The internet provides plenty of fun and exciting opportunities for you and your family, from sharing on social media to online shopping. To help you enjoy every minute of it, though, it’s good to be aware of what less savory characters are up to.
And they sure have been busy. In fact, the U.S. Federal Trade Commission (FTC) received 2.1 million fraud reports in 2020. What is identity theft? Well, it’s the fraudulent use of another individual’s name and details for personal gain.
Those affected by identity fraud may see a dip in their finances and credit scores. They may also deal with anxiety around financial security going forward. However, while it’s important to be aware of the threat of identity theft, this shouldn’t be cause for alarm. There are plenty of tools and techniques that can help protect you and your family so you can continue to enjoy everything modern technology has to offer.
The first step in protecting yourself? Educate yourself. Understanding the different types of identity theft can help you safeguard yourself and your loved ones so that you can continue all your favorite online activities. Here we’ll define and explore the different types of identity theft to watch out for.
What is identity theft?
We’ve all probably heard of identity theft, but what is it? Identity theft is when someone uses another person’s financial or personal data, usually for monetary gain. This means a fraudster may take sensitive information like names, birthdates, Social Security numbers, driver’s license details, addresses, and bank account numbers or credit card numbers. They might then use this information to make purchases, open credit cards, and even use health insurance to get medical care.
5 types of identity theft
A little knowledge can go a long way in stopping cybercriminals in their tracks — especially since they’re becoming more sophisticated and coming up with new schemes every day.
Here are five common types of identity theft to help you stay one step ahead of hackers.
Financial identity theft
Financial identity theft is when one person uses another’s personal data for financial benefit. This is the most common form of identity theft (including the credit card example described above). Financial identity theft can take multiple forms, including:
- Fraudsters may use your credit card information to buy things. We all love to shop online — even criminals. Unfortunately, this issue has become especially prevalent thanks to online shopping during the COVID-19 pandemic.
- Hackers may steal funds from your bank account. Sometimes, the amount might be so small that it seems inconsequential, totaling just a few dollars. However, criminals can rack up millions in damages if they target enough people in this way.
- Criminals may open new accounts using your Social Security number and other data. For example, a person may use your data to open a new line of credit. They then run through the credit line, leaving you to foot the bill.
The good news is that it’s easy to protect yourself against financial identity theft by checking your bank accounts, credit card statements, and bills. If you see an unexplained charge, contact your credit card company or bank immediately to report it. Also, check your credit report for changes in your score. An unexplained decrease in your score could mean fraudulent activity. You can do this through AnnualCreditReport.com, where you can get a free credit report every 12 months from each of the three major credit bureaus.
Another idea is to place a one-year fraud alert on your credit reports to keep people from opening new accounts in your name. This encourages creditors and lenders to take extra precautions to verify your identity before granting any loans or credit increases. You can also place a security freeze on your credit report, which blocks others from accessing it to extend credit.
Medical identity theft
This might not seem like a real form of identity theft, but it happens. Medical identity theft is when a criminal poses as another person to obtain health care services. In fact, fraudsters may use your name and insurance information to:
- Get prescriptions for drugs.
- Access medical services, from checkups to costly surgeries.
- Obtain medical devices and supplies, such as wheelchairs or hearing aids.
This can result in you having bills for prescriptions, services, or devices you didn’t need, ask for, or even receive. Your health care and insurance records may even have these things added to them. An inaccurate medical record can make it harder for you to get the care you need in the future and even impact insurance coverage.
Fortunately, you can help minimize the risk of medical identity theft by regularly reviewing your medical claims. Contact your insurer if you see unfamiliar procedures, prescriptions, or services. You’ll also want to let your health care provider know so that they can ensure your medical files are correct. Finally, consider filing a complaint with the U.S. Department of Health and Human Services (HHS).
Criminal identity theft
Criminal identity theft occurs when a person arrested by law enforcement uses someone else’s name instead of providing theirs. They might be able to pass this off by creating a fake ID or using a stolen ID, like your driver’s license, to show to the police. This type of fraud can be difficult to detect until the consequences are evident, like:
- You receive a court summons. For example, the courts may issue a summons if a criminal uses your ID for unpaid parking tickets.
- A bench warrant is issued for your arrest. Unresolved problems like unpaid parking tickets can also result in a judge issuing a bench warrant. You may then be taken into custody at any time, even during a routine traffic stop.
- A background check is issued. Sometimes, police will keep an identity theft victim in their database, noting it as an alias for the real criminal. This can result in a false criminal record showing up on your background check. This can cause problems with potential landlords and employers.
