Identity Theft

Identity Theft: What It Is, How It Happens, and How to Protect Yourself

Identity theft has become a huge problem in recent years. With more of our personal and financial information being stored online, it’s easier than ever for criminals to steal our identities and commit fraud. In this article, we’ll explain what identity theft is, how it happens, and most importantly – how you can protect yourself.

What is Identity Theft?

Identity theft occurs when someone steals your personal information and uses it to commit fraud or other crimes. This can include things like:

• Opening credit cards or taking out loans in your name
• Accessing your bank accounts to steal money
• Getting medical care using your health insurance
• Filing a fraudulent tax return to collect your refund
• Committing crimes while impersonating you

Identity theft often goes unnoticed for a long time, until the victim sees suspicious charges or accounts on their credit report. By then, the damage is already done and can take months or years to undo. According to the Federal Trade Commission (FTC), identity theft is one of the fastest growing crimes in the U.S. [1]

How Does Identity Theft Happen?

Identity thieves use a variety of methods to get your information. Here are some of the most common:

• Data breaches – When companies that store personal data experience a breach, hackers can access customer information. Some major breaches have exposed data like Social Security numbers, bank account details, and more.
• Phishing – Deceptive emails or websites pretend to be legitimate in order to trick you into entering your login credentials or sensitive information.
• Skimming – Stealing credit/debit card information using a special storage device when processing your card. This often happens at gas stations or ATMs.
• Dumpster diving – Rummaging through trash looking for documents with personal information.
• Hacking – Breaking into your email or other online accounts to gain access to financial and identity data.

Once identity thieves have your information, they can use it in a couple different ways:

• Existing account fraud – Criminals access your existing accounts, like credit cards or bank accounts.
• New account fraud – Thieves open new accounts in your name, using your SSN and other details.

How to Protect Yourself from Identity Theft

While you can never completely prevent identity theft, there are steps you can take to minimize your risk:

1. Check your credit reports. Get free annual credit reports from AnnualCreditReport.com and review them for any suspicious activity. Checking your reports regularly makes it easier to spot fraud early.
2. Freeze your credit. Stop thieves from opening new accounts by freezing your credit reports with Equifax, Experian and TransUnion. Freezing credit is free and prevents criminals from accessing your credit report unless you unfreeze it. [2]
3. Use strong passwords. Create complex, unique passwords for each of your online accounts. Consider using a password manager to store them securely. Weak passwords make it easy for thieves to hack into your accounts.
4. Beware of phishing. Don’t click links or download attachments from suspicious emails. Phishing messages often imitate real companies and try to infect your device with malware or steal your data.
5. Shop securely online. Only make purchases through secure sites that encrypt your data. Look for the “https” and padlock icon in the web address. Avoid using public Wi-Fi for shopping.
6. Shred sensitive documents. Use a cross-cut shredder to destroy any paperwork containing personal information before throwing it out. This prevents dumpster divers from piecing it back together.
7. Watch out for skimmers. When using ATMs or gas pumps, check for any signs of tampering, like an added card reader. Give the card reader a wiggle to see if it’s been attached.
8. Be social media savvy. Don’t post too many personal details like your address, birthdate, or mother’s maiden name. This info often helps verify identity and can aid thieves.
9. Monitor your accounts. Routinely check your financial and credit card statements and report any fraudulent charges right away. Set up text or email alerts for large purchases or suspicious activity.

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

Even with precautions, identity theft can still happen. If you suspect you’re a victim, act quickly to minimize the damage:

1. Call companies affected. Contact your bank, credit card issuers, or any other companies where you know fraud occurred. Report the charges and have replacement cards issued.
2. Place a fraud alert. An initial 90-day fraud alert requires creditors to verify your identity before opening new accounts. You can renew it after it expires. [3]
3. Freeze your credit. Stop thieves from causing further harm by freezing your credit reports. This blocks access to your reports unless you lift the freeze.
4. Reset passwords. Change the passwords for all of your financial, email, and other online accounts to lock out the thieves.
5. File an identity theft report. Submit a report to the FTC at IdentityTheft.gov and get an official Identity Theft Report to help recover losses and fix your credit.
6. Dispute fraudulent charges. Use your Identity Theft Report to dispute unauthorized charges with credit reporting agencies and companies.
7. Monitor your credit. Keep a close eye on your credit reports moving forward so you can catch any new fraudulent activity.

Recovering from identity theft takes time and effort, but you can take back control by acting quickly after discovering you’re a victim. Monitor your personal information and credit closely to limit the damage.

Protecting Yourself is a Priority

Identity theft can wreak havoc on your finances, credit, and reputation when thieves access your information. While you can’t prevent all identity theft, making it harder for criminals to exploit your data goes a long way.

Take preventative steps like checking your credit reports regularly, freezing your credit, and being cautious where you share your details. If thieves do get ahold of your data, have a plan to catch it early before major fraud occurs. Pay attention to warning signs, report any suspicious activity, and work to repair any damage right away.

By understanding the common tactics identity thieves use and taking precautions, you can reduce your risk and stress. But even with great care, identity theft can still occur. So make sure you know what to do if you become a victim. With vigilance and quick action, you can protect your identity and recover from fraud.