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10 Things You Should Know About Identity Theft

Identity theft may be more common than you think. Here are 10 important things to know about identity theft, including how to prevent it and what to do if it happens.

By Elliot M. Kass | American Express Credit Intel Freelance Contributor

7 Min Read | August 4, 2021 in Credit Score

 

At-A-Glance

Identity theft is surprisingly common: About 33% of American adults have experienced it in some form.

The consequences of ID theft can sometimes take years to resolve.

There are steps you can take to avoid identity theft – and ways to minimize the damage if it does occur.

Each day, millions of people face the threat of identity theft – a crime that can take a huge financial and emotional toll. One study found that 5.1% of Americans experienced identity fraud in 2019 alone, resulting in losses of $16.9 billion.1 And a separate study found that the vast majority of people surveyed who experienced identity theft said it diminished their well-being in other ways as well.2 


So how can you avoid having your identity stolen? Here are 10 important things you need to know about identity theft, including how to spot when it happens and what to do if it does.

 

1. Identity Theft Is Commonplace

Some people think identity theft won’t happen to them if they’re alert and street smart. But the truth is that identity theft is everywhere, with one out of three U.S. adults having experienced some form of it.3 And it can happen to people of all ages. In 2017, the identities of more than 1 million children – most of whom were under the age of seven – were used in some type of fraud.4

 

2. ID Thieves Are Often a Step Ahead

Professional identity thieves spend their time and energy coming up with new ways to scam unsuspecting people, and many of these con artists are tech-savvy and well-versed in the latest technologies. What’s more, a report from the research firm Gartner found that fewer than one in 500 identity thefts leads to arrest.5

 

3. Identity Theft Can Occur Both Online and Off

Many people consider identity theft a digital crime that takes place via the Internet. Certainly, it’s become commonplace for thieves to try and steal passwords, intercept Wi-Fi signals, or use various types of malware to gain access to personal information. But would-be imposters also use other methods to swipe personal data, many of which are comparatively low-tech. These can range from clever phone scams and snail-mail theft to old-fashioned pickpocketing and dumpster diving for personal information.

 

4. The Consequences of Identity Theft Are Not Easy to Correct

Apart from financial losses, identity theft can damage your credit, cause emotional distress, and require extensive time and effort to resolve. More serious instances of identity theft, like having a falsified tax return filed in your name, can take much longer.6 Experts say it can take up to 33 hours or longer to resolve a case of stolen identity, and that a full recovery can take months or even years.7 Other research indicates that it takes people an average of six months and 100 to 200 hours of personal time to undo identity fraud.8

 

5. Data Breaches Can Expose Personal Data Even if You’re Careful

Even if you take precautionary steps, ID theft can still happen if a company you do business with experiences a data breach. In 2020, 1,001 breaches were reported in the U.S., exposing nearly 156 million individual data records to doctoring or theft.9 Because it’s sometimes beyond your control, it can be a good idea to sign up for credit monitoring services. Even if information is stolen, you’ll be notified and may be in a better position to mitigate some of the potential damage.

 

6. How to Tell Whether Your Identity’s Been Stolen

Once an ID thief has your personal information, they can use it to dip into your bank account, charge purchases to your credit cards, open new accounts, or pay for medical treatments with your health insurance. A thief can even file a tax return in your name and collect a fraudulent refund. But how can you tell that you’ve become a victim? Here are some tip-offs that your identity may have been stolen:

  • Mysterious withdrawals were made from your bank account that you can’t readily explain.
  • You stop receiving your monthly bills or other U.S. Postal mail.
  • Debt collectors start calling you about debts that aren’t yours.
  • There are unfamiliar charges on your credit card, or you discover you have a new card that you didn’t apply for.
  • You start receiving bills for medical services you didn’t have.
  • The IRS rejects your tax return because one was already filed in your name.
  • You learn about a data breach at a company with which you do business.

 

7. Social Security Number Is Key to Protecting Your Identity

Unlike credit card numbers, Social Security numbers aren’t easily replaced. They’re also needed to open a new account, file a tax return, and for countless other financial transactions. This makes them invaluable to an identity thief who can steal one and then wait for months or even years before using it to pilfer a bank account or open a new line of credit. By the same token, without a Social Security number it is much harder to assume someone’s identity. You can help protect yourself by refusing to provide yours unless you’re 100% certain of who you’re giving it to and that they absolutely need it. Likewise, try to avoid keeping your Social Security card in your wallet or another obvious location.

 

8. Ways to Protect Your Identity Online

Using a firewall and a virtual private network (VPN) can help keep your data secure. Otherwise, any information sent via Wi-Fi can be intercepted.

  • Antivirus software can help protect you from the various types of malware that intercept passwords and personal data.
  • Long passwords with lots of capital letters and special characters can further protect your personal information. Also, it’s best practice to change passwords frequently.
  • Don’t forget to use your mobile phone’s security features, like using a passcode to unlock the device.
  • Use multifactor authentication if your social network or other online service offers it. This is when the service sends a code to a separate device through text, email, or voice message, and you use your password plus that code to log in.

 

9. Ways to Protect Your Identity Offline

  • Don't share any personal information, unless you trust the person you’re giving it to.
  • Collect your mail daily and place a hold on it when you travel.Shred any papers and documents that contain personal information – including sales receipts – before you dispose of them.
  • Freeze your credit reports with the major credit bureaus, which you can do free of charge. Credit freezes can help prevent someone from applying for a new account or utility service in your name.

 

10. What You Should Do if Your Identity Gets Stolen

If you think you may have become a victim of identity theft, there are several steps you can take to minimize the damage. These include:

  • File a report with the Federal Trade Commission, which compiles information about identity theft cases. The FBI and other law enforcement agencies use this information to track down identity thieves.
  • Contact your local police department.
  • Notify the IRS by submitting a Form 14039 Identity Theft Affidavit. This alerts the agency that your Social Security number may have been used to submit a fraudulent tax return.
  • Review your credit card and bank statements for unauthorized charges and check your credit reports for any new accounts that have been opened in your name.
  • Reach out to your financial institutions to determine how best to avoid further damage. In many cases, this will mean closing your current accounts – even ones that haven’t been compromised – and reopening new ones.

 

The Takeaway

Identity theft is a serious crime experienced by tens of millions of Americans. It can be difficult to avoid, and the outcome can be devastating. But there are a variety of precautions you can take to reduce your chances of becoming a victim and mitigate the damage if you do.

Elliot Kass

Elliot Kass is a journalist who has covered global business and technology from New York, London, and San Francisco for more than 30 years.

 

All Credit Intel content is written by freelance authors and commissioned and paid for by American Express. 

The material made available for you on this website, Credit Intel, is for informational purposes only and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.