A Review of 5 of the Most Common Types of Identity Theft
Identity theft is unfortunately a common crime that affects millions of individuals worldwide. According to Javelin Strategy & Research, more than 49 million people were victims of various types of identity theft in 2020. They lost a combined $56 billion, $43 billion of which resulted from phishing emails and other direct-interaction scams. In 2020 the Federal Trade Commission in the United States received more than 2.2 million fraud reports, and research shows one-third of all Americans have been a victim of identity theft.
Criminals steal people’s identities in a variety of ways and for different purposes. For instance, identity theft can involve using a person's Social Security number and other information to take out fraudulent loans, or opening accounts using the information of children under the age of 18.
The following is a closer look at five of the most prominent types of identity theft.
1. Financial Identity Theft
Financial identity theft, which involves a criminal stealing another person's information for financial gain, is the most common type of identity theft. With access to sensitive information, including bank account numbers, driver's license details, birthdates, and Social Security, criminals can open credit card accounts in other people's names and make purchases. They may even open up lines of credit or gradually steal small sums of money from existing accounts.
Scammers can steal your information via phishing, a scheme that usually involves the criminal posing as a representative from a financial institution. They often send threatening messages with calls to action, whether it's clicking a link or opening an attachment containing malware or spyware that can infect your computer or mobile device. These viruses can infect files and collect personal information stored on your device.
Protecting against financial identity theft requires regularly checking your bank accounts and credit card statements for suspicious activity. You should also request credit reports from each of the three credit bureaus via AnnualCreditReport.com. You can get one free report from each bureau every 12 months. Alternatively, you can prevent new accounts generated in your name altogether by requesting a one-year fraud alert or placing a security freeze on credit reports.
2. Medical Identity Theft
Medical identity theft can also leave you with unexpected and unwanted bills. This type of identity theft occurs when a criminal uses another person's information to obtain healthcare services, whether it's in-patient checkups, expensive surgeries, or prescription drugs.
While it isn't as common as others forms of theft, medical identity theft can be a more serious threat than financial identity theft. In the US, the law states that consumers can only be liable for $50 in fraudulent credit card charges. However, there is no legal protection for medical identity theft. A 2015 Ponemon Institute survey of medical identity theft victims found that the average resolution cost was $13,500. Compounding the problem is the fact that medical identity theft is occurring at an increasing rate; the FTC received almost 43,000 reports in 2021, up from just 6,800 in 2017.
You can mitigate false charges by regularly reviewing medical claims. If you notice unfamiliar prescriptions or procedures, file a complaint with the US Department of Health and Human Services or call 1-800-MEDICARE.
3. Synthetic Identity Theft
According to the FBI, synthetic identity theft is the fastest-growing crime in the US. This type of crime involves a criminal using a combination of real and fake information to create a new identity, which they then use to apply for credit. Children and senior citizens are especially susceptible to synthetic identity theft.
Parents can sign up for identity monitoring services to discover if their child's information has been used to create new identities. They can also request to have credit bureaus freeze their child's credit until they turn 16.
"The other thing they can do is have their children signed on as an authorized user for their credit profile," notes FBI special agent Zacharia Baldwin. "They don't actually have access to the card to make purchases, but they're linked to their accounts. This is often done to build their credit; then when [they] go into the real world, they have an existing credit profile with good credit."
4. Child Identity Theft
Children are easier identity theft targets as they usually don't have existing financial accounts and can't access credit reports. Most parents do not even think about their child’s potential of being an ID theft victim, and these thefts can take years to discover. Criminals will typically use their information to apply for government benefits, open a line of credit, or even take out a mortgage.
The Identity Theft Resource Center notes there are 1.3 million instances of child identity theft every year. Unfortunately, most cases involve a relative using the child's information to commit fraud.
5. Tax Return Identity Theft
If you go to file an annual tax return and notice one has already been processed, then chances are you've been a victim of tax identity theft. Scammers commit this type of fraud by using your Social Security number and other personal information to file fraudulent returns and collect a refund. The Internal Revenue Service recommends completing an Identity Theft Affidavit if you've been a victim of tax identity theft.