You can help protect yourself against criminal identity theft by safeguarding your ID. If your license or state-issued ID is lost or stolen, report it to the local Department of Motor Vehicles (DMV) and law enforcement. Also, limit the information you share online (and encourage family members to do the same). For example, if your teen got their first driver’s license and wants to share a pic of it on social media, explain why this isn’t a good idea.
Synthetic identity theft
As one of the fastest-growing types of financial crime in the U.S., synthetic identity theft involves creating fake identities using real people’s information. Fraudsters may use data like birthdates, addresses, and Social Security numbers from real people, blending them to create a fake profile. They can then use this persona to apply for loans or credit cards or commit other financial crimes. Kids and older adults tend to be vulnerable to this type of fraud since they rarely use their SSNs.
The most important thing about synthetic identity theft is knowing the signs and acting fast. Keep an eye out for any mail with your address on it but addressed to a different name and phone calls or mail about new credit accounts. You can further protect yourself by regularly checking your credit reports for unexplained changes and placing a security freeze on them.
There are also identity monitoring services available, which scan the internet, including the dark web, for breached Social Security numbers. If you suspect you or a loved one is the victim of synthetic identity theft, contact the relevant financial institutions to alert them.
Child identity theft
We all want to protect our children from bad actors, especially when it comes to identity theft. Child identity theft involves using a minor’s information to commit financial fraud, like opening a new account or line of credit under the child’s name. The thief may even use the child’s identity to get a driver’s license, apply for government benefits, or buy a house. This is often easier than targeting an adult because most kids don’t have credit reports or financial accounts, making them a clean slate.
Unfortunately, child identity theft is often perpetrated within the family by a relative who has access to the child’s data like their birthdate and address. And many children don’t realize they’ve been targeted until they’re older — for example, when they try to take out a student loan. By this point, the issue may have been escalating for years. So, it’s important as a parent to be aware of child identity theft.
The best way to do this is to check whether your child has a credit report with any of the three big credit bureaus (TransUnion, Equifax, and Experian). If so, review the report and report any fraudulent activity. You can also place a freeze on your child’s credit report to help minimize the risk of future fraud.
How do you know if you’re a victim of identity theft?
No one wants to be left in the dark when it comes to identity theft, so knowing the signs can help you spot it and take action quickly. This can help stop fraud in its tracks, minimizing both immediate damage and long-term repercussions. Some warning signs that may indicate identity theft include:
- You get a fraud alert from a financial institution. To protect customers against identity thieves’ scams, most banks have security protocols to pinpoint potential data breaches. For example, if you live in the U.S., but a purchase is made using your credit card information in London, your bank may stop the transaction and send you a credit card fraud alert.
- There are unexplained changes in your credit score. Your credit score going up can mean someone is trying to extend credit in your name (with the intent to run through it). A dip in your score could indicate anything from a loan application to a bill going to collection. You can get a free copy of your credit report from the three major credit bureaus every 12 months.
- There are changes to your financial accounts. Check your bank statements at least once a month, keeping an eye out for unfamiliar transactions or withdrawals. Also, check for an increase in your line of credit or a new credit card account (which someone else may have requested in your name).
- A loan or credit card application is denied. If you apply for a new credit card or a loan and are turned down, find out why. If you thought you had good credit, double-check your current credit history. Identity theft can result in your credit score
- You get phone calls from debt collectors. If collection agencies start calling you about unfamiliar debts, someone else might be using your information to open financial accounts or take out lines of credit. Don’t divulge any personal information on the phone but do check your credit report to see what debts they’re referring to.
- You get unfamiliar mail. If you get mail sent to your address that’s clearly for someone else, that person might be using your address for personal gain. Be wary if you receive medical bills in the mail that you don’t recognize or W-2 forms for companies you’ve never worked for.
- You experience tax return If you get a tax transcript you didn’t ask for, or the Internal Revenue Service (IRS) rejects your e-filing, identity theft might be to blame. Some thieves will file fraudulent returns to get the victim’s refund. Contact the IRS fraud alert department.
You can also increase your odds of recognizing identity theft with tools like McAfee’s identity protection services. Our continual monitoring can keep tabs on over 60 types of personal information, which allows us to quickly identify security issues, alerting you to potential breaches so that you can fix them. We’ll also notify you up to 10 months sooner than similar services. By combining the best practices described above with a comprehensive identity protection service, you can worry less about identity theft and spend more time enjoying the internet.
Start protecting your information today
The internet makes daily life easier in many ways. You can now learn, work, play, and shop online. You shouldn’t have to forego these conveniences because of the threat of identity theft.
McAfee’s identity theft protection services can help keep you and your loved ones safe. McAfee uses extensive monitoring and an early detection system to notify you of potential risks or breaches. You’ll also have access to 24/7 online security experts and up to $1 million of identity theft coverage. Get the peace of mind you need to continue using the internet with confidence.