What Are the Most Common Types of Identity Theft?

Although there are many types of identity theft, most fall into these main categories:

  • Unauthorized credit and debit card use: Thieves use your card credentials to make unauthorized purchases.
  • Account takeover: Here, fraudsters access your account information and use it to change account details, make purchases or withdraw funds. Targets include checking and savings accounts, but also accounts linked to credit cards, mobile phones, investments—the list is long.
  • Opening credit accounts or loans: This is when your personal identifying information is used to open credit card or loan accounts. The credit accounts are linked to your identity, and when the fraudsters ultimately default, it damages your credit in the process. If the account is disputed and removed from your credit reports, the credit score damage should go away.
  • Government, identification, job or tax fraud: Fraudsters use your identity to receive government benefits, generate fake identification, offer documentation to employers or file fraudulent taxes (to get a refund). Government document and benefit fraud saw an explosion in 2020—up 1,400% over the prior year, according to FTC data—most likely due to a rise in COVID-19-related fraud.

    How Can Identity Theft Affect You and Your Finances?

    Although much of the financial damage from identity theft can be dealt with by reporting the fraud and filing claims with your financial institutions, Javelin nevertheless reports that consumers paid $3.5 billion out-of-pocket for costs related to identity theft. Among the possible reasons for this: fraudulent charges that are reported too late or accounts that don’t assume liability for identity fraud. Identity theft insurance can help you defray some of this cost. Detecting and reporting identity theft takes vigilance and time. So even if fraudulent charges on your account are eventually reversed, you’ll need to invest time and effort in consistently monitoring your accounts for suspicious activity. You may also want to monitor your credit, to make sure fraudsters aren’t opening new accounts in your name. If someone has given your Social Security number to an employer, you may have to prove to the IRS that your identity was stolen. The same goes if a fake tax return was filed—or COVID-19 stimulus money paid out—using your information. Undoing the effects of complex identity theft can take months or even years. There may be emotional costs as well. The Identity Theft Resource Center surveyed consumers who experienced identity crime and found that 77% had increased stress levels and 55% experienced fatigue or decreased energy.

    How to Prevent Identity Theft

    It’s nearly impossible to avoid the risk of identity theft completely. Even when you are meticulous, a merchant or organization you do business with can suffer a security breach and expose your information. That said, you can take proactive steps to reduce the chances you’ll be hacked by following best practices:

    • Monitor your accounts and credit. Stay alert to all activity on your bank and card accounts. Consider credit monitoring, which provides you with current credit score and report information and can send alerts when new credit inquiries and accounts, changes or suspicious activity are detected.
    • Use an encrypted internet connection and stay off public Wi-Fi. Better still, look into getting a VPN, which will help to keep your information safe from hackers.
    • Be mindful about online activity. Some of the additional exposure people have been seeing in recent months comes from ramped up online activity. Whenever you download an app, store payment information on a company’s website or share personal information online, you increase your risk of identity theft. You don’t have to go dark; just take it easy.
    • Use complex, unique passwords. Symbols, numbers and letters in passwords increase their security. Also, make sure they aren’t easy to guess, and don’t use the same password on several sites.
    • Mind your mail and discarded documents. Shred any documents containing personal information before throwing them out. Don’t leave incoming or outgoing mail where it can be stolen.