What Is Identity Theft and How Do I Make Sure It Doesn’t Happen to Me?

Quick Answer

Identity theft occurs when someone steals your personal information and uses it to take your money, open credit accounts, file tax returns, make health insurance claims and more without your consent. Fortunately, there are many things you can do to protect yourself.

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Identity theft is when someone steals your personal information and uses it without your permission.

Reports of identity theft have grown exponentially in the past few years, jumping from 3.43 million in 2019 to 5.74 million in 2021, according to the National Council on Identity Theft Protection. There are several forms of identity theft, and each one can affect you in a different way.

There's no way to inoculate yourself against identity theft completely. But if you're diligent in learning how your information can be at risk and what fraudsters can do with it, you'll be better equipped to protect your data and act quickly if someone does manage to steal it.

How Identity Theft Happens

Identity theft is a broad term that applies anytime someone steals your personal information, such as your Social Security number, and uses it to create a new account, make a purchase or commit other fraud.

Due to the nature of technology and the internet, your personal information is always at risk. If you're not carefully monitoring your credit file, you may not notice you've been victimized until the damage is already done.

Here are nine of the most common ways identity thieves get hold of your data:

1. Data Breaches

A data breach happens when someone gains access to an organization's consumer data without authorization. The most common types of information stolen in data breaches include full names, Social Security numbers and credit card numbers.

2. Unsecure Browsing

For the most part, you can browse the internet safely, especially if you stick to well-known websites. But if you share any information on an unsecure website or a website that's been compromised by hackers, you could be putting your sensitive information directly in the hands of a thief.

3. Dark Web Marketplaces

The dark web is a hidden network of websites that aren't accessible by normal browsers. People who visit the dark web use special software to mask their identities and activity, making it a haven for fraudsters.

Hackers may steal your information and sell it on the dark web rather than using it for themselves. If your information ends up on a dark web marketplace, anybody could buy it, putting your identity in more danger.

4. Malware Activity

Malware is malicious software that's designed to wreak all sorts of havoc. Fraudsters may use malware to steal your data or spy on your computer activity without you knowing.

5. Credit Card Theft

One of the simplest forms of identity theft is credit card theft. If a thief can gain access to your credit card information, they can use it to make unauthorized purchases.

Common ways credit card theft occurs are through a data breach, physical theft, credit card skimmers and via online retail accounts where card information is stored.

6. Mail Theft

Since long before the internet, identity thieves have been combing through the mail to find documents that hold personal information. Bank and credit card statements and any other document you send or receive through the postal system can be intercepted and used to gain access to your data.

7. Phishing and Spam Attacks

Some scammers use email and text messages and other forms of electronic communication to steal your sensitive information. The message often looks like it's coming from a reputable source and asks victims to open a malware-infected attachment or to visit a spoof website and give up one or more types of information.

8. Wi-Fi Hacking

If you use your computer or phone on a public network—airport, department store or coffee shop Wi-Fi—hackers may be able to "eavesdrop" on your connection.

This means that if you type in a password, bank account or credit card number, Social Security number or anything else, an eavesdropper can easily intercept it and use it for their own purposes.

9. Mobile Phone Theft

Smartphones are a treasure trove of information for identity thieves, especially if your apps allow you to log in automatically without a password or fingerprint. If someone manages to steal and unlock your phone, it could allow them to view the information found in your apps, as well as in your emails, text messages, notes and more.

How Identity Theft Can Affect You

Once a thief has your information, they can do several things with it, including:

  • Open fraudulent credit cards.
  • File phony health insurance claims.
  • Use your existing bank or credit card accounts to make unauthorized purchases.
  • Sell it to other thieves.
  • File a fraudulent tax return or steal your tax refund.
  • Access your financial accounts and steal your money.
  • Commit child identity theft using your child's information.

Depending on the type of theft that occurs and how the criminal uses your information, identity theft can result in immediate financial loss, damage to your credit and emotional distress. It can also take anywhere from less than a day to several months or even years to resolve the issue.

As you work on recovering from identity theft, you may end up dealing with late payments, medical bills and even IRS penalties requiring investigations and long-term assistance if you are a tax identity theft victim. It can also result in losing account access, having your personal accounts taken over by thieves and general loss of data privacy.

How to Check for Identity Theft

You can't completely avoid the possibility that your identity may be stolen, but you can take action to spot potential fraud before it becomes a major problem.

Here are some ways you can check for identity theft:

  • Monitor your credit score. With Experian's free credit monitoring service, you can check your FICO® Score anytime. If you see a sudden inexplicable drop, it could be a dead giveaway that something is wrong.
  • Keep an eye on your credit reports. While you can view each of your credit reports for free every 12 months through AnnualCreditReport.com, you can access your Experian credit report for free anytime through Experian's credit monitoring service. Watch for tradelines that you don't recognize or remember opening.
  • Look at your bills. Comb through your statements for your bank account and credit cards to ensure that you recognize every transaction. If you get a bill, statement or explanation of benefits for an account you didn't sign up for or a service you didn't receive, it could be identity theft.
  • Read your email. If your information has been compromised in a data breach, you should receive an email from the company telling you about it. You may also get an email from an app or service notifying you of a recent login to your account. If it wasn't you, it could be fraud.

Other potential signs of identity theft can include having your tax return denied as a duplicate, being denied credit despite having an excellent credit rating or not receiving important mail.

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

If you have even an inkling that you've fallen victim to identity theft, the most important thing to do is to limit the potential damage. The steps you'll take can vary based on the type of fraud committed, but here are some general things you can do:

  • Contact your bank or credit card issuer. If a credit card or debit card was stolen, contact the card issuer and your bank immediately—some banks may even allow you to lock your account through your mobile app until you can report the fraud.
  • Review your credit reports. Double-check your credit reports with the three credit bureaus (Experian, TransUnion and Equifax) to confirm any type of unusual activity and get help dealing with the theft. You can dispute fraudulent tradelines directly with the credit bureaus.
  • Freeze your credit or set up a fraud alert. If you find something is amiss on your credit reports, consider locking or freezing your credit. Alternatively, you can set up a fraud alert, which notifies lenders that you've been a victim of identity theft so they can take extra measures to verify your identity when they get an application for credit in your name.
  • File an identity theft report. Reach out to the Federal Trade Commission to file a report. The agency will provide steps you need to take and paperwork to file reports—including how to deal with police reports—and help you dispute fraudulent charges.
  • File a police report. Remember, identity theft is a crime, so it's also a good idea to contact your local law enforcement agency and report it. While local authorities may not be able to do much, they can take reports and be on the alert for suspicious behavior that could involve your name or address.

Being a victim of identity theft is a harrowing experience. It can take months and many hours of filling out forms and working with agencies and businesses to recover your identity once it is stolen. As such, it's important to be alert and to respond promptly when you believe identity theft has occurred.

Diligence Pays Off

Recognizing the signs of identity theft and taking steps to prevent it can save you heartache, stress and loss.

As you check your credit report and credit score regularly, watch out for suspicious transactions, accounts and notifications, and act fast when something is off. If you're diligent, you'll be in a better position to catch identity theft early before it ruins more than just your day.

Learn More About Identity Theft

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