Identity theft is upsettingly common and often strikes people when they are at their most vulnerable. When most of us think of identity theft, we think of someone stealing our Social Security number and personal information. However, there are multiple types of identity theft that you should know about.
In addition to garden variety identity theft, Addition Financial members should know about other types of identity theft that exist. Here’s what you need to know.
#1: Traditional Identity Theft
Let’s start with a definition of identity theft. The US government defines identity theft like this:
“Identity (ID) theft happens when someone steals your personal information to commit fraud. The identity thief may use your information to apply for credit, file taxes, or get medical services. These acts can damage your credit status, and cost you time and money to restore your good name.”
Identity theft and fraud are not the same thing. If someone hacks into a store’s database, steals your credit card number and uses it to buy things, that’s fraud. If someone gets their hands on your Social Security Number and other identifying information and uses it to open new accounts or obtain services in your name, that’s identity theft. If you suspect you have been a victim of identity theft, you should report it to the FTC here.
#2: Child Identity Theft
One of the most common forms of identity theft occurs when someone uses a child’s Social Security Number to apply for credit cards and rack up debt. Known as child identity theft, this type of identity theft can sometimes go unnoticed for years. Most parents apply for SSNs for their children as soon as they’re born but very few do anything with those numbers until their children are old enough to work or open a bank account.
There’s evidence to suggest that children are 51 times as likely as adults to be victims of identity theft. You can reduce the risk of your child’s identity being stolen by placing a freeze on their credit as soon as you obtain their SSN. Freezes are free to place and can be removed only with a password or PIN provided by each credit bureau. You might also consider paying for a credit lock which is easier to lift than a freeze.
#3: Medical Identity Theft
Medical identity theft occurs when someone gains access to either your medical insurance information or your health records and uses them to commit fraud. 27% of all data breaches in 2017 were related to medical records.
Medical identity theft can be both expensive and devastating. If someone racks up medical debt using your identity, you may have difficulty proving it and get stuck with debt that you didn’t incur. 65% of victims in 2017 needed to borrow money to repay an average of $13,500 in debt.
In addition to causing financial difficulties, medical identity theft can also be risky to your health. When another person uses your identity to obtain medical services, their health information may become part of your record. Inaccurate medical records can cause confusion and ultimately, may make it difficult to get the care you need.
Sometimes medical identity theft occurs when well-meaning individuals share their insurance information with a friend or family member to help them out. To protect yourself, make sure never to share your medical insurance with anyone who isn’t covered on your plan. You should also pull free copies of your credit report once a year and review them completely. If you can afford it, enrolling in a credit monitoring service can help you spot potential medical fraud early.
#4: Synthetic Identity Theft
One of the most nefarious types of identity theft is synthetic identity theft. Synthetic identity theft occurs when a thief steals information from multiple targets and blends them to create a new, seemingly real identity to obtain credit. According to the Federal Trade Commission, synthetic identity theft now accounts for between 80% and 85% of all identity theft.
Synthetic identity theft can be difficult to spot because the “person” committing the fraud is not real. For example, if a thief took your SSN and combined it with someone else’s name and a third party’s address, it would create what’s known as a fragmented credit report. Any potential creditor who pulled your report would see multiple names and addresses which might make it appear that there is something shady about your credit.
It’s a good rule of thumb to review your credit report regularly and report any anomalies, including incorrect names and addresses. It may also be a sign if you receive mail that’s addressed to a name you don’t recognize. Be vigilant and follow up if you see something that doesn’t make sense.
#5: Tax Identity Theft
Tax identity theft occurs when someone uses another person’s Social Security Number to file a fraudulent tax return and receive a refund. According to the Internal Revenue Service, some of the warning signs of tax identity theft are:
- Receiving a notice that an online IRS account has been created in your name
- Receiving an IRS notification about a tax return for a year you didn’t file or for income from an employer you don’t recognize
- Being unable to file an eReturn because of a duplicate SSN
- Receiving a tax transcript that you didn’t request
Tax identity theft can be complex and difficult to untangle. If you receive anything suspicious from the IRS or you have questions about your taxes, you can find detailed instructions about how to proceed on the IRS website, here.
#6: Criminal Identity Theft
Criminal identity theft occurs when someone is arrested for or charged for a crime and presents a stolen identity in lieu of their own. This type of identity theft can be deeply harmful to the victim, since it saddles them with a criminal record that can inhibit their ability to get a job or even to vote.
Sometimes, victims of criminal identity theft only learn of the problem when they are arrested for a crime they didn’t commit. For example, a person is arrested and charged with a crime and they present a stolen ID. When that person’s court date arrives, they don’t show up and the judge issues a warrant for the person’s address. The police come to the home or workplace of the victim and arrest that person.
The scariest thing about criminal identity theft is that there’s no easy way to protect against it and in most cases, you won’t learn about it until it has reached the point of negatively impacting your life. If you suspect you have been a victim of criminal identity theft, you should contact your local law enforcement and ask to be fingerprinted. Often, fingerprints are the best way to rule you out as the criminal.
#7: Social Security Identity Theft
People who are retired or disabled and who receive Social Security benefits are sometimes targeted by identity thieves whose goal it is to steal their benefits for themselves. While the potential exists for a thief to steal a Social Security Number through hacking, senior citizens sometimes fall prey to a less complicated technique: a phone call.
If someone wants to steal Social Security benefits, they will sometimes make phone calls pretending to be from the Social Security Administration. They request the SSN of the person they call and then use that information to redirect Social Security checks to a new address, thus depriving the intended recipient of the money they should get each month.
It can be difficult to protect against Social Security identity theft. The best defense is for people to know that nobody from the Social Security Administration is going to call and ask for your Social Security Number over the phone. You should never give out your SSN to anybody who calls you.
It’s also important to keep in mind that anybody who has your SSN may use it in a variety of ways, including to apply for credit cards and loans.
#8: Mortgage Identity Theft
What would happen if someone stole your mortgage information? One possible outcome is that they could use that information to apply for a second mortgage or home equity line of credit in your name, using the money for their own purposes and saddling you with the debt.
There are other possibilities as well. For example, if a thief steals your identity and knows that you have a mortgage on your home, they could create fake IDs and paperwork and use them to transfer the deed of your home to themselves and sell it out from under you.
The most common warning sign would be receiving information from a mortgage company that’s not yours. If that occurs, you should immediately investigate. You may also want to regularly check the county recorder’s office for deeds you don’t recognize. If you suspect you have been a victim of mortgage fraud, you should contact the FBI or your local police department.
Identity theft is a widespread problem and it’s essential to protect yourself as much as possible. Understanding the eight types of identity theft we have explained here can help you be on alert and shield your personal information from would-be thieves.
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