Identity theft occurs when someone uses your personal information—Social Security number, credit card numbers, or other identifying data—without permission. The consequences can be devastating: damaged credit, financial losses, and months or years of recovery. Understanding how identity theft happens helps you protect yourself and respond if you become a victim.
Types of Identity Theft
Financial identity theft involves using your information to open credit accounts, take out loans, or make purchases. This is the most common type and directly affects your creditworthiness.
Tax identity theft occurs when thieves file fraudulent tax returns using your Social Security number to claim refunds.
Medical identity theft involves using your insurance information to obtain medical care, affecting your medical records and insurance benefits.
Criminal identity theft happens when someone gives your information to police during arrest, creating a criminal record in your name.
Child identity theft targets children's Social Security numbers, often going undetected for years.
How Thieves Steal Identity
Identity theft happens through data breaches at companies storing your information, phishing emails and fake websites tricking you into revealing data, physical theft of wallets, mail, or documents, social engineering manipulating you into disclosing information, and insecure online practices exposing your data.
Data breaches are increasingly common—your information may be compromised even without personal mistakes.
Warning Signs
Monitor for these red flags: unfamiliar accounts on credit reports, bills for products or services you didn't buy, debt collection calls for unknown debts, medical bills for services you didn't receive, tax return rejection because a return was already filed, and missing mail or bills you expected.
Regular credit monitoring helps catch problems early.
Prevention Strategies
Secure your personal information. Shred documents containing sensitive data. Use strong, unique passwords. Enable two-factor authentication. Be skeptical of unsolicited requests for personal information.
Limit what you share online—social media provides identity thieves with personal details. Don't carry your Social Security card.
Monitoring Your Credit
Check your credit reports regularly from all three bureaus—Equifax, Experian, and TransUnion. You're entitled to free annual reports at AnnualCreditReport.com. Consider staggering requests to check different bureaus throughout the year.
Credit monitoring services provide alerts when activity occurs, though they can't prevent theft—only detect it.
Credit Freezes
A credit freeze restricts access to your credit report, preventing new accounts from being opened in your name. Freezes are free and provide strong protection. You can temporarily lift freezes when you need to apply for credit.
Freezes don't affect existing accounts or your credit score.
Fraud Alerts
Fraud alerts notify creditors to verify your identity before opening new accounts. Initial fraud alerts last one year; extended alerts for confirmed victims last seven years. Alerts provide less protection than freezes but require less management.
When Theft Occurs
Act quickly when you discover identity theft. Contact affected companies immediately. File reports with the FTC (IdentityTheft.gov) and local police. Place fraud alerts or freezes on your credit. Document everything.
Getting Legal Help
If identity theft causes significant damage, an attorney may help pursue responsible parties. This might include companies with inadequate security, credit bureaus reporting inaccurate information, or collectors pursuing fraudulent debts. Consumer protection laws provide remedies for certain violations.