What Is Identity Theft?
Identity theft, or stolen identity, refers to unlawful usage of another's personal information. While that definition may sound relatively harmless, those who have been victimized by identity theft know that this crime can have disastrous effects.
Sources like the Identity Theft Resource Center have outlined four major types of identity theft:
- Financial Identity Theft occurs when the thief uses another person's information to obtain goods or services. For example, someone who provides your credit card number while making an online purchase for himself is committing financial identity theft.
- Criminal Identity Theft refers to the act of posing as another person during an arrest. Giving a police officer personal information that identifies you as someone you are not is an instance of criminal identity theft.
- Identity Cloning happens when an identity thief actually uses another person's personal information to go about his everyday business. An identity clone could potentially apply for new credit cards, open new bank accounts and complete change-of-address forms using your information.
- Commercial/Business Identity Theft is the use of another company's information to get credit.
Unfortunately, the popularization of the Internet as a venue for financial transactions has made identity theft all too common in the United States. But there are measures you can take to minimize the likelihood of having your identity stolen.
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Identity Theft and Bankruptcy
In a report from the Institute for Financial Literacy detailing bankruptcy filing statistics since the new bankruptcy laws took effect in 2005, identity theft was cited as a cause of 2.3% of bankruptcy filings.
In 2006, records show that 597,965 people filed for bankruptcy. This means that 13,747 people were actually driven to bankruptcy by identity theft in 2006. This is a frighteningly high number, and serves to highlight the importance of taking as much preventative action as possible.
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Identity Theft Prevention
While there's no surefire way to protect yourself from identity theft, there are precautions you can take to make sure the chances - and potential effects - of identity theft are minimized. The following is a list of important pieces of the identity-theft-prevention puzzle. Understanding how these elements play into identity theft can help you protect yourself and your finances.
- Credit Reports: Each of the three major credit reporting agencies (credit bureaus) is required to give you one free credit report per year. Checking your credit report regularly is perhaps the best way to know if you've been victimized by identity theft - all purchases, charges and accounts in your name will appear on your report. If something unfamiliar shows up on your credit report, you can take action immediately to protect yourself. To order your free credit report, visit www.annualcreditreport.com.
- Credit Freeze: A credit freeze is a service provided by credit reporting agencies which allows consumers to keep their credit information private. Basically, the credit freeze works like this: once you request a credit freeze, the credit reporting bureau cannot give out your information. If an identity thief tries to open a new credit card or account in your name, the lender will try to run a credit check to assess risk. When the lender cannot get access to your credit information, the new account will be denied and the theft will be prevented.
Credit freezes have been called one of the most effective ways to prevent identity theft, but there is a downside. In some states, credit freezes and unfreezes cost as much as $10.00 each, meaning that every time you wish to unfreeze your information (for example, if you wanted to take out a loan), you'd have to un- and re-freeze your information.
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- Phishing: Attempting to get someone's personal information using fraudulent and/or criminal means is considered phishing. Usually, online phishers pose (often in emails) as legitimate entities (banks, credit card companies, etc.) and ask users to "confirm" personal details like Social Security Numbers, account numbers, usernames, passwords and more. Once people enter this information, the phishers can use it to steal identities.
- Social Security Numbers: The Fair Trade Commission notes on its website that Social Security Numbers should be treated with great care. While some people legitimately need your SSN (employers, bankers and more), many people do not. If you are asked to give out your SSN, be sure to ask why it's needed and how it will be used before providing it. If you feel uncomfortable with the explanations you receive, don't give it out.
Other everyday efforts you can make to prevent identity theft include shredding or tearing up credit card offers, bank statements, medical reports and anything else containing indentifying information and staying alert for identity theft clues, like receiving bills for items you didn't purchase or credit cards for which you didn't apply or having unexplained difficulty getting loans.
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Identity Theft Resources
The more you know about identity theft and how to protect yourself, the better off you'll be in the fight against identity theft. Total Bankruptcy is committed to keeping you updated on the latest data breaches around the country, as well as recent identity theft news and legislation and articles about identity theft.
Reporting Identity Theft
If you think you've been victimized by identity theft, you need to follow the steps outlined by the FTC.