Cover your credit/debit card information and PINs while withdrawing funds or making a purchase.
- Freeze your credit/debit cards immediately if you lose them.
- Pick up your mail every day and use a secure mailbox. If you can’t pick up your mail because you are away from your home, place a hold on it or have someone you trust pick it up for you.
- Shred important documents such as ATM receipts, loan and credit card applications, old credit cards, insurance forms, bank statements, pay stubs, tax documents, and more when you no longer need them. This can prevent people from finding this information in your garbage and using it.
- Use different and complex passwords for each of your logins and store them in a secure location. If you ever think one of your logins may have been compromised, change your passwords immediately and contact a website administrator.
- Don’t open email attachments or links from unknown sources.
- Before you dispose of or sell your smartphones or computers, delete, and destroy all personal information on them.
- Use the security features and virus-detection software offered to you on your smartphones and computers.
- If you are on public Wi-Fi, use a virtual private network (VPN).
- Enroll in an identity theft protection plan for you and your family. It is an affordable solution to help you monitor the health of your identity and prevent others from accessing your information.
How to Report Identity Theft
There are various ways you can report identity theft, and many steps you should take to ensure it is stopped at once. Here are some steps you should consider taking:
- Reporting online versus over the phone has many benefits:
- You can get an identity theft report from the FTC which you can share with businesses to prove that your identity was stolen.
- Access to pre-written letters you can send creditors to fix your accounts.
- Access to a recovery guide you can follow and track your progress on.
- You know the thief.
- The thief used your name in an interaction with the police.
- A creditor or another company requires you to provide a police report.
Step Five: Request a fraud alert or freeze be placed on your credit report from one of the three major credit reporting agencies (i.e., Equifax, Experian, TransUnion).Step Six: Contact the fraud department at your bank and other financial institutions you have accounts with.
Step Seven: Contact businesses where the thief visited, opened accounts, or even applied for jobs.
Identity theft is a very serious and prevalent topic in today’s world, and if you aren’t careful and prepared to fight it, it could cost you dearly. If you are interested in protecting your and your family’s identities or offering identity protection to your employees as an employee benefit, request a quote to speak with an MSIG identity theft specialist, or purchase identity theft protection directly today.