Identity theft is the fraudulent use of someone else’s personal information. It can be used to steal money or goods, establish fraudulent credit accounts, or even present false identification to authorities. Different types of identity theft include financial, credit, criminal, medical, synthetic, and identity cloning. A credit freeze is an effective defense against most forms of identity theft.
Identity theft is one of several methods used by criminals to steal, directly from those whose identities have been stolen, or from third parties, the private information of one or more people for illegal use. There are several types of identity theft, with the common characteristic being the criminal’s fraudulent use of personally identifiable information that is not yours. Identity theft is used to steal directly from the victim’s financial accounts, to obtain goods or services in the victim’s name, or to claim the victim’s identity, among others.
One of the most commonly known types of identity theft is financial identity theft, which involves obtaining the identifying information needed to access a victim’s financial accounts at banks and brokerages and then raiding them. Millions of dollars worth of brokerage accounts were liquidated and stolen by identity thieves.
One form of financial identity theft, credit identity theft, involves using the identification and financial data of real people to establish fraudulent credit accounts. A great deal of effort goes into obtaining the sensitive information needed to open new accounts, and identity theft crimes are perpetrated far more often by criminal organizations than by criminals acting alone.
Criminals will buy expensive consumer goods using as many credit accounts as they can open until credit limits are reached, usually within a day or two. The goods they buy are usually then sold for cash. Unless the victim has an identity theft protection mechanism in place, the crime may not be discovered until they apply for a new line of credit or receive documents informing them that they have been sued by the company of the credit card for non-payment. This time lag between the theft and its discovery makes this one of the most popular types of identity theft for criminals.
One of the most damaging types of identity theft is called criminal identity theft, where a criminal presents false identification to the authorities when arrested. In some cases, the false identification presented may simply be a hastily prepared fake ID card, but in other cases it will be an easily obtained form of state identification that the criminal requested using stolen information or documents. The arrest is registered in the victim’s name, not the offender, and the results can be far-reaching and devastating. Victims of this form of identity theft often spend years trying to clear their names, sometimes losing a good credit rating and even a job.
Of all the types of identity theft, the one that may be the most benign is identity cloning, which involves someone assuming another person’s identity entirely in day-to-day life. There are a wide variety of reasons why people perpetrate identity cloning, but perhaps the most common is to hide a person’s immigration status. This form of identity theft can go on for many years undetected, especially if the perpetrator is not employed.
Of all types of identity theft, medical identity theft has the greatest potential to be life threatening, as the victim’s identifying information is used by the criminal to obtain medical insurance or treatment. Information entered into medical records based on such incidents could have potentially disastrous effects for the victim. For example, if the perpetrator has cancer and uses medical identity theft to obtain treatment, the details would be entered into the victim’s medical records, risking jeopardizing their future insurability and even employment.
Synthetic identity theft is one of the most annoying types of identity theft because it is much more difficult to identify and prevent. Synthetic identity theft involves a mix of real and made-up information, such as a real ID number with a made-up name and address. This type of identity theft only harms people when their names are associated with a credit account created as a result of a synthetic identity theft.
In most US states, as well as many countries around the world, the most effective defense against most forms of identity theft is a credit freeze, under which each individual has absolute control over who sees credit reports issued by credit bureaus. Since credit issuers do not extend credit without a credit report, this system is nearly foolproof in preventing credit identity theft and some other types of identity theft as well.
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