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Identity Theft: What is, how to prevent It, Signs to Watch for and Tips

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Identity Theft: What It is, How to Prevent It, Warning Signs and Tips

ID theft is the illegal act of someone posing as you, typically in order to steal cash. Be aware of these signs and prevention tips.

By Bev O’Shea personal finance writer | MSN Money, Credit.com, Atlanta Journal-Constitution, Orlando Sentinel Bev O’Shea is a former NerdWallet authority on consumer credit, scams and identity theft. She holds a bachelor’s level degree of journalism at Auburn University and a master’s in education from Georgia State University. Before joining NerdWallet, she worked for the daily papers, MSN Money and Credit.com. Her work was featured in The New York Times, The Washington Post, the Los Angeles Times, MarketWatch, USA Today, MSN Money and many other places. Twitter: @BeverlyOShea.

7 February 2023

Written by Kathy Hinson Lead Assigning Editor Personal finances, credit scoring debt and money management Kathy Hinson leads the core personal finance team at NerdWallet. Previously, she spent 18 years with The Oregonian in Portland in capacities such as chief of the copy desk and team leader for design and editing. Previous experience included copy and news editing for several Southern California newspapers, including the Los Angeles Times. She graduated with a bachelor’s in mass communication and journalism at Iowa’s University of Iowa.

A majority of the products we feature are from our partners who pay us. This impacts the types of products we write about and where and how the product is featured on a page. However, this does not affect our assessments. Our opinions are entirely our own. Here’s a list and .

Identity theft occurs the use of your personal information — names, Social Security number, birthdate, etc. — to impersonate you, usually using the information to extort money from you. The Federal Trade Commission received 1.43 million complaints of identity theft from people in 2021.

Here’s what you need to know to reduce chances you’ll be a target, identify warning signs and then take action to minimize any damage.

What is identity theft?

Identity theft occurs when someone uses your personal data to pose as you or steal from you. Identity thieves can take your investment and bank accounts, open fresh credit lines get utility service, steal your tax refund, use your insurance details to obtain medical treatment or police your name and address when they are detained.

Numerous data breaches means that your information may already be compromised. In today’s world it’s important to take precautions to stop malicious actors from using your personal data and ruining your financial situation.

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7 kinds of identity theft, as well as the warning indications

Once a criminal has access to your details, here are some the most common ways that it could be used:

1. The theft of credit card information

The theft of your credit identity occurs when a criminal utilizes your personal details such as your birthdate and Social Security number, to apply for an additional credit line.

Alert signs: You could notice a sudden change in your credit scores or an account that you do not recognize on your credit reports. You could receive debt collection notices or a judgment from the court against you. The best way to prevent it is to freeze your credit.

2. Identity theft from children

Criminals can seek credit in the child’s name. It is often not realized until the person who is victimized applies in college loans or any other type of credit.

Warning signs: If your child is getting offers of credit cards or phone calls about late payments or debt collections, investigate. It is possible to stop it.

3. The theft of identities using synthetic means

It is the case when criminals employ a patchwork of identity details to construct a fictitious consumer, using a Social Security number — typically one belonging to the minor child or one that is simply made up — which is not yet on the database of credit bureaus and then combining it with the name and address. They then apply for loans or credit cards and often make payments over time as credit limits increase. Then comes an “bust in,” when cards are fully loaded and criminals disappear.

Watch out for warning signs if you try to freeze your child’s credit and discover that their Social Security number is already in use. Often it is not discovered until the child is applying to get student loans. It is not always preventable since sometimes, criminals can make up and use a Social Security number even before it is assigned.

4. Taxpayer identity theft

Sometimes, scammers use the Social Security number to file an income tax return, and then steal the tax credits or refunds.

Alert signs: You might be unable to e-file because someone else has filed under that Social Security number, you receive an IRS notice or a letter referring to an activity that you didn’t know about or IRS records suggest you were employed by an employer that you do not. can help you beat criminals to filing in your name, and some states offer the six-digit ID protection pin (after an extensive verification) with additional security.

5. Identity theft for medical professionals

Using someone else’s identity to obtain health services is known as medical identity theft. It’s particularly dangerous because it could result in medical histories being mixed providing hospitals and doctors with incorrect information when they’re making health care decisions.

Warning signs: Claims or payments in your insurance’s statement of benefits you do not know could suggest that someone is taking advantage of your health care benefits. If you’ve been a victim, you’ll need to both report it to your insurance provider and notify your health care provider to ensure that the information contained in your medical records is actually yours.

6. Takeover of a bank account

Criminals can use personal data to gain access to your financial accounts. They then change passwords or addresses to ensure that you don’t have access.

