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Incidents of identity theft have been growing increasingly frequent year after year. Identity theft occurs when someone steals your personal information and identification and uses it to apply for credit cards, loans, apartment rentals, or purchase phone services – all in your name. In many cases, the thief will request a change in address so you never receive the bills associated with their activity. These impersonators spend your money as quickly as possible. Most identity theft victims don't know they have had their identity stolen until they apply for a loan or receive a call from a collection agency. Clearing your name and undoing the damage of identity theft can be a nightmare and takes a great deal of time. You could spend months, or even years, re-establishing your creditworthiness.
Common Types of Identity Theft
The first step to protecting yourself from identity theft is being able to identify the warning signs. Here are some common types of identity theft defined, the warning signs you should look out for, and steps you can take to avoid falling victim.
Financial Identity Theft. The most common type of identity theft – when someone uses another person's information for financial gain. Check your bills, accounts, and bank statements regularly; if you see a charge you don't recognize, it may be a sign that your identity has been stolen. You should also check your credit report for accounts you don't recognize; in this case, someone may have used your Social Security number to open new credit accounts.
Taxpayer Identity Theft. Fraudsters use your personal information to file a tax return, to steal your refund. This usually goes unnoticed until you file a tax return yourself and receive a rejection because someone already filed a return in your name. In this case, you should immediately contact the IRS and file a fraud claim.
Medical Identity Theft. Scammers use your information to receive medical care in your name. If you receive bills for medical visits or procedures that were not performed on you, you are probably the victim of identity theft.
Employment Identity Theft. Identity thieves use your information to get a job or pass a background check. You may receive a call from an employer about a job to which you didn't apply. You can check the federal government's E-Verify website to find out if your information has been used for an employment background check.
Child Identity Theft. Fraudsters can use a minor's information to open credit accounts in their name and remain undetected, since most children don't receive credit reports. Victims often don't learn their identity has been stolen until the first time they apply for a job or student loans.
Senior Identity Theft. Elderly people are especially vulnerable to identity theft because they tend to be more trusting and less able to recognize a scam. The types of identity theft seniors encounter can be the same as anyone else: financial, taxpayer, medical, etc., though the methods used to get the information from seniors are much more varied.
Estate Identity Theft. The scammer uses the personal information of a recently deceased person to steal money or open accounts. This usually remains undetected until the family of the deceased are contacted about issues with an account opened in their deceased relative's name. When a loved one dies, you should contact the three major credit bureaus – Equifax, Experian and TransUnion – to have them place a "death notice" on the decedent's credit report to avoid this type of fraud.
Criminal Identity Theft. While all identity theft is criminal, "criminal identity theft" occurs when someone who is under arrest impersonates you to law enforcement by using your personal information. This theft goes undetected until you receive some type of official correspondence, such as receiving a bench warrant for your arrest over an unpaid speeding ticket that wasn't issued to you.
Synthetic Identity Theft. Scammers don't need to steal all your information to practice identity theft. Some criminals will create fake identities using a combination of real information and made-up details. Often this means using a real Social Security number with a made-up name not associated with that number to open credit accounts.
Account Takeover. A scammer that gains access to your personal or financial data can log into your accounts and change passwords or addresses to block your access. If you receive a letter or email notifying you of information being changed on your account, you could be the victim of this kind of identity theft.
Tips to Avoid Becoming a Victim of Identity Theft.
For certain types of identity theft, there are specific steps you can take to avoid becoming a victim. However, there are general precautions everyone should take to safeguard themselves from all types of identity theft.
Freeze your credit. Freezing your credit with all three major credit bureaus restricts access to your records so new credit files cannot be opened. It's free to freeze your credit and unfreeze when you want to open an account, and it provides the best protection against criminals using your data to open new accounts.
Safeguard your Social Security number. In the hands of a scammer, your Social Security number may as well be a skeleton key to all your personal information. Guard it as best you can. When you are asked for your number, ask why it is needed and how it will be protected. Don't carry your card with you. Securely store or shred paperwork containing your Social Security number.
Be alert to phishing and spoofing. Scammers can make phone calls appear to be coming from official organizations or businesses, and emails that appear legitimate may be attempts to steal your information. Rather than responding to an unsolicited call or email, initiate a callback or return email yourself, working from a known entity such as the organization's official website. And be wary of attachments – many contain malware.
