One of the most discouraging aspects of living in the digital age is the rapid increase in identity theft. It happens when someone illegally obtains information about someone and wreaks havoc on credit, employment, retirement benefits and more by stealing money or property. Typically, identity theft involves the taking of sensitive information such as names, birthdays, social security numbers, addresses, bank accounts, credit card numbers, driver’s license details , etc.
There are different types of identity theft, and while some are more publicized than others, none are good for the person affected.
Identity theft is a growing problem. The United States Federal Trade Commission, which tracks consumer fraud and identity theft by Consumer Sentinel Network, received 5.7 million complaints in 2021. Of these, 25% were specific to identity theft, which saw a 113% year-over-year increase. As a result, total fraud losses in the United States in 2021 totaled $5.8 billion.
What can be done?
There is no magic mechanism that protects someone against identity theft. Yet, one can be proactive and consider enrolling in an identity theft protection program. Individuals should also monitor their credit reports and make sure everything is correct. Thorough verification of bank accounts, credit cards and other documents is also important. Finally, issues should be reported immediately to the necessary stakeholders for resolution.
The Many Types of Identity Theft
There are different types of identity theft. The majority of these fall into three broad categories: credit card fraud, government document or benefits fraud, and loan or lease fraud. In addition, telephone or utility fraud, bank fraud, employment or tax fraud, medical fraud, and child identity theft are also committed by criminals. You’ll learn more about them below.
Government documents or benefits fraud
Citizens, permanent residents, and working temporary residents are all assigned a United States Social Security Number. This nine-digit number is primarily used for federal retirement and tax purposes. For the former, criminals collect benefits intended for someone else.
Most fraud cases in this category involve criminals obtaining someone’s name, social security number, and other identifying information and applying for government benefits. Forgery of driver’s licenses, passports and other government documents also occurs.
Tax evasion is a similar type of identity theft, highlighted below.
credit card fraud
The FTC says credit card fraud has consistently been the most reported type of identity theft since 2017. The primary reason may not be so surprising; most of us have at least one credit card.
Thieves operating in credit card fraud do so by physically stealing cards or tricking account holders into providing credit card numbers online or over the phone. Many criminals have also turned to the dark web for information about consumers seized during data breaches. Then they use this information to open new credit card accounts on behalf of the victims.
Credit card fraud leads to higher interest rates for law-abiding cardholders and negatively affects their credit rating. It can also lead to higher prices of consumer goods.
Interestingly, credit card fraud has increased dramatically during the pandemic as more people have relied on the internet to make purchases of everyday goods such as groceries and clothing.
Loan or lease fraud
Loans can take many forms, and each is the target of criminals. In 2021, most involved applying for personal loans using identifying information such as name, address, and social security number. Other scammers open illegal home and auto loans using this same information. Improper leases of apartments, houses, and cars also fall into this category of identity theft.
Telephone or utility fraud
Spam calls are an ongoing problem that doesn’t seem to be going away no matter what governments do. Many phone scammers hope to steal money and personal information by pretending to be someone they are not and obtaining personal information. Phone scammers can be real people or involve robocalls and text messages.
Some spam scams can lead to utility fraud. This type of fraud involves using someone else’s name or identity to order home services such as internet, water or gas. There is also cable and satellite fraud.
With bank fraud, individuals use complex schemes to defraud and illegally obtain money or property. These can include fakes, stolen checks, fraudulent loans and Internet fraud.
When it comes to identity theft, most cases of bank fraud involve opening illegal accounts for profit. However, some involve stealing existing accounts. For example, illegally obtaining someone’s debit card and using it to purchase items is bank fraud.
Job theft is not the same as employee theft, which is when someone steals their business. On the contrary, job theft is often linked to unemployment insurance. In this case, someone’s identity is stolen and the thief applies for unemployment benefits using this information.
In contrast, tax evasion involves using someone else’s identity to collect refunds and other monies that are meant to benefit the real person. Typically, this type of fraud surfaces during tax filing season. In this case, a taxpayer cannot file their taxes or receive their refund because someone beat them to it using the victim’s social security number.
Medical identity theft
Often affecting the elderly, medical identity theft occurs when someone steals personal information and submits fraudulent claims to Medicare and other health insurers. This harms the government and its taxpayers, but it can cause problems for the person whose information was taken illegally, as it can disrupt medical care.
To prevent medical identity theft, individuals should keep their Explanation of Benefits statements and contact their health insurance company if anything does not appear to be correct.
Child Identity Fraud
Finally, there is child identity theft. Like other forms, this type of fraud involves stealing credentials from minors for profit. Children are susceptible to identity theft because they have no credit history associated with their social security number. Thieves can use this information to register for government benefits, apply for a loan, and more.
For added peace of mind, learn about the many ways to protect your Social Security numbers from hackers.