Identity Theft: What it is and What You Need to Know

Jenius Bank Team1/26/2023 • Updated 4/4/2024

Frustrated man on a phone call holding his head.

Identity theft is a real headache. Learn the signs to protect yourself. Change your passwords. Use secure apps and internet connections. Don’t share your personal information on untrustworthy sites. Watch for scammers. After years of hearing these tips, you may start tuning them out. Unfortunately, this inattention makes you a target for identity thieves.Thieves could steal your identity with access to just a few pieces of information, and it may take years to recover. According to the Federal Trade Commission, identity theft was the most common form of fraud in 2022 and 33% of identity theft reports came from people between the ages of 20 and 39.¹ The median amount lost for these age groups was $569.²But what exactly is identity theft? And how could it affect you?

Key Takeaways

Identity theft happens when thieves get your personal information and use it without permission.
Thieves may use your information to open new accounts, make purchases, or even commit crimes.
You may be able to avoid long-term complications from identity theft by protecting your personal information with complex passwords, secure internet connections, and watching for scams.

What is Identity Theft?

According to the United States Department of Justice, identity theft and fraud are crimes committed by someone who unlawfully obtains and uses another person’s personal information. These crimes usually involve fraud or deception and are done to make money.³ In non-lawyer speak, identity theft happens when someone steals your information and exploits it, typically to make money. Identity theft takes many forms, from financial to medical to someone stealing your tax refund. While all forms of identity theft could result in thieves making money, we’re focusing on financial identity theft.

Types of Financial Identity Theft

Not sure what constitutes financial identity theft? It happens anytime a thief uses your personal information in a way that could impact your finances. Here are a few common situations you should know about.⁴

Credit Card Fraud: Credit card fraud may occur in two ways. First, a thief may use your personal information to open new accounts in your name. Second, someone could access current credit card information and make purchases without your knowledge.
Account Takeovers: Depending on the information a thief has, they may be able to access your bank account. From there they could make unauthorized purchases, write fraudulent checks, or potentially transfer your money to themselves. In a worst case scenario, they could alter login and verification details, locking you out of your account entirely.
Tax Identity Theft: If identity thieves gain access to your personal information, they may be able to file a tax return and receive your refund. This may cause delays or errors when you try to file your taxes. If you suspect that you’re a victim of tax identity theft, contact the IRS to help you investigate the situation.

To protect yourself from these scenarios, keep an eye on your credit report for any unfamiliar accounts associated with your Social Security number and report unauthorized accounts to the credit bureaus immediately. It’s also important to review bank and credit card statements for any purchases you didn’t make. If you notice suspicious activity, contact the institution immediately.

How Do Thieves Get My Information?

Identity thieves are crafty and have many ways to obtain your financial information, ranging from scams to modern forms of pickpocketing. Some common methods used today include:

Dumpster Diving: Fraudsters may search trash and recycling for new account offers or financial statements.
Skimming: Some thieves use a skimmer, an electronic device that steals information from a card’s magnetic strip, on an ATM or fuel pump to get account numbers.
Online Vulnerabilities: Thieves may gain account information via unsecured public Wi-Fi or websites.
Dark Web: Some thieves purchase account information on the dark web from others who found it via hacking or data breaches. The dark web is a hidden part of the internet that requires special software to access. Using the dark web alone isn’t illegal, but engaging in criminal activities, like sharing stolen personal data, may occur.
Phishing and Smishing: Many thieves trick people into giving over their information voluntarily by sending them emails (phishing) or text messages (smishing) impersonating companies you may already have an account with. The message may look official with a logo or use an email address that’s off by a letter.

“Fraudsters have stepped up their game when it comes to phishing and smishing scams,” says Angie Houchins, Fraud Investigation Manager at Jenius Bank. “Today many phishing emails and smishing text messages appear almost identical to the company the fraudster is attempting to impersonate.”

What Do Thieves Do With My Information?

Identity thieves could fraudulently use your information in several ways, including opening accounts in your name, making purchases, or potentially engaging in criminal activities. Some of the most common instances include:

Opening New Accounts. Fraudsters may use stolen information to open credit lines or bank accounts in your name. Oftentimes, they change the billing address so you don’t receive statements and are unaware of the account. Since the accounts are in your name, you could be on the hook to pay off the debts.
Making Unauthorized Purchases. If a thief gets your credit card or bank account numbers, they may spend money ranging from small items that blend in with your regular spending habits to large, multi-thousand dollar purchases. If they gain access to your debit card, they may also withdraw cash from your accounts.
Criminal Behavior. A thief may be able to use your information for illegal matters, such as purchasing illegal items or submitting false applications for loans and credit cards.

Identity theft may cause a range of problems for you, from a poor credit score to placing you on the hook for debt you didn’t take on, and, potentially, even criminal charges. In addition to protecting your information, make sure to keep an eye on your accounts for any unusual activity.

Early Warning Signs of Identity Theft

If your information has been stolen, there are ways to catch thieves before they have a chance to use it excessively. Many companies, especially financial companies, send you an alert if the information on your account has changed or if suspicious activity has occurred. In addition to these alerts, it’s a good idea to check your accounts manually for charges you don’t recognize and your credit report for accounts you didn’t open. You could get a free copy of your credit report from AnnualCreditReport.com.Some things to keep your eye out for include:

Unexpected changes to personal information on an account
Unexplained withdrawals or charges on your statements
New accounts on your credit report
Errors on your credit report
Collection notices for unknown debts
Denial of loan or credit card applications
Missing statements
Errors on your tax return

According to Angie, you could save yourself a lot of heartache by watching for small changes to your information in different locations.“Pay attention to more than just your credit report,” she says. “Yes, your credit report is important, but also watch for odd changes happening on existing accounts. Something as simple as an unauthorized email address change on a long-standing bank or credit card account could be an early indicator of identity theft. The key is to catch it before it becomes out of control.”

How to Protect Yourself

The best way to prevent identity theft is to find ways to keep your personal information safe. Here are a few easy things you could do now to help protect yourself for years to come:

Use different passwords for each site that stores your credit card information, bank account details, and any other sensitive data.
Shred old bills, bank account statements, and investment statements as soon as you no longer need them.
Monitor your credit report regularly and report any errors on your report when you find them.

Recovering From Identity Theft

As the victim of identity theft, the road back to stability is long but possible. You may choose to use the free step-by-step identity recovery plan on the Federal Trade Commission’s website. If you believe you’re the victim of identity theft, there are actions you may take to recover your identity.

Final Thoughts

Identity thieves are constantly coming up with new ways to get your information, but you can help protect yourself by watching your accounts and following up on any suspicious activity. It’s a cliché, but when it comes to your identity, an ounce of protection really is better than a pound of cure.

Financial WellnessFraud & Security

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