Use strong passwords and enable multi-factor authentication. Use a password manager to create and store complex, unique passwords for your accounts. Never reuse passwords. Adding a multi-factor authenticator app can reduce your risk. Don't rely on security questions to keep your accounts safe; your mother's maiden name and your pet's name aren't hard to find. Think carefully about what you post on social media so as not to give away clues about answers to security questions or what you may use for passwords.
Use alerts. Many financial institutions allow you to sign up for official notifications, so you know when and where your credit or debit cards are being used, when there are withdrawals or deposits to financial accounts, and more.
Watch your mailbox. Stolen mail is one of the easiest methods to steal someone's identity. Make sure to deposit any outgoing mail containing sensitive information in an official USPS collection box and promptly remove incoming mail from publicly accessible mailboxes. Have your mail held if you're out of town. Consider a U.S. Postal Service-approved lockable mailbox. You can also sign up for Informed Delivery through the USPS, which gives you a preview of your mail so you can tell if anything is missing.
Shred, shred, shred. Shred financial information, bank statements, bank checks, credit card offers or pre-approved credit applications and credit card receipts that someone could fish out of your garbage.
Use a digital wallet. A digital wallet is an app containing secure, digital versions of your credit and debit cards. You can use it to shop online or at compatible checkout terminals and your transactions will be tokenized and encrypted, keeping your information safe.
Protect your mobile devices. Enable the auto-lock feature on all mobile devices and protect them with passwords and fingerprint or faceprint identification. If your bank has an official mobile banking app, use that instead of accessing your online banking via mobile web browser. Never enter sensitive information into your phone while accessing public Wi-Fi.
Monitor financial and medical statements. Make sure you recognize every transaction that appears on your regular billing statements. Keep track of your due dates and follow up with companies regarding late or missing bills. Review "explanation of benefits" statements to make sure you recognize what services are provided to avoid health care fraud.
Regularly check credit reports. You're entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies. Order online from annualcreditreport.com, the only authorized website for free credit reports, or call (877) 322-8228. You will need to provide your name, address, social security number, and date of birth to verify your identity.
Steps to take If you become a victim of identity theft:
- Notify companies of your stolen identity. Don't wait – you should immediately call any company where fraudulent transactions have occurred, or where accounts have been opened in your name. Alert them to the situation and make sure to change any account access safeguards to prevent the thief from accessing more personal information.
- File a report with the FTC. The FTC's toll-free "Identity Theft Hotline" is (877) 438-4338 and their website is identitytheft.gov. As part of the reporting process, you'll receive a recovery plan and prefilled letters and forms that can be used to file police reports and dispute fraudulent charges.
- File a report with your local police department. Ask for a copy of the police report or, if unable to obtain a copy, make sure to record the date, time, and number of the report, the location of the department, and the name of the officer taking the report. Filing a police report protects you by creating a paper trail in case the thief uses your information to commit a crime.
- Place a fraud alert on your credit reports. Contact the fraud department at one of the three credit bureaus; whichever bureau you contact will notify the other two. Have them place a "fraud alert" in your file; these alerts require that creditors contact you before opening any new accounts or changing existing accounts. You should also request a copy of your credit report – credit reports are free to fraud victims. To report fraud:
- Equifax: Equifax.com| Phone: (888) 766-0008
- Experian: Experian.com| Phone: (888) 397-3742
- Trans Union: TransUnion.com| (800) 680-7289
- Notify financial institutions. Call any financial institutions with whom you have accounts to let them know your identity has been stolen. You should:
- Close compromised accounts and open new accounts.
- Change PINs and passwords on your accounts.
- Deactivate compromised credit/debit cards and have the institution issue new cards.
Consumer Rights under the Federal Credit Reporting Act (FCRA)
- Ask the national credit bureaus to place an initial or extended fraud alert in your file. These alerts require that creditors contact you before opening any new accounts or changing existing accounts.
- An Initial Alert stays on your file for at least 90 days and entitles you to a free copy of your report on file at each of the three credit bureaus.
- An Extended Alert stays on your file for seven years and entitles you to two free credit reports in a 12-month period from the time the alert was placed.
- Obtain documents relating to any fraudulent transactions made or accounts opened using your personal information. A creditor or other business must give you copies of applications and other business records relating to transactions and accounts that resulted from the theft of your identity, but you must ask for them in writing.