Identity Theft: What it is and What You Need to Know
Identity theft can be a real headache. Learn the signs to protect yourself.
Change your passwords. Use secure apps and internet connections. Don’t share your personal information on untrustworthy sites. Watch for scammers.
After years of hearing these tips, you may start tuning them out. Unfortunately, this inattention makes you a target for identity thieves.
Identity theft happens when thieves get your personal information and use it without permission.
Thieves may use your information to open new accounts, make purchases, or even commit crimes.
You can avoid long-term complications from identity theft by protecting your personal information with complex passwords, secure internet connections, and watching for scams.
Thieves can steal your identity with access to just a few pieces of information, and it may take years to recover. According to the Federal Trade Commission, identity theft was the most common form of fraud in 2021 and 42% of identity theft reports came from people between the ages of 20 and 39.¹˒² The median amount lost for these age groups was $500.³
But what exactly is identity theft? And how can it affect you?
What is Identity Theft?
According to the United States Department of Justice, identity theft and fraud are crimes committed by someone who unlawfully obtains and uses another person’s personal information. These crimes usually involve fraud or deception and are done to make money.⁴ In non-lawyer speak, identity theft happens when someone steals your information and exploits it, typically to make money.
Identity theft takes many forms, from financial to medical to someone stealing your tax refund. While all forms of identity theft can result in thieves making money, we’re focusing on financial identity theft.
How do Thieves Get My Information?
Identity thieves are crafty and have many ways to obtain your financial information, ranging from scams to modern forms of pickpocketing. Some fraudsters will go through trash and recycling looking for new account offers or financial statements they can get information from. Others may use a skimmer, an electronic device that steals information from a card’s magnetic strip, on an ATM or fuel pump to get account numbers. With the increase in online purchases over the past few decades, thieves may gain account information via unsecured public Wi-Fi or websites. Some thieves purchase account information on the dark web from others who found it via hacking or data breaches. The dark web is a part of the internet that requires special software to access and keeps information behind layers of encryption. Accessing the dark web alone isn’t illegal, but engaging in criminal activities, like sharing stolen personal information, can occur. Finally, many thieves will trick people into giving over their information voluntarily by sending them emails or text messages impersonating companies they may already have an account with. This is called phishing (emails) or smishing (text messages). They pull you in by making you think the request is trustworthy because the message may have an official logo or the email address may be off by a letter, but you don’t notice the misspelling at a glance. “Fraudsters have stepped up their game when it comes to phishing and smishing scams,” says Angie Houchins, Fraud Investigation Manager at Jenius Bank. “Today many phishing emails and smishing text messages appear almost identical to the company the fraudster is attempting to impersonate.”
Protect Yourself From Identity Thieves
The best way to protect your identity is to reduce your chances of being targeted. By increasing the barriers to your information, you become a less attractive target to thieves. While there aren’t any 100% foolproof ways to protect your information, following some of these best practices will put you in a better position.
Keep Your Info Safe With These Tips
1. Complex Passwords Rule
We know you’ve heard this before but it’s important to protect your accounts with complicated passwords. They should include upper and lowercase letters, numbers, and characters in unique ways, and for goodness' sake, do not use your birthday, or the word password! But why does complexity matter? Using different character types makes it harder for them to be cracked. For example, changing your password from something like kangaroo to Kang@roohop2 changes the time it would take for a brute force attack to crack it from instantly to 63,000 years?⁵
If keeping track of multiple complex passwords sounds like a headache, consider using a password tool that stores passwords for your accounts and can be accessed on multiple devices.
2. Mix it up
Make your username and password unique for each account. According to the security firm SpyCloud, an estimated 64% of people were using the same password for more than one account in 2021.⁶ When you reuse usernames and passwords on multiple accounts, you make it easier for hackers to gain access to multiple accounts with just a few pieces of information.
3. Watch for Security
When browsing the internet, use private and secure internet connections that require a password to join. If you’re using unsecured or public wi-fi, don’t log into your accounts while on these networks.
