Have you ever considered that you could become a victim of Identity Theft? Do you know that nearly 42 million Americans were victims of identity fraud last year?
When a criminal gets hold of your personal information, there are several things they can do with the data. Getting hold of such personal details will enable a criminal to do fraudulent things at any time they wish. They often strike with fraud when you are least expecting it to happen.
- Even though not committed by the victim, these fraudulent acts can land the victim in trouble.
- Because of identity theft, the victims of financial fraud might find themselves saddled in debt if their details are used to conduct financial transactions.
- It can cost the victim time and money and negatively impact their credit score.
- And, if the victim’s credit score is tainted, he might find it challenging to get a mortgage, a new credit card or a loan.
In today’s MoneyTalk, we will discuss Identity Theft and what you can do to prevent and protect yourself from Identity theft. We will also talk about what actions you need to take if you become a victim of Identity theft.
What is Identity Theft?
Let’s first understand what Identity Theft is. Identity Theft, also called ID Theft, is a crime where the thief steals your personal information and uses it unauthorized for their own personal gain.
- Criminals use seemingly pieces of information such as your full name or date of birth to commit identity theft.
- In today’s world, where so much of our data is online, it is very easy for thieves and fraudsters to get hold of your personal information.
There have been many high-profile data breaches where online hackers have access to the personal details of millions of people. For example, whenever we shop online or pay for anything online on any website, we share our first name and last name, address, and credit card details.
Some companies may even ask for more personal information as part of their verification process. These companies store all of these details and information in data servers. Even though these companies may be following data security precautions and procedures to safeguard this information.
In these data breaches, criminals can access information and personal data such as bank and credit account details, email addresses, social security numbers, home addresses, mother’s maiden name, place of birth, PINs and passwords.
What are the Types of Identity Theft?
For more severe ID theft crimes, the victim may fall under the suspicion of the police and become a suspect in a criminal investigation. The victims may find it challenging to prove their innocence. In a worst-case scenario, the victim may eventually end up in jail, leading to legal trouble.
Let’s now look at the different identity theft types as ID theft has taken various forms. They range from the simplest to the most dangerous crimes you can think of. The typical types of Identity Theft are:
1. Financial Identity Theft
Additionally, a thief may use your Social Security Number to falsely file tax returns with the Internal Revenue Service or state government and commit Tax Identity Theft. If you do not catch this fraud as soon as it happens, it can lead to severe financial impact and will likely dent your credit score.
2. Employment Identity Theft
In this theft, the culprits use stolen identification such as Social Security Numbers to obtain employment where they would otherwise not be able to work.
They use the stolen identity to avoid having background checks into their natural, personal and drug use history. This is a severe issue, as any crimes committed at the workplace under your identity may cause you legal troubles.
3. Driver License Identity Theft
Criminals can also use the victim’s personal information to obtain a driver’s license and then use the driver’s license to commit traffic violations on the victim’s record.
Due to this, the victim might pay fines or even lose their driver’s license for violations they never committed.
4. Medical Identity Theft
Medical identity theft occurs when someone steals your personal information. Such as your Medicare ID or Health Insurance Number, then uses this information to obtain medical care, buy medication, or issue fraudulent billing to your insurance provider.
This theft can lead to the victim receiving unexpected large sums of bills charged by the insurance providers. If the victim cannot prove his innocence, the invoices may be sent to the Collections Agency, which will hound the victim to pay bills.
5. Child Identity Theft
A child’s or student’s identity is a gold mine for identity thieves. Children’s identity records are not well established in the various systems, and such theft might go undetected for many years.
- Criminals can use a child’s Social Security Number to claim dependent children or welfare payments from the government falsely.
- They can even use the child’s details to commit crimes or apply for loans.
- Sadly, relatives or friends are usually the culprits who commit child identity theft.
- They have easy access to the required information, so they use it to obtain credit cards and take loans in the child’s name.
When the victim is old enough, they will learn of the theft and discover that their credit rating is ruined. The victim will find it challenging to obtain a student or car loan. It will then require several years of credit monitoring and clean up to restore the victim’s credit.
Now that we know the different types of Identity Theft let’s talk about some of the ways you can protect yourself from Identity Theft.
The methods used by identity thieves to steal information have evolved. They continuously adapt to new technology, making it almost impossible to prevent identity theft completely. But that doesn’t mean the likelihood of being a victim cannot be limited or even eliminated by taking certain precautions.
- Shred receipts, bank and credit card account statements, and only set up to receive e-statements and cancel paper statements whenever possible.
- Store personal documents in a safe and secure place at home or work, and keep them hidden and locked
- Do not give away your credit or debit card when paying bills, such as at a restaurant, and always make sure that the card never leaves your sight.
- Don’t respond to unsolicited requests for personal information by phone, mail or email, and always check the numbers against what is listed on the bank or credit card company’s website.
- Secure your Social Security Number and only give out your Social Security Number when necessary
- Install firewalls and virus-detection software on your home computer, and never download or install software or apps on your phone from unverified sources
- Promptly compare receipts with the amounts in account statements and check for discrepancies in the charges.
- Watch for unauthorized transactions on your accounts by checking your bank and credit card accounts daily.
- Make sure your passwords are complex so that identity thieves cannot guess them quickly, and never keep your passwords written on paper.
- Collect mail promptly and ask the post office to put your mail on hold when you are away from home for several days
- Monitor your Credit Score reports regularly and check for unrecognizable loans or credit cards opened in your name
Most importantly, it would be best to use MoneyPatrol to monitor your bank and credit card accounts. MoneyPatrol will send you a text and email notification whenever it detects new transactions on your accounts. These alerts will help you spot fraudulent and suspicious transactions on your accounts. You can then immediately contact your financial institution to take further action.
Suppose you realize that you have been a victim of ID theft. In that case, we recommend that you contact your financial institution immediately. Many banks and credit card companies will reverse fraudulent charges if you notify them within 15 to 45 days of the crime. They will lock your account and send you a new debit and credit card. You can also call the Credit Bureaus and request to freeze your credit. Any new loan applications will not be approved unless you unfreeze the credit. Additionally, if you are an ID theft victim, you should also look into filing a criminal report with the authorities.
We hope that this MoneyTalk has helped you understand ID Theft, what you can do to prevent it from becoming an ID theft, and what actions you can take if you become an Identity Theft victim.