What Is Identity Theft and What Forms Does It Take?

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What Is Identity Theft and What Forms Does It Take?

Identity theft is a crime in which a person uses another person’s personally identifying information without that person’s permission in order to commit a crime. Reasons for committing identity theft are many; they can include buying things for free, exacting vengeance, avoiding taxes, and other reasons. ID thieves can be friends and family members, fellow churchgoers, rogue individuals, or whole criminal syndicates.

How prevalent is it?

Not every victim reports identity theft, and not every victim is even aware of it. One figure provided by Javelin Strategy and Research (a consulting firm for businesses) put the number of victims at 43 million in 2022. The total annual reported fraud, according to Javelin, was about $43 billion in 2022. This figure is large enough to make identity theft a factor to consider in safeguarding your finances.

Laws against ID theft

The federal government passed the Identify Theft and Assumption Deterrence Act in 1998 to address ID theft. The law has been enhanced over the years. Federal agencies such as the FBI, the Secret Service, and the US Postal Inspection Service investigate ID crimes. The Department of Justice handles prosecutions.

Every state has a law covering identity theft. Many states have specific provisions for restitution and forfeiture. A number of them also have identity theft passport programs to protect victims from ongoing ID theft. State statutes can be found here.

Forms of identity theft

Identity thieves steal a person’s identifying information and use it for any of several different purposes. Many of them overlap.

• Financial. Financial identity theft is what most people think of when they hear of identity theft. It involves stealing another person’s credit card number, Social Security number, bank account number, or some other information that allows that person to access the victim’s money. The thief can also buy homes, rent apartments, get utility services, sign up for credit cards, and many other things, all in the name of someone else.
• Medical. Medical identity theft has the most potential of all the forms of ID theft to cause physical harm. It happens when someone uses your name or your insurance information to obtain medical services or to change your medical record. Beyond just the monetary costs to you and your insurance company, the changes to your record can result in incorrect and life-threatening diagnoses or treatments.
• Criminal. This form of ID theft is sometimes not detected until you get stopped for a minor criminal infraction, such as speeding. The officer pulls up your information and you discover that there is an arrest warrant or some other surprise there. In other cases, you might get a letter stating that a fine you did not incur is overdue. If the thief is the one who gets caught, he will typically have a fake ID with your information but his picture.
• Driver’s license. Stealing a driver’s license is as simple as stealing a wallet or purse. Once the thief has it, he or she can sell it to someone who looks like you. Then that impostor can open up other forms of identification in your name.
• Social Security. Your Social Security number is the most valuable piece of information that a thief can steal, because it is required for opening so many types of accounts and forms of ID. This form of theft can also be perpetrated by people who want you to pay their taxes for them. They steal your Social Security number and put it onto a W4, and file income tax forms fraudulently. There can be many ripple effects on other areas of your life.
• Child. Children are also victims of ID theft. Why? Partly because they won’t be checking their credit reports for many years to come. In some cases, the ID thief is the child’s parent(s) or a relative.
• Business. With business ID theft, a person uses a business’s name to get credit or to bill the business’s clients for money. Sometimes, the thief is an insider with access to the company’s information.

How identity theft affects your life

Because your identity is central to everything you do, ID theft can reach into all areas of your life and can affect you for years, perhaps for the rest of your life. For some victims, recovering from ID theft becomes a full-time job. It depends on what information was stolen, how it was used, and how quickly and thoroughly you have responded to it.

So how can your life be affected?

Your credit is harmed. Your credit will probably be harmed because thieves will use your credit to buy what they want without intending to pay it back. Victims often don’t realize that their identity has been stolen until they attempt to buy a home or car. By this point, their credit can be seriously damaged. There may be collections out on them, and they may be unable to buy anything on credit for quite a while.

You must spend a lot of time talking with law enforcement. In some cases, you have to work with law enforcement repeatedly in order to clear up your criminal record. In some cases, you can be arrested for a thief’s crimes, and you can sit in jail until it is straightened out.

Your insurance and medical care may be compromised. An ID theft may use your identity to get medical care. This can leave behind large medical bills and false diagnoses and drive up your health insurance rates.

You may need to change your name. Your name may be associated with the ID thief for many years to come. This is why some victims of extensive ID crimes resort to changing their names. Changing your name carries with it a whole new set of paperwork for such tasks as getting a driver’s license and changing your W2 forms.

It can hurt your ability to get a job. Some jobs require security clearances, credit checks (this is getting more and more common), or a clean police record. If someone else has stolen your identity and committed crimes in your name, all of these can be compromised.

You may need to declare bankruptcy. If your credit is damaged and recovery is taking a long time, you may consider declaring bankruptcy to get creditors off your back.