4. Double Check the Sender
When you get an unexpected email or text from a company or person you “know,” double-check the sender. Look at the actual email address, not just the sender's name to make sure it’s someone you know, not someone impersonating them. As Angie mentioned, scammers are getting better at creating fake messages that look like they come from reputable companies. They do this to trick people into sharing their personal information. If you get an unexpected alert or message from your bank or credit card company, don’t click the link provided. Instead, go to the company’s official site and login to your account from there.
5. Watch for Poor Writing
If you receive an email claiming you’re eligible for a great interest rate or just won a contest, watch for poor spelling and grammar. Emails from legitimate companies will be error free because they invest in editors!
Don't Overshare on Social Media
In addition to the tips mentioned above, be careful when sharing information on social media. For example, avoid including detailed information about yourself on social profiles, such as your exact address, e-mail, or birthday.
Many platforms also allow you to restrict who can see certain information, such as your friends list or personally identifiable information. And as tempting as it is, don't check in to your location when on vacation. This lets people know you aren’t home, and someone could grab offers from your mail. Speaking of mail, consider investing in a shredder and shred any documents with personal information before you dispose of them.
Additionally, don't accept friend requests from people you don't know, and be cautious when accepting requests from people you do know. Thieves have begun copying social media accounts and requesting connections with the same friend list. Once connected, they have access to more of your information.
What Do Thieves Do With My Information?
Identity thieves can fraudulently use your information in several ways, including opening accounts in your name, making purchases, or potentially engaging in criminal activities.
Opening New Accounts
Fraudsters may use stolen information to open credit lines or bank accounts in your name. Oftentimes, they will change the billing address so you don’t receive statements and are unaware of the account. If they open a bank account in your name, they may begin writing bad checks. Depending on your credit history, when thieves apply for loans or credit cards, they could be approved for credit lines worth tens-of-thousands of dollars. Since the accounts are in your name, you are on the hook to pay off these debts.
Making Unauthorized Purchases
If a thief gets your credit card or bank account number, they can spend money ranging from small items that blend in with your regular spending habits, to large, multi-thousand-dollar purchases, such as a new appliance or entertainment system. If they gain access to your debit card, they may also withdraw cash from your accounts.
Engaging in Criminal Activities
Thieves may also use your information to engage in criminal activities. For example, they may use your identity to buy products they can’t purchase themselves. Identity theft can cause problems for you, ranging from a poor credit score to placing you on the hook for debt you didn’t take on, and, potentially, even criminal charges. In addition to protecting your information, make sure to keep an eye on your accounts for any unusual activity.
Early Signs of Identity Theft
If your information has been stolen, there are ways to catch thieves before they have a chance to use it excessively. Many companies, especially financial companies, will send you an alert if the information on your account has changed or if suspicious activity has occurred.
In addition to these alerts, it’s a good idea to check your accounts manually for any charges you don’t recognize and your credit report for new accounts you don’t recognize. You can get a free copy of your credit report from AnnualCreditReport.com.
Some things to keep your eye out for include:
Unexpected changes to personal information on an account
Unexplained withdrawals or charges on your statements
New accounts on your credit report
Errors on your credit report
Collection notices for unknown debts
Denial of loan or credit card applications
Errors on your tax return
According to Angie, you can save yourself a lot of heartache by watching for small changes to your information in different locations. “Pay attention to more than just your credit report,” she says. “Yes, your credit report is important, but also watch for odd changes happening on existing accounts. Something as simple as an unauthorized email address change on a long-standing bank or credit card account could be an early indicator of identity theft. The key is to catch it before it becomes out of control.” If you believe you’re the victim of identity theft, there are steps you can take to recover your identity.
Recovering From Identity Theft
As the victim of identity theft, the road back to stability is long but possible. While many companies offer paid services to help you recover from identity theft, the Federal Trade Commission’s website, identitytheft.gov, has a free, step-by-step plan to help you regain control of your financial information.
Included in this plan are tips on reporting the fraud to companies where the thief opened accounts or made transactions in your name, as well as how to report the situation to the Federal Trade Commission. There is also information on how to close accounts opened in your name, correct your report, and add fraud alerts or credit freezes to protect yourself from future fraud attempts.
Identity thieves are constantly coming up with new ways to get your information, but you can protect yourself by watching your accounts and following up on any suspicious activity. It’s a cliché, but when it comes to your identity, an ounce of protection really is better than a pound of cure.