What is identity theft? Definition, types, and prevention

What is identity theft?

Identity theft is a crime in which someone obtains your personal information like your Social Security number, credit card details, or login credentials without your permission, often through data breaches or phishing. Scammers then use that information to commit identity fraud. It could mean opening accounts in your name, taking out loans, or even stealing your tax refund.

How does identity theft happen?

Even small mistakes can potentially lead to data theft. Scammers use all kinds of methods to steal your identity, including:

• Installing malware through fake links or files that let them access your device.
• Intercepting your data on public Wi-Fi when the connection isn’t secure.
• Using social media clues like your birthday or your pet’s name to guess passwords or security answers.
• Stealing wallets, bank cards, or mail to get credit card, tax, or bank information.
• Peeking over your shoulder or digging through trash to find documents with sensitive details.

Types of identity theft

Let’s take a look at the most common types of identity theft and how they’re carried out.

Criminal identity theft

Criminal identity theft occurs when someone gets arrested and wants to avoid legal consequences, so they use your name and personal information. For example, if a warrant is issued, your information may appear on that warrant. The thief might also appear in court and plead guilty, which will create a criminal record under your name. 

Social Security identity theft

Your SSN can be misused to report earnings, apply for jobs, or claim government benefits. Thieves could also damage your credit history if they use your SSN to take out loans (but don’t pay them). Learn more about what to do if someone has your Social Security number with our guide.

Employment identity theft

A scammer may use your personal information, such as your Social Security number, to get a job. Employment identity theft can lead to serious issues, such as incorrect income being reported to the IRS, unexpected tax bills, or problems with your own employment records.

Medical identity theft

Medical identity theft occurs when someone pretends to be you and uses your name or SSN to get medical care. As a result, false entries may appear in your health records, and you could be stuck with unpaid medical bills.

Tax identity theft

Tax identity theft happens when scammers file a fake tax return with your name and SSN to claim a refund or get a job. If you’d like to learn more about this crime, check out our guide on tax fraud.

Child identity theft

Fraudsters target children’s identities because they often go unchecked for years. Scammers can use a child’s Social Security number to open credit accounts, apply for loans, or even rent housing. Many victims of child identity theft only find out about the use of their identity years later. 

Financial identity theft

Financial identity theft occurs when someone uses your credit card, debit card, or bank account information without your permission to make purchases, withdraw money, or open new credit accounts in your name. If not detected and addressed quickly, it can result in unauthorized charges, drained accounts, damaged credit, and long-term financial consequences.

PRO TIP: Research on malware linked to stolen bank card details revealed that RedLine is one of the most common information-stealing malware types, which accounts for 60% of stolen payment cards. It often relies on social engineering techniques, such as phishing emails and malicious attachments. To protect yourself from financial identity theft, avoid clicking on unknown links or downloading suspicious files, and ensure your antivirus software is always up to date.

Synthetic identity theft

With synthetic identity theft, thieves combine real information, such as a stolen Social Security number, with fake details like a made-up name or birthdate to create a brand-new identity. They use this false identity to apply for credit cards, loans, or government benefits. Because the identity includes real data, it can be harder to detect and may go unnoticed for years, causing significant financial damage.

Biometric identity theft

Hackers may try to steal or spoof your biometric data, such as fingerprints or facial images. They can also create deepfake videos or images to impersonate you, which can be used to bypass security systems or commit fraud.

Account takeovers

An account takeover occurs when a hacker breaks into one of your existing accounts and changes your password, locking you out. The hacker could steal your personal data or use your account for fraudulent activities.

Identity cloning

Identity cloning is when someone completely impersonates you. Scammers live, travel, and work using your name and personal information. This type of theft can cause serious problems because it affects your reputation, finances, and even legal standing.

Examples of identity theft

These major identity theft cases show how millions can be affected in one sweep and why staying proactive matters:

• The Philip Cummings case. Reported as one of the largest cases of identity theft in the US, this case involved stolen credit reports from more than 30,000 victims. The scheme caused losses between $50 and $100 million.
• The Stefan and Judy Zweig case. The Zweig family, victims of the Palisades fire, were unable to get disaster assistance because a fraudster stole Stefan Zweig’s identity and filed a FEMA (Federal Emergency Management Agency) claim using his name.
• Abraham Abdallah. In 2001, Abdallah used stolen personal data in an attempt to access the accounts of some of the richest and most famous people in the US, allegedly including Steven Spielberg and Oprah Winfrey. He was arrested before he could carry out the full fraud.

What are the warning signs of identity theft?

