Identity theft is on the rise in America and across the world. Increased technological sophistication, combined with a growing consumer shift toward electronic transactions, has made it easier than ever for crooks to obtain and use a victim's personal or financial information for their own gain.
Download our tip sheet Identity Theft [PDF, 188Kb] to learn what it is, how to recognize it, and what you can do about it. We also recommend that you download the Federal Trade Commission's (FTC) booklet Take Charge: Fighting Back Against Identity Theft [PDF, 7324Kb] for information relating to various types of identity theft (such as credit card fraud, investment fraud, mail theft, Social Security number misuse, and more), as well as step-by-step instructions and sample forms for you to use if you ever become a victim.
Types of identity theft
There are many kinds of identity theft, which can be sorted into three main groups:
• Theft by access card: Ths is the most common form of identity theft encountered in the United States. A thief obtains your credit or ATM card number and uses it to make large purchases online, or even creates a fake card and uses it at various stores or even ATMs.
• Social Security number misuse: A thief will use your Social Security number, combined with your name and date of birth, sometimes even your home address or telephone number, to apply for credit with multiple stores and banks, ring up hundreds or thousands of dollars in purchases or services, and stick you with the bill. Alternatively, some thieves will sell Social Security numbers to illegal immigrants or those trying to evade tax collections or child support payments, for purposes of employment.
• Complete identity assumption: the most insidious type of identity theft, in which a thief will live, work, and play as the victim; fortunately this is rare. Less extreme but more common is "false personation," in which the identity thief will temporarily pose as the victim to avoid legal responsibility for something, such as when getting a traffic ticket.
Theft by access card
There are multiple ways for thieves to obtain your card information, most involving the use of a memory device to capture your card information. Sometimes this device will be attached to the card reader, overlaying the actual card reader so that your card passes through the fraudulent one first. Other times a small strip will be inserted into the card reader itself. Occasionally a device is implanted inside the card reader to either store card numbers or transmit them wirelessly to the crook's computer. On occasion, online retailers (particularly smaller ones with less stringent security measures in place) will have their systems hacked and customers' card numbers compromised.
No matter how your card information is stolen, you may not find out right away that you've become a victim. Since the criminals don't need your actual card, you might not realize you've been victimized until a transaction that should have gone through gets declined due to insufficient funds.
Here are some tips to help minimize your chances of becoming a victim:
• Only use your card at major stores you trust. If you have the option of paying outside or going inside (such as at a gas station), go inside.
• Select the "credit" option whenever possible if using your debit card. It might not prevent the theft of the card number, but at least the thieves won't have your personal identification number (PIN) too.
• Always check the terminal before using your card. Look for loose card readers or key pads, or anything that looks unusual (such as a card reader that sticks out further than you remember). If you see anything suspicious, use a different terminal or form of payment.
• Use a credit card instead of a debit card. With debt cards, banks will investigate disputed transactions before refunding the money - meaning that you're out the cash in the meantime. Credit card transactions that are disputed don't have to be paid until the dispute is resolved, so you don't lose anything (though the transactions may still count against your available credit until the dispute is resolved).
• Be wary when using your card online. Always type the URL in yourself instead of clicking on a link, and check for a VeriSign, Trusteer, or other security seal (always go to that company's website to verify the certification). If possible, use a trusted third-party payment service such as PayPal or Google Checkout that will keep your information from getting to the retailer's servers, where it could be hijacked or sold.
• Never give out sensitive information over the phone, including card numbers and checking account/routing numbers (check-by-phone), unless you placed the call to a number that you got from a trusted source (NOT an advertisement). Don't give out this information on postcard-type return mail (such as for magazine subscriptions) without first putting it in an envelope, even for trusted companies.
Theft of your Social Security number
These nine little digits can be used to access all sorts of information about you and your accounts; since each person has a unique number, banks and companies often use it to verify your identity over the phone and online when they can't see you face-to-face or check your ID. Credit cards, loans, and employment can all be obtained with your Social Security number (SSN), so you need to guard it as carefully as you would your paycheck.
• Never give out your SSN over the phone to anyone, including the IRS, unless you placed the call yourself to a phone number you got from a trusted source (NOT an advertisement).
• When applying for a job, remember that even though the application asks for your SSN, you're not required to give it until you are actually hired. Keep in mind that job applications may be handled by several people not directly involved in the hiring process.
• Be wary when entering your SSN online, and only do it on websites certified by VeriSign, Trusteer, or another trusted internet security company, when you've typed in the URL yourself.
• Keep tabs on your credit report for suspicious changes, such as accounts with unknown companies, addresses at which you've never lived, variations on the spelling of your name, etc. Under federal law you are entitled to one free report from each of the three credit bureaus per year; order them all at once to compare details or get a different one every four months to stay up-to-date with any changes. Visit http://www.annualcreditreport.com (link will open in a new window) or call (877) 322-8228 to get your free report - this is the ONLY authorized source to obtain your free, no-strings-attached credit reports under the law.
If you've become a victim of identity theft
How will you know if you've become a victim? You won't, unless you keep up with your information. Keep tabs on your checking and savings accounts, checking them daily if possible. Get and thoroughly review your credit reports from all three bureaus. Kepp an eye on the mail for a sudden increase in junk mail offering credit, or for mail that's all of a sudden not being delivered. Watch for phone calls and letters from collections agencies for accounts you didn't open. Pay attention when you apply for credit and are unexpectedly denied due to your credit score or history.
Sometimes, especially in the case of employment fraud, it may take a few years for the identity theft to catch up with you; IRS typically does not notify taxpayers of underpaid taxes due to unreported income for two or even three years due to sheer backlog.
If you ever learn or suspect that you've become a victim of identity theft, there are some things you can do. Start by contacting your bank or credit issuer (whichever is applicable) and get copies of credit applications and/or transaction records. Get a copy of your credit report from each bureau and check to see if there are other discrepancies as well. If you are contacted by the IRS, ask for a Wage & Earnings Transcript to see where the fraudulent employment was obtained. All this information will be critical in helping law enforcement locate the criminals and hold them accountable.
Once you have any information, call the Sheriff's Department and file a police report. Also contact the FTC at (877) ID-THEFT (438-4338), or online at http://ftc.gov/bcp/edu/microsites/idtheft/ (link will open in a new window).