Alert signs such as an email, letter or text message from your financial institution referring to an action (like an email or password change) or transaction you don’t recognize.

7. Criminal identity theft

The crime of criminal identity theft is when someone gives law authorities someone else’s name and address when they are investigating an arrest. It is usually done using fraudulent identification documents, for example, fake driver’s licenses.

Be aware that you could be detained by a police officer due to reasons that are not clear to you, or not granted a job or a promotion because of something found in a background investigation.

>> > LEARN: What’s the definition of Canada?

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11 ways to prevent identity theft

You’re unlikely to find a fail-safe way to prevent identity theft. Monitoring services will only notify you when something is wrong. There are 11 ways you can do to make it much harder for identity thieves.

1. Stop freezing your credit

The three major credit bureaus — Equifax, Experian and TransUnion — restricts access to your credit records, so that the new credit file cannot be opened. Freezing your credit and release it when you want to open a new account, and it offers the best protection against an identity thief who uses your information to open a new bank account.

2. Secure your Social Security number.

The Social Security number is the principal key to your personal data. Protect it as well as you can. When you are asked for your phone number, you should ask what the reason for it and how it will be secured. Don’t take your card with you. Make sure you securely store or destroy any paperwork that contains your Social Security number.

3. Be alert to phishing and fraud

The calls they make appear to come from businesses or government agencies or even emails that appear to be legitimate could be attempts to steal your personal information. Make a callback or send a reply to an email on your own, working from a known organization, such as their official site, instead of answering a call or email. Be wary of attachments, as they may contain malware.

4. Make sure you use strong passwords and include an authentication step

Make use of a password manager to create and store complex, distinct passwords to your account. Don’t reuse passwords. Adding an authenticator app can reduce your risk. Do not rely on security questions to ensure that your accounts remain secure. Your mother’s maiden name as well as your pet’s name are easy to locate. Consider carefully the content you put up to make sure you don’t share key data or clues about the way you respond to security questions.

5. Use alerts

Many financial institutions will text or email you when transactions are made on your accounts. Join so that you are aware of the times and places your credit card is used and when there are transfers or withdrawals to your financial accounts and more.

6. Check your mail

Stolen mail is one of the easiest paths to a stolen identity. Keep your mail in a safe place if you’re away from home. Think about an U.S. Postal Service-approved lockable mailbox. You can also sign up for through the USPS and receive the ability to preview your mail, so you can determine if something is missing.

7. Shred shred

Any credit card, bank and investment statement that someone could fish out of your garbage shouldn’t be there in first place. Shred junk mail, too, especially preapproved offers of credit.

8. Use a digital wallet

If you’re shopping online or in a store you can use a digital wallet. It’s an application that offers safe, digital versions of debit and credit cards. It can be used to shop online or use an ATM that’s compatible with. Transactions are tokenized and encrypted making them more secure. In addition, contactless transactions have fewer health risks.

9. Protect your mobile devices

. According to the Javelin report that only 48percent of us lock our smartphones. Make use of passwords on your electronic devices. Make use of a banking app rather than a mobile browser to manage your banking.

10. Be sure to check your credit report regularly

The three main credit bureaus have been offering customers access to free credit reports weekly through 2023’s end, accessible by . Check to be sure that accounts are being reported properly and be on the lookout for signs of fraud, such as accounts that you aren’t familiar with. You can also sign up with NerdWallet to be alerted when there are changes.

11. Review medical and financial statements.

Review your financial statements. You must be aware of each transaction. Know due dates and call to inquire if you do not receive an expected invoice. Review “explanation of the benefits” statements to make sure that you understand the benefits offered to protect yourself from health care fraud.

Find out how your credit is assessed

See your free score and the factors that influence it, plus insights into ways to keep building.

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10 ways identity theft happens

Here are a few ways your personal data could be hacked:

1. Lost wallet

If your wallet gets damaged or lost, somebody could be able to access all the information inside it.

Don’t carry your Social Security card or more credit cards than you are using regularly and don’t have a list of passwords and Access codes inside your wallet.

Create photocopies of all your credit card, front and back, and keep them in a safe place to make it easy for you to contact the issuer in the event that a card or your wallet is stolen. Some issuers permit you to temporarily “turn off” the card that was lost; for others, you need to cancel and get a new card issued.

2. Mailbox theft

Someone simply receives your mail, or forwards your mail at a new address, in order to stop getting most mail.

When you sign up, you’ll receive an email with pictures of the items to be delivered to your address so you’ll be aware of items that are missing.

Select a safe mailbox and get mail quickly.

3. Utilizing Wi-Fi in public places

Hackers may be able to observe what you’re doing when you use free Wi-Fi.

