What is Identity Theft?

NOVEMBER 11, 2018

Ask anyone who has been a victim of identity theft, and they are bound to tell you that it is a massive headache.

a robber goes through documents

Identity theft in its various forms is a crime that directly affects millions of Americans and costs billions of dollars every year according to the Identity Theft Resource Center. According to the U.S. Department of Justice, identity theft is now surpassing drug trafficking as the number one crime in the nation. Let that statistic sink in for a moment- the number one crime in the entire nation.

If you’ve never been the victim of identity theft, you may be breathing a somewhat premature sigh of relief; remember that this can happen to anyone at any time. All American consumers need to understand just how common this crime is in the United States and what they can do to protect themselves.

We’ll take a closer look at how and why identity theft happens, and we will cover a number of proactive steps you can take to prevent it.

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Identity Theft: How it Happens

It’s easy to consider the various ways identity theft occurs in the digital age. Hardly a day goes by that we don’t hear news stories about hackers, and anyone using social media has worried that their personal details have been compromised on apps like Facebook.

We share (and often save) a wide variety of personal and financial details on consumer websites such as Amazon, and in doing so, we risk making that information readily available to hackers. But identity theft occurred long before the digital age; before our inboxes were “hacked” even our old-fashioned standing mailboxes could be hacked!

Identity theft can even occur with simple eavesdropping, as you recite your credit card number over the telephone to pay a bill or order merchandise from a catalog company. Without knowing it, you may have provided those details to a thief within earshot, who then has all the information needed to begin making purchases with your stolen account information.

Some of the most common ways identity theft occurs include:

  • Eavesdropping and Watching: while entering your credit card details online or over the phone, someone may be watching you and listening, recording or memorizing the account numbers for their own use.
  • Forgetting to Shred: do you receive credit card offers in the mail? Millions of Americans receive these daily, and if you simply toss them in the garbage without shredding the paperwork, you may be at risk. Someone can take the information and try to apply for the card on your behalf if they know enough of your personal details.
  • Falling Prey to Spam: there are countless “spam scams” directed at consumers via email, asking for people to submit personal information that can then be used by the scammer to take unlawful financial action in your name.
  • Digital Breaches: this is the news story we hear on what seems like a daily basis now – massive breaches where consumer information is hacked from popular websites and even credit bureau files.

And, of course, there is still one of the most common ways identities are stolen: in the aftermath of wallets and/or purses being stolen. This is why it is incredibly important to cancel or freeze credit cards, checking accounts, etc. as soon as you realize the theft has occurred.

Unfortunately, many theft victims realize only when it’s too late. If you leave your purse in your car in your driveway around 4 p.m. and only realize it’s been stolen then next day at 10 a.m., the thief has had ample time to make purchases or even apply for additional accounts in your name.

Victims of identity theft frequently find that thieves have used their personal information to obtain credit cards or other lines of credit that they then use to make large purchases, often costing upwards of thousands of dollars.

When the bills for these purchases come due, it is the victim of the crime who creditors try to hold accountable, and in many cases, their credit reports show the first evidence that a crime has been committed. This is why many experts suggest regularly monitoring your credit reports for unknown accounts or charges in order to more quickly identify if you have been the victim of identity thieves.

Identity Theft: The Statistics

If you have read this far and still believe this won’t happen to you, we will share some staggering statistics that just might make you change your mind.

  1. There’s a new victim of identity theft EVERY TWO SECONDS!
  2. In 2017, 16.7 million Americans were the victims of identity theft
  3. The total consumer fraud loss in 2017 was $905 million

Identity Theft: How You Can Protect Yourself

While no one is completely immune to the possibility of identity theft, there are certainly some steps you can take to try and protect yourself as much as possible. You should be your own best advocate when it comes to protecting your financial information! Here are some ideas and best practices you can start working on right away.

Give Your Devices a Security Overhaul!

If you use a mobile phone and/or laptop (as most people do these days) think carefully about the security of these devices, especially as far as your financial information is concerned. Make sure you are using the appropriate screen locks and passwords on these devices and avoid using public Wi-Fi whenever possible.

Try connecting to a Virtual Private Network (VPN) and encrypt your stored data on all of your devices. Hackers may have incredible technical know-how, but we should at least make it HARD for them to get your data! If you do not properly secure these devices, you should think of it as leaving your home unlocked 24 hours a day. Most people wouldn’t do that, yet they fail to secure their devices properly.

Don’t Dumb Down Your Passwords!

