How Does Identity Theft Happen & Could It Happen to You?

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If you’ve been paying attention lately, you’ve no doubt heard a lot about identity theft. But what exactly is identity theft, how does it happen, and how likely is it to happen to you?

Identity theft is defined as a crime in which a criminal obtains your personal information and uses it to commit financial fraud or theft. It is also one of the fastest-growing categories of crime in the US, with over 14.4 million victims in 2019 alone. Every 3 seconds a new case of identity theft happens. It can strike anyone, especially if you shop online or have credit cards because many of the top US retailers have had their databases hacked. Sadly, it’s only a matter of time before you become a victim.

How Do Thieves Get Your Information?

There are several ways this can happen. Some are old fashioned, like rifling through your garbage cans to get old bank statements, credit card bills, and the like.  However, thieves are increasingly using high tech methods. These include hacking into company databases where customer records are stored, or installing spyware onto computers to capture the information that gets transmitted between companies and their customers. Sometimes thieves will find somebody inside a company or government agency that has access to confidential information and pay them to provide it to them.

The information includes your name and address, social security number, and credit card and bank account numbers.  This information is used to:

  1. Access your bank accounts and credit cards.
  2. Obtain new credit cards in your name, but have them sent to the thief.  They will then use the credit card until the fraud is detected.
  3. Sign up for services — like a cell phone — in your name.
  4. Open a new bank account in your name and proceed to write bad checks.

If the thieves access your bank account or credit cards and steal from you, it can be difficult or time-consuming to prove the fraud. In some cases, depending on your bank or credit history, you may not get all the money back. Definitely check with your bank and credit card providers to see if you’re covered just in case.

With new cards and accounts, most consumers are not ultimately responsible for these stolen amounts, but it typically takes months to clear up an incident. 

More importantly, your credit can be severely damaged, affecting your ability to get the credit you need.

How to Prevent It

Normally, victims are completely unaware that identity theft has occurred until the company that issued loans or credit lines to the thief does not receive payment and starts coming after you to collect.

Experts agree that the most effective preventative measure is to check your free credit report regularly and try a monitoring service that immediately notifies you whenever there is a suspicious credit activity.  This is the fastest way to spot when someone has obtained your confidential information and is trying to commit fraud.

Identity protection companies ofter the following services:

  1. Free Credit Report and Credit Report Monitoring, to notify you of any fraudulent activity on your accounts.
  2. Fraud resolution assistance – They will work with creditors’ to resolve any issues in the event that a real or attempted fraud occurs.
  3. Wallet protection”– if your wallet is lost or stolen just call 1 number to conveniently cancel all cards.  This is a huge time saver.
  4. $1 million ID theft guarantee – The service will cover you from any personal liability for fraudulent use of your credit, lost wages and legal fees, up to one million dollars.

These services cost money, so some people prefer to skip using them. If that’s the case, checking your credit report regularly is a good option.

How Does Identity Theft Happen — Sources

Bureau of Justice Statistics
Identity Force