What Are the Unexpected Costs of Identity Theft?

How Can Identity Theft Impact Your Life?

The impacts of identity theft can vary depending on the type of fraud and how long it takes to be detected. If caught immediately, for example, an unauthorized charge to your credit card may be resolved quickly and the charges reversed. In some cases, the transaction is even declined before it's approved, with a new card and account number issued on the spot. But if left unchecked, fraudsters can quickly rack up charges and cause other harm that takes more time and effort to reverse.

In more complex cases, identity thieves may open loans and credit cards in your name, file taxes and receive refunds or use your identity to obtain medical services. In these cases, it can take years to stop the fraud, undo the damages and restore your identity.

How can identity theft take a toll on you and your finances? Here are five key ways:

Lost Time and Money

Although debit and credit card issuers limit your liability for fraudulent charges, you could still be on the hook for the loss if you don't report phony charges in time. And since time is money, the hours you spend tracking, reporting and resolving the effects of identity theft represent a significant cost.

Both time and money are at issue. In a survey of identity theft victims conducted by the Identity Theft Research Center (ITRC), 77% of respondents reported having at least some financial problems following identity theft, with 61% saying they had difficulty covering basic needs. Although 28% said they resolved their issues within six months of an ID theft incident, 65% said issues remained unresolved even after a year.

Credit Damage

If a fraudster has used your identity to open new accounts, their failure to pay can show up on your credit report and damage your credit score. Loans or credit they've opened will also increase your debt amounts and credit utilization, which can affect your credit scores and interfere with your ability to be approved for new credit. For the most part, these issues are resolvable, but take time and effort to address.

Criminal Record

Someone using your identity to commit crimes could put you at risk for legal consequences, including arrest or a criminal record. You may need to prove that your identity has been stolen in order to clear up your record.

Emotional Distress

Having your identity stolen can be traumatic. Nearly 9 in 10 respondents (87%) in the ITRC survey reported feeling anxious or worried in the wake of identity theft; 77% felt violated, and an alarming 16% reported feeling suicidal in the months following identity theft.

Isolation and Loss of Trust

Identity theft victims report feeling unable to trust friends (34%) and family members (33%). More than half (52%) say they feel embarrassed or ashamed, even though ID theft can be difficult for the average person to detect and thwart, and some forms of identity theft, such as data breaches, are beyond the victims' control. Shame, suspicion and a feeling you should be curtailing your activity to prevent further theft can lead to isolation. One respondent, quoted anonymously, said: "I quit using social media as a means of selling my handmade crafts. Lost that income."

Learn more >> Identity Theft Statistics: Fraud Is on the Rise

How to Avoid Identity Theft

No matter how careful you are, completely avoiding the risks of identity theft isn't possible. You can, however, improve your chances of avoiding identity theft by following some simple guidelines:

• Don't give out personal or payment information by phone, text or email. When someone unknown contacts you, take steps to verify their identity, including by ceasing contact and reaching out via a trusted phone number or email address. Phishing scams are increasingly difficult for the average person to detect—thanks in part to AI. It's OK to hang up on a call or delete an unsolicited text if you suspect you're being scammed.
• Don't click on links in unsolicited texts or emails. When in doubt, go directly to the website of the company that's (allegedly) trying to contact you, or call the company using the phone number listed on their website.
• Sign up for account alerts on your card and bank accounts. You'll be notified every time a transaction is made, increasing your chances of catching suspicious activity immediately. Keep cards turned off when you aren't using them, if that feature is available.
• Check your bank and credit card statements regularly. Be on the lookout for fraudulent transactions and double-check that your account balances make sense.
• Monitor your credit. Check your credit report and score regularly for any unexpected changes, including new accounts or activity you don't recognize as yours. Credit monitoring from Experian can simplify your efforts; it lets you track your credit score, credit report and spending continuously and sends alerts to let you know when changes and transactions occur.
• File your taxes on time to help avoid tax identity theft. Get an identity protection PIN from the IRS to make it harder for fraudsters to file a fake tax return in your name.
• Use strong online passwords. In addition, stay away from public Wi-Fi, use anti-malware software and consider using a virtual private network (VPN) to increase your online security.
• Shred all documents that have personally identifiable information. Alternatively, use a permanent marker to block it out.
• Consider identity theft protection. Premium identity theft protection from Experian includes identity theft monitoring, dark web surveillance, monthly privacy scans and the ability to lock and unlock your credit file easily using Experian CreditLock. Members receive alerts when risks are detected and help with fraud resolution.

Learn more >> How to Check for Identity Theft

What to Do if You're a Victim of Identity Theft

If you believe you are a victim of identity theft, take immediate action to report and stop it, then work to resolve any outstanding issues. Here are some basic recovery steps to get you started:

1. Report it. File a police report and document your experience with the Federal Trade Commission (FTC). A report might be necessary to dispute unauthorized charges or accounts. The authorities may also help you clear your record of criminal activity that has taken place in your name.
2. Add a fraud alert to your credit reports. You have the right to add a fraud alert to your credit reports if you are (or suspect you may be) a victim of fraud. These alerts ask creditors to take extra steps to verify your identity before issuing any credit in your name. Requesting a fraud alert with any credit reporting bureau will trigger an automatic fraud alert with all three bureaus.
3. Freeze your credit. You also have the right to request a credit freeze, which limits the access that others, including lenders, have to your credit file. Experian, TransUnion and Equifax maintain dedicated web pages where you can set up credit freezes and find instructions for requesting freezes by mail. Credit freezes stop legitimate applications for credit as well, but you can thaw a freeze by contacting each bureau individually if needed.
4. Report tax ID theft to the IRS. If you discover that a duplicate tax return has been filed in your name or you believe you're the victim of tax-related ID theft, contact the IRS.
5. Notify your health insurer and doctors of medical ID theft. Ask to have your medical files corrected. You can also file a complaint with the U.S. Department of Health & Human Services online or by calling 800-368-1019.
6. Get help and support. Identity theft is not your fault and you don't have to work alone to resolve issues and recover. Ask for help and support from family and friends, your bank or card company, law enforcement, credit reporting bureaus and anywhere else help is available. You may want to consider whether paid identity theft protection might be worthwhile, given the value of your time.

If you feel an overwhelming anxiety, sadness or inability to cope, talking to a mental health professional may help. Call or text 988 from any phone to reach the 988 Suicide & Crisis Lifeline for immediate assistance any time you're struggling with thoughts of suicide or self-harm.

The Bottom Line

In part, recognizing the many costs of identity theft means coming to terms with loss—including, potentially, the loss of your privacy and sense of peace. But fully knowing what to expect may point the way to a healthier recovery. If you can, try to work through financial and credit issues while also looking after your personal wellbeing. Where you can, look for sources of help and support. Identity theft protection from Experian helps keep an eye on your credit and identity, which might help ease your mind in the stressful aftermath of identity theft.