Identity theft often shows up through small, easy-to-miss signs. You might notice a charge on your credit card that you don’t remember making. Or a bill stops arriving. Let’s take a look at some common warning signs of identity theft:

• Receiving charges for items you didn’t buy. You receive a bill for items or services you didn’t purchase using an account under your name (that you didn’t open). 
• Mail stops coming. Are you missing mail, bills, and bank statements? It could be a sign that someone is trying to steal your information. Contact the mail sender to see if your bills have been redirected without your consent.
• Unusual withdrawals from your bank account. Look for unfamiliar bank transfers or transactions you don’t recognize. 
• Receiving calls or notices for loan applications. In such cases, contact the financial institution. Ask about the application or delinquent loan and report any fraudulent activity immediately.
• A new credit card or account was opened without your authorization. Fraudsters can submit false applications for new accounts made using your name and other personal information.
• Getting notifications about password resets. If you didn’t try to change your password, you could be getting a fake notification, indicating a potential phishing attack. Alternatively, it might indicate an attempted account takeover.

Which groups are the most vulnerable to identity theft?

Anyone can become a victim of identity theft. However, certain groups tend to be bigger targets, such as:

• Children. Kids are more susceptible to long-term fraud because they have clean credit histories, which are also rarely checked. 
• Seniors. Older adults are frequently targeted by scammers posing as banks, government agencies, or tech support.
• High earners and business owners. They’re profitable targets with more financial activity, which could provide scammers with more opportunities for fraud.
• Active social media users. People who tend to overshare personal information online are more vulnerable to identity theft.

What should you do if you become a victim of identity theft?

If you think you’ve been a victim of identity theft, don’t panic. But don’t wait either. Acting quickly can help limit the damage, so follow these steps:  

1. 1.Report to IdentityTheft.gov. This government site walks you through what to do next. It creates an FTC identity theft report and personal recovery plan based on your situation. 
2. 2.Change all passwords. Use strong, unique passwords. Don’t reuse your passwords, especially if they’ve been compromised. Enabling MFA also adds an extra layer of protection.
3. 3.Protect your tax account. Contact the IRS and notify both state and local tax authorities if you’ve been a victim of identity theft. 
4. 4.Contact the companies where the fraud occurred. Contacting financial institutions, like your bank or credit card providers, helps them flag your account for fraud and reverse unauthorized charges. 
5. 5.Keep records of all communication with relevant parties. Keep copies of emails, letters, and notes from your interactions with banks, credit bureaus, and law enforcement. 

For more information, check out our detailed guide on how to take action if your identity has been stolen.

How to report identity theft

Reporting identity theft is an important step in protecting yourself and resolving the issue. Follow these steps to make sure your report reaches the right agencies and companies:

1. 1.Contact the Federal Trade Commission. File a report online or call 1-877-438-4338 to talk to an FTC representative.
2. 2.File a police report. This step may help when disputing charges or communicating with creditors.
3. 3.Contact your bank, creditors, or any affected companies. Let them know that your accounts have been compromised or that new accounts may have been made using your personal information.
4. 4.Keep communication records. Have detailed copies of every call, email, or letter you send.

What are the consequences of identity theft?

The effects of identity theft go beyond financial loss and bad credit ratings. Identity theft can take a mental and emotional toll on victims. It can affect your reputation, impact future job or loan applications, and result in false information being added to your medical records. It may also lead to false arrests.

In 2024, 53% of general consumers felt worried or anxious after experiencing identity theft. Around 42% felt vulnerable, while 37% felt they were violated. Some reported losing interest in their hobbies, and others felt shame or embarrassment. 

How to protect yourself from identity theft

Identity theft hits fast and often without warning. Staying alert and building a few smart habits can help keep your information safe. Follow these steps:

• Place fraud alerts. Initial fraud alerts on your credit report notify lenders to take extra steps to double-check your identity before opening new accounts. Meanwhile, turning on scam and fraud alerts helps you get real-time warnings about unusual activities.
• Check your credit reports regularly. If you notice unusual transactions, report them immediately to your bank’s fraud department.
• Secure your accounts with complex passwords. Unique passwords help prevent cyberattacks and keep your data safe. 

• Don’t give away or share your personal information easily. Don’t post your SSN, address, or birthday on social media. Don’t answer calls, emails, or other forms of communication from people or numbers you don’t know.

Services that protect your identity

You don’t have to face identity threats alone. Many people use identity theft protection services to monitor for suspicious activity, help with recovery after fraud, or even cover related costs. These services often include credit monitoring, identity monitoring, recovery support, and sometimes identity theft insurance. For example, NordProtect offers 24/7 dark web and credit monitoring, real-time alerts, and dedicated recovery assistance if your identity is compromised.