What is identity theft?

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In a Nutshell

Identity theft can wreak havoc on your finances as well as other aspects of your life. And while there’s no way to guarantee you won’t become a victim, there are steps you can take to reduce the risk of your information being stolen.
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Identity theft occurs when someone steals another person’s personal information, such as their name, address or Social Security number, to commit fraud.

The purpose of most ID theft is financial gain. With enough information, criminals can get access to your existing accounts or use your personal information to open new ones in your name.

According to the Federal Trade Commission, in 2017 identity theft was the second-most common complaint reported by consumers. Credit card fraud was the most common type of ID theft reported. But that’s not the only way thieves can use your information for their benefit.

In this article, we’ll explore some common types of identity theft, things you can do to reduce your risk, signs your identity may have been compromised and steps to take if your identity is stolen.

Common types of identity theft

There are many ways ID thieves use personal information to rip off unsuspecting folks. Here are some ways they do it:

  • Credit card fraud: Someone uses your existing credit card number to make unauthorized purchases or opens a new credit card with your personal information.
  • Phone or utilities fraud: Thieves gain access to your existing accounts or open new ones in your name.
  • Bank fraud: Someone uses your information to access your existing bank accounts or open new ones in your name.
  • Medical identity theft: The thief steals your personal information to obtain healthcare services.
  • Tax fraud: An ID thief falsifies tax returns and submits them to the IRS using your information to collect your tax refund. Calling the IRS’s automated hotline may help get you the information you need to submit a report if you’ve been a victim of tax fraud.
  • Criminal ID theft: The person who has your information provides it to law enforcement to evade the law, for example when they receive a speeding ticket.
  • Loan fraud: Thieves take out loans in your name.
  • Government documents fraud: A person obtains a government-issued document such as a driver’s license or passport in your name or uses your government-issued document for fraudulent purposes.
  • Benefits fraud: A fraudster uses your identity to collect benefits such as disability or unemployment payments.
  • Child identity theft: Someone steals a child’s identity to engage in one or more types of fraud.

How to help reduce your risk of identity theft

There’s no way to guarantee you won’t become a victim of identity theft. But there are things you can do to protect yourself from ID theft and help reduce the risk of your information falling into the wrong hands.


  • When going online, use only secure and reputable sites.
  • Don’t enter sensitive information (e.g., credit card number, Social Security number, etc.) on a public computer, especially one that’s used by multiple people.
  • Install reputable anti-malware software on your computer and mobile devices. These programs can help protect your devices from malware that cybercriminals may use to steal your personal data.
  • Use a different password for each account you have and aim to make your passwords diverse and complex. To keep track of your passwords, you can use a password manager that generates, encrypts, stores and retrieves complex passwords for your online accounts. But be aware that you may have to pay to use these services, especially if you’re interested in upgrading from a basic version.
  • Choose two-factor authentication if it’s available. It provides an added level of security by requiring you to verify your identity in more than one way to gain access to your account. That could include one-time security codes sent to you as a text message, hardware security tokens, and applications such as Google Authenticator.


  • Shred all account statements, preapproved credit offers, medical records and any other documents with personal data on it before throwing them in the trash.
  • Protect your information in public places. For example, make sure no one is looking over your shoulder when you type in your PIN or account number at the ATM.
  • Limit the number of people you give your Social Security number to. If someone wants your Social Security number to verify your identity, ask if there’s another type of identification you can use instead.

In your everyday life

  • Avoid giving out your personal information to anyone who contacts you by phone or email. If an organization you do business with tries to get in touch with you, check your statement, the back of your card or their website to confirm their phone number. And contact the business to make sure the call or email you received is legitimate.
  • Monitor your accounts carefully to ensure there aren’t any transactions you don’t recognize. Notify your bank or credit card company if necessary. Consider signing up for an identity-monitoring service that can check whether your personal info has been exposed in a public data breach and offers tips that can help you if your information was exposed. If you are a Credit Karma member, you can receive our free ID monitoring service, which can help you spot signs of identity theft.

Warning signs your identity may have been compromised

Monitoring your accounts can help alert you if someone does steal your identity, so you can take care of it right away. Here are some signs your identity may have been compromised.

  • Your credit card statements or other bills contain charges you don’t recognize.
  • Your bank statements show transactions you didn’t make.
  • Your credit reports list tradelines or accounts you didn’t open.
  • You start getting bills for medical services you didn’t receive.
  • You stop receiving your bills and/or bank statements in the mail.
  • You start receiving calls from debt collectors about accounts that aren’t yours.

What to do if you are a victim of identity theft

If you suspect you’ve been a victim of identity theft, it’s important to act quickly to help minimize the damage. Here are some steps you can take to get started.

  • Call the companies affected by the fraud and explain what happened.
  • Place a fraud alert on your credit reports by contacting one of the three major consumer credit reporting agencies — Equifax, Experian or TransUnion. (You only need to contact one of the bureaus to place a fraud alert on your credit reports from all three.)
  • Request your credit reports from each of the three major credit reporting agencies. Under the Fair Credit Reporting Act, you’re entitled to receive one free report from each of the three nationwide credit bureaus at your request every year.
  • Place a freeze on your credit reports. This freezes your credit reports so that lenders cannot pull them, which can prevent new accounts from being opened in your name. You must request this service from each of the three major credit bureaus separately.
  • Report identity theft to the Federal Trade Commission.
  • Consider filing a report with your local police department.
  • If you’re a Credit Karma member, consider enabling our free credit monitoring service. If we notice important changes on your Equifax® or TransUnion® credit reports, we’ll send you an alert so you can check for suspicious activity.

You may need to take additional action based on the type of ID theft you experienced. After you report the theft, you should take steps to start repairing the damage, like disputing any errors on your credit report.

For a more-comprehensive list of what you can do if someone steals your identity, visit identitytheft.gov.

Bottom line

Identity theft can strike just about anyone at any time.

As public data breaches become more common and identity thieves become more sophisticated, your information could be compromised at some point.

And if it is, many aspects of your life may be negatively impacted. But the sooner you can identify the fraudulent use of your information, the sooner you can start repairing the damage.

About the author: Jennifer Brozic is a freelance financial services writer with a bachelor’s degree in journalism from the University of Maryland and a master’s degree in communication management from Towson University. She’s committed… Read more.