While it is increasingly frustrating to come up with the numerous passwords we need for everything from banking and loan sites to social media apps, resist the temptation to use the same simple password over and over, or one that might be obvious to figure out, such as your first name and birth year.

Instead use complex passwords with no obvious connections to your personal details (such as your address, mother’s name, etc.) The more far-fetched and ridiculous the password, the harder it will be for anyone to guess. There are even a variety of apps available to help you store all passwords securely in one location.

Sign up for Account Alerts

Be sure to take advantage of alert systems set up by your credit card company or bank letting you know of any suspicious activity on your account. These alerts can help you quickly detect fraudulent activity and stop it.

  • Use Two-Factor Authentication as a Rule. If two-factor authentication is an option for a login, use it! This means the institution will text you or e-mail a secure code to you even after you have entered a username and password. It just adds an extra measure of security and a way to prevent someone from gaining access to your accounts. The few extra seconds it takes to log in may seem like an inconvenience, but certainly, a minor one compared to the inconvenience of identity theft!
  • Guard Your Social Security Number Carefully. Many people make the mistake of carrying their social security cards in their wallets. There is no reason to do this – it should be kept in a safety deposit box if possible, or a safe and secure place in your home! And be sure not to state the number over the phone within earshot of others in public places.

What Happens After Identity Theft?

“Inconvenience” doesn’t even begin to cover it. It can take months or even years to resolve an identity theft issue, and consumers are often blindsided by not only the theft itself but also the massive amount of clean-up work involved. Once you realize you have been the victim of identity theft, you will need to act quickly in a number of areas.

  1. File a Police Report! Don’t underestimate the importance of a police report because this is a CRIME. Just because the thief didn’t steal the television out of your living room doesn’t mean he didn’t take what is rightfully yours. Once you have filed the report, make sure you keep a copy for your records. It’s a good idea to keep all records together while you are working to resolve this issue, and you might find it handy to gather all paperwork in one large binder. That way you have it available for easy reference as you discuss your case with both law enforcement and credit bureaus and other financial institutions.
  2. Contact Social Security, the IRS, and the post office! If your social security number has been compromised, you should immediately alert both that agency as well as the Internal Revenue Service. Better to play it safe and have both agencies alerted in the event that the thief may be planning to commit tax fraud. Also, if you suspect the thief may have issued a fraudulent address change in your name, you should alert the postal inspection unit.
  3. Contact ALL Financial Institutions. Go ahead and contact each bank or credit card company where you have an account, as well as any other loans (such as a mortgage or student loans) to let them know you have been a victim of identity theft. You may need to freeze or cancel some accounts until the issue is resolved.

Identity Theft and Credit Repair

One of the most unfortunate aspects of identity theft is what it can do to damage someone’s credit report. Consumers need good credit to purchase homes, open credit card accounts, or even secure jobs; suddenly, through no fault of one’s own, a credit score can go from good to bad because of identity theft. This is an incredibly frustrating predicament. A responsible user or credit is lumped into the same category as someone who may have constantly been late paying bills, which seems incredibly unfair.

If you have been a victim of identity theft and your credit report has been damaged, we can work to help.

  • Fraud Alert on your Credit Reports: You should immediately put a fraud alert on your credit reports. This opens up an opportunity for you to dispute fraudulent items on the reports that may be directly linked to the identity theft.
  • Contact one of the Credit Bureaus: The good news is you only need to contact one of the agencies to do this. There are three major credit bureaus (Experian, Equifax, and TransUnion) and once you contact one of them, they will tell the other two on your behalf.
  • Obtain a Copy of your Credit Report: After you have created the fraud alert be sure to obtain a copy of your report (you are entitled to a free copy every 12 months!) Then once you have reviewed the report you can begin the process of disputing any fraudulent items. The fraud alert will stay in place for 90 days at no cost to you.
  • Security Freeze on your Credit Report: You can also put a security freeze on your credit reports if you have been the victim of identity theft but bear in mind this means creditors cannot access your report at all (so you would automatically be denied a new loan, for example).

Recovering from identity theft and repairing damage to your credit history is rarely an easy task. Victims reported in 2004 that after dealing with creditors, collectors, the credit bureaus, and law enforcement agencies, resolving the problems associated with identity theft took an average of 330 hours of work. This is a massive amount of work for anyone, especially someone going it alone!

The experts at Lexington Law can ease some of this burden by helping you dispute fraudulent items on your credit report. Identity theft is a massive headache, but recovering from it can be made easier by trusted experts who are ready to guide you through the process.