How identity theft works

How identity theft works: A complete guide to understanding and preventing it

Identity theft is a growing cyber threat that can have serious consequences. But understanding how identity theft works, how criminals access your personal data, and what you can do to stay safe is key to protecting yourself.

What is identity theft?

Identity theft occurs when another person gains access to your private information and pretends to be you in order to carry out illegal activities or fraudulent actions. This information may include:

• Full name

• Home address and email

• Social security number

• Bank or credit card details

• Bank account and bank account number

• Passport or driver’s license number

• Login credentials and passwords

Once criminals get access to this information, they can use it to steal your money, open accounts in your name, or even commit more complex fraud.

How identity theft works

To fully understand how identity theft works, you need to know how cybercriminals steal your information and how they use it afterward. Here are some of the most common methods.

1. Data breaches

Data breaches happen when hackers gain unauthorized access to an organization’s database. Personal data like names, credit card details and social security numbers are often exposed.

2. Insecure browsing

If you enter personal information on a website that isn’t secure, it can be intercepted. Always check that the URL starts with “https” and avoid websites marked as unsafe by your browser.

3. Phishing attacks

Phishing is one of the most common forms of cybercrime. Criminals send fake emails or messages pretending to be a trustworthy source. They trick you into clicking a link or downloading a file, often leading to stolen login information or malware infection. Learn more about how phishing works and how to protect yourself.

4. Malware

Malicious software can be used to steal your personal information or gain control of your device. Malware can record your keystrokes, read files or spy on your activity. Dive deeper into what malware is and how to defend against it.

5. Public Wi-Fi hacking

Using unsecured Wi-Fi in public spaces like airports or cafés can be risky. Hackers can intercept your connection and steal passwords or sensitive data, especially if you log into accounts.

6. Theft of physical items

Identity thieves can steal personal information by intercepting your mail or physically stealing your phone, wallet or documents. The theft of physical items like a wallet can lead to financial identity theft, where the stolen information is used to gain access to credit, goods, or services.

7. Card skimming

Card skimmers are devices placed on ATMs or payment terminals. They capture your card’s magnetic data when you make a transaction, which can later be used to clone your card.

8. Social engineering

This technique manipulates people into revealing confidential information. Criminals may pretend to be someone you trust, such as a colleague or bank employee. Learn how social engineering works and how to avoid falling for it.

9. The dark web

After data is stolen, it is often sold on the dark web. Hackers may not use your data themselves but sell it to other criminals who will. Explore what the dark web is and how your data ends up there.

10. Credit card theft

If a criminal gains access to your credit card information, they can make unauthorized purchases. This can happen through online breaches, phishing, or physical theft. Monitoring your credit card statements regularly is crucial to catch unauthorized transactions early and mitigate potential damage.

What criminals do with your stolen personal and financial information

Once your personal data is in the wrong hands, it can be misused in several ways:

• Opening new bank or credit accounts

• Applying for loans or benefits in your name

• Filing fake tax returns to claim refunds

• Using your health insurance for medical treatment

• Engaging in medical identity theft to receive medical care or prescriptions fraudulently

• Committing synthetic identity theft by merging real and fictitious information to forge new identities

• Impersonating you on social media

• Selling your data on the dark web

According to Experian, stolen social security numbers can sell for around $1, credit card details for up to $110, and a passport for as much as $2,000.

Signs of identity theft

Some warning signs that your identity may have been stolen include:

• Unfamiliar charges or withdrawals on your bank or credit card

• Debt collection calls about accounts you never opened

• Letters from the tax office about multiple filed returns

• Bills for services you never received

• Missing bills that usually come by mail

• Loan rejections without clear reasons

How to avoid identity theft

There are many simple steps you can take to reduce the risk of identity theft:

• Use strong, unique passwords for every account

• Activate two-factor authentication when available

• Never share personal information unless absolutely necessary

• Shred documents before discarding them

• Keep sensitive cards like health insurance and credit cards in a safe place

• Only visit secure websites with “https” in the URL

• Avoid clicking on links or opening attachments from unknown sources

• Set up transaction alerts on your bank accounts

• Monitor your social security number for suspicious use

• Keep your devices updated and use antivirus software

• Contact credit card issuers immediately after discovering identity theft to close existing accounts, request new cards, and ensure old accounts are marked as 'closed at consumer's request' to maintain accurate credit reports

Identity theft protection services

Identity theft protection services are designed to help individuals safeguard their personal and financial information and provide support if identity theft occurs. These services typically offer a range of features to detect and prevent identity theft, as well as assist in recovery. Here are some key components:

1. Credit monitoring: Regularly checks your credit report for any unusual activity, such as new accounts or credit inquiries, and alerts you to potential fraud.

