How Identity Theft Works – Are You You, or is Someone Else You?

Have you heard about the fastest-growing crime in the world? Identity theft. It’s a nasty crime. Identity thieves are hard to catch. In fact, many are never caught. That’s probably why it’s such an increasing problem.

Victims of identity theft have a hard road ahead of them – the road to reclaiming their identity. It’s a very rocky and winding road, full of potholes and cracks big enough to fall into. An identity-theft victim may be turned down for credit, education, housing or any number of things that represent a positive turn in one’s life. And the turn will indeed be a negative one. It could even include being arrested for a crime they didn’t commit.

We’re going to take a close look at this horrible crime and really closely examine how identity theft works. This is information you need to know – everybody needs to know – to protect your financial life.

How is your identity stolen?

Identity thieves have many ways to steal your identity. They can exist for years under your name, without you having a clue what’s going on behind your back. But how can someone possibly “steal” your identity? For them, it’s easy. Here are some of the methods they use:

Adopt a name close to theirs. This practice is used a lot in areas where Latinos live, especially in the U.S., because their names are often very similar, with only one letter difference.
Steal your wallet or purse. You know how much personal information you carry in your wallet or purse. It presents many opportunities for identity thieves.
Steal your mail. A lot of your mail has your personal information in it.
Put in a “Change of Address” form at the Post Office, rerouting your mail, so you can’t see the charges they’ve made to your accounts.
Pose as a landlord, employer or any other person authorized to access your credit report. All your personal information is on your consumer credit report – a goldmine for an identity thief.
Steal your personal information from your home. Workers, cleaners, nannies or any other people visiting your home, are prime suspects.
Hack into any unsecure websites you may visit and steal your information.
Send you an email, posing as a company you do business with.
Bribe employees of companies who have your personal information in their files – a very common practice.

Every day, you perform simple transactions. You write checks for groceries; you charge tickets for sporting events or concerts on your credit card; you rent a car; you mail tax returns; you call home from your cellphone; you order new checks from your bank; you apply for a credit card. All of these things, you probably take for granted. But hold on – an identity thief can access any one of those things and intercept your personal information.

What do identity thieves do with your personal information?

So now an identity thief has your personal information. How does he use it to complete his crime? Well, he simply becomes you. Sounds eerie, doesn’t it? But that’s exactly what happens. And there are many ways he can do that. And once he’s adopted your identity, here’s what he can do in your name:

Open a credit card account, using your name, date of birth and SSN/SIN.
Call your credit card company and change your address, so you won’t see what he’s charging to your account.
Get a home phone or cellphone.
Open a bank account and bounce checks.
File for bankruptcy.
Counterfeit checks and/or debit cards and drain your bank account.
Get a car loan.
Give your name when arrested. This could result in a warrant being issued for your arrest when the thief doesn’t show up in court.

How can you protect yourself against identity theft?

You probably can’t completely protect yourself against identity theft, because as the saying goes, “These guys are good.” But there are some things you can do to make the crime harder to commit. Here are some important immediate steps you can take to minimize the risk:

Get a copy of your credit report and check it for inaccuracies.
Use passwords on all your accounts. Don’t use passwords that relate in any way to your personal information. Never use your mother’s maiden name.
Don’t leave your personal information where any visitors to your home (workers, cleaners, nannies or, believe it or not, even relatives) can get hold of it.
Find out who has access to your personal information at your job and how it’s protected.

There are some more things you can do in continuing to protect yourself against identity theft:

Subscribe to a credit monitoring service. You’ll be notified immediately if there are unauthorized changes to your information. You don’t want to be surprised when you apply for a major purchase loan and are turned down because of something on your credit report. By the time you get the mess cleaned up, your purchase could have fallen through.
Don’t give out your personal information, whether it be by phone, by mail, or