Do not use Wi-Fi in public areas for banking, shopping, or any other transactions that are sensitive.

If you decide to connect to public Wi-Fi, you can use the virtual private network service to secure your connection.

4. Data breaches

Hackers gain access to databases that hold sensitive information, as in hacks like the Equifax security breach at the credit bureau in 2017. Almost everyone has been affected by the .

Assume that your data is out there, and be sure to take appropriate security measures.

Unexpected changes could provide clues — so be sure to read your financial and insurance statements carefully. Check your credit reports regularly particularly for new inquiries or accounts that result from credit applications.

5. SIM card swap

This happens when an individual . You might not get texts and calls, or you may get a notice that your phone has been activated.

Create a PIN or password on your cellular account.

Think about using an authentication application to protect accounts that have sensitive financial data.

6. Phishing or the spoofing of

Certain fraudsters attempt to convince you to disclose personal data including the number of your credit card, Social Security numbers and banking information, by sending unofficial-looking emails. Spoofing involves doing much similar things with caller ID, in order to create the impression that the phone number appears to be from a reputable company or agency.

Do not give out personal data in response to a phone call or email.

Find contact information from a reliable source such as the bank’s website. You can use it to confirm whether the call or email is genuine.

7. Skimming

Skimming is getting credit card information, often through a tiny device when the credit card is utilized at a brick-and-mortar location such as a gas pump or ATM.

Utilize cards with chips that offer additional security.

Pay inside at the gas station if you have the option, since skimming machines will more often be placed at unmonitored payment sites.

Find out about fraudulent activity earlier By setting up text or email alerts that notify you the moment your credit cards are utilized. If you suspect that a card has been used without your permission, contact the issuer right away.

8. Telephone scams

It could be that you have won something or even that you are in danger of being arrested. The person calling you claims to require personal, banking or credit details to confirm your identity and to know where to deposit your money.

Don’t divulge any personal information on the phone.

Take note of . The IRS for instance, does not initiate contact with taxpayers via telephone (or social media or email) to ask for financial or personal information and does not call for threats to arrest, or even lawsuits.

9. Looking over your shoulder

Fraudsters can learn the password through watching the fingers while you type it into. The information on your credit card can be captured using a smartphone while you shop on the internet in a public space. The business could place sensitive information in a location where others are able to see it.

Be aware of your surroundings.

Don’t leave cards where they can be seen.

Make sure you protect your hands as you type in code or passwords.

10. Malware

The act of opening an email attachment or visiting a site that has been hacked can install malicious software on your system, for example keylogger. That does what it sounds like -it records every keystroke and gives criminals access to passwords, account numbers and more.

Be cautious about clicking on attachments or hyperlinks in emails and about the websites you visit.

Use a password manager, which allows you to avoid typing into login credentials.

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How do you report identity theft?

This is one-stop-shop for information and reports of identity theft. Begin by visiting the site that is managed through the Federal Trade Commission, and follow the steps it recommends to create a recovery plan. It is also possible to contact your police department or your local police department, the Postal Service and the credit bureaus. The IRS offers a number for identity theft at 800-908-4490, and a site.

You can also go directly to the credit card issuer in the event that your credit card has been stolen, lost or utilized without your knowledge. If it appears somebody else took advantage of your health benefit, contact your health insurer and consider contact with any of the providers involved to ensure that someone else’s health history is not mixed with yours.

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What happens when you file a complaint about identity theft?

Reporting identity theft starts an investigation and the process of getting your name back. The exact procedure will be contingent on the kind of identity theft.

Credit card issuers generally replace the cards with ones with an additional number, and you are back to business. Identity theft of taxpayers, or theft of benefits typically are resolved more slowly.

No matter which type of identity theft you suffer take detailed notes on conversations on the phone and keep copies of emails.

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What is the most effective security service to protect your identity from theft?

Security services for identity theft will let the user know that their personal information has been used, or that it is at risk due to being disclosed as part of a data breach. If you’ve been the victim of identity theft, they may assist you and reimburse you for costs — through the process of clearing the mess and restoring your identity.

If you’re already doing all you can do to protect your identity , or you feel that you don’t have time to take care of it You might be interested in an additional Security plan that is different, but most provide additional protections for your privacy and other benefits. The best option among paid options is one that works with your budget and gives you the protection you want.

Before you buy one, you should ensure that you’re not purchasing something you’re not using.

If you do decide to buy, NerdWallet has reviews of:

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About the author: Bev O’Shea worked as a writer for credit at NerdWallet. Her work has been featured in publications such as the New York Times, Washington Post, MarketWatch and elsewhere.

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