2. Identity theft detection: Uses advanced algorithms and machine learning to identify signs of identity theft, such as changes in your personal information or unauthorized transactions.

3. Identity theft alerts: Sends notifications if suspicious activity is detected, allowing you to take immediate action to protect your identity.

4. Identity restoration: Provides assistance in resolving identity theft incidents, including contacting creditors, disputing fraudulent charges, and helping to restore your credit.

5. Identity theft insurance: Offers reimbursement for stolen funds, legal fees, and other expenses related to identity theft, up to a certain amount depending on the plan.

Some popular identity theft protection services include:

• LifeLock: Offers a range of plans with features like credit monitoring, identity theft detection, and identity restoration.

• IdentityForce: Provides comprehensive protection with credit monitoring, identity theft detection, identity restoration, and additional features like dark web monitoring.

• Experian IdentityWorks: Includes credit monitoring, identity theft detection, identity restoration, and credit score tracking.

When choosing an identity theft protection service, consider the following factors:

1. Coverage: Ensure the service covers various types of identity theft and offers extensive protection.

2. Monitoring: Check how frequently credit report monitoring is performed and what types of activities are detected.

3. Alerts: Understand how alerts are sent and what types of activities trigger them.

4. Restoration: Look for services that provide comprehensive assistance in the event of identity theft.

5. Insurance: Review the amount of reimbursement provided for stolen funds and related expenses.

By selecting a robust identity theft protection service, you can significantly reduce the risk of identity theft and have peace of mind knowing you have support if an incident occurs.

Recovering from identity theft

Recovering from identity theft can be a daunting and time-consuming process, but taking prompt and decisive action can help minimize the damage and restore your identity. Here are the essential steps to take if you become a victim of identity theft:

1. Report the incident: File a report with the Federal Trade Commission (FTC) at IdentityTheft.gov. This will generate an identity theft report, which can be used to help resolve issues with creditors and financial institutions.

2. Contact creditors: Notify your creditors and financial institutions about the identity theft. Request that they freeze or close any accounts that have been tampered with or fraudulently opened.

3. Dispute fraudulent charges: Contact your creditors to dispute any unauthorized charges or transactions. Provide them with a copy of your FTC identity theft report.

4. Monitor credit reports: Regularly check your credit reports from the three major credit bureaus (Equifax, Experian, and TransUnion) to detect any further suspicious activity.

5. Consider a credit freeze: Placing a credit freeze on your credit reports can prevent identity thieves from opening new accounts in your name. This can be done by contacting each of the three major credit bureaus.

6. Seek assistance: Consider enlisting the help of an identity theft protection service or a credit counselor to guide you through the recovery process and provide additional support.

In addition to these steps, it’s crucial to:

1. Keep detailed records: Maintain thorough records of all correspondence and communication with creditors, financial institutions, and law enforcement. This documentation will be invaluable in resolving disputes and restoring your identity.

2. Be cautious: Exercise caution when sharing personal and financial information. Avoid using public computers or public Wi-Fi networks to access sensitive information, as these can be vulnerable to identity thieves.

3. Stay informed: Keep yourself updated on the latest identity theft scams and tactics used by identity thieves. Being aware of potential threats can help you take proactive measures to protect your identity.

By taking these steps, you can effectively minimize the damage caused by identity theft and work towards restoring your financial and personal security. Remember, the sooner you act, the less harm identity thieves can inflict.

Final thoughts: How identity theft works

Understanding how identity theft works is the first step in protecting yourself. By learning how criminals operate and following best practices for digital and physical security, you can significantly reduce your risk of falling victim to identity theft.