How Identity Theft Works and Why It Can Hurt You

Identity Theft

You’ve already heard of stories where people got credit card bills that they did not spend. Or someone gets unexplained withdrawals from their bank account. These are just some examples of identity theft, a crime that can have life-altering consequences to those who fall victim.  

Identity theft statistics show that your chances of becoming a victim of this crime might be much higher than you think, especially in the current times. Experts predict 33% of American adults are likely to fall victims to these growing criminal acts as more people continue to embrace technology.

How Identity Theft Works and Why It Can Hurt You

If it hasn’t happened to you yet, you should count yourself very lucky indeed. Keep reading for tips to prevent identity theft.

What is identity theft?

Identity theft refers to obtaining another person’s personal or financial information and using it to commit fraud. The identity thief may use the obtained data to make unauthorized purchases or transactions such as applying for credit, filing taxes, or getting medical services.

How does identity theft work?

Identity theft happens in various ways, ranging from simple to more sophisticated tactics that are difficult for an average person to comprehend. Being aware of some basic identity theft types is the first step in protecting yourself against this crime. 

Some of the common types of identity theft include:

  • Looking over your shoulder at the ATM to capture your PIN
  • Stealing newly issued items, including insurance statements, identification cards, utility bills, checks, credit cards, and other benefits documents from your unsecured mailbox
  • Sifting through your trash for discarded papers
  • Claiming to a representative of your financial institution

It’s important to note that these are not the only ways you can fall victim to identity theft. Thieves may use more advanced methods such as malware, skimming, and phishing to steal your personal or financial information.

With your name, address, Social Security Number (SSN), bank account, or credit card details, these criminals can open fraudulent cell phone, credit card, bank, or other service accounts in your name. They may also make changes to your account details such as logins and passwords and billing address or even secure loans in your name.

If you suspect that or you’re worried that you may be an easy target for such criminals, follow this link for tips to prevent identity theft for your personal circumstances. 

Consequences of identity theft

Considering that the thief has virtually every information on the victim, there’s no limit to what they can do. As a result, the victim may suffer damage to their credit status, finances, and reputation. 

The ramifications of identity theft go beyond the financial or credit status. In extreme cases, the criminal may commit a series of non-financial crimes in your name, for which you then suffer the consequences. The consequences are even more severe in cases that involve a high-risk organization, such as those affected by data breaches.

Whether the thieves used your information to make new purchases, rent, or steal a car, identity theft crimes can have severe impacts on your life, both in the short term and in the long term. Even worse, they often involve highly complex schemes and numerous players, meaning they take years and, of course, a lot of money to resolve.

Some of the telltale signs of a stolen identity include:

  • Being denied credit and not understanding why
  • Receiving a bill for accounts you don’t know anything about
  • Unexplained withdrawals from your bank account
  • Medical providers billing for services you don’t know anything about
  • Debt collectors calling about debt that you don’t understand

What to do when your identity gets compromised

If you have lost your wallet/purse or suspect that your personal or financial information has been compromised, act fast! Change all your online accounts’ passwords, file a police report with the local law enforcement authority, and let all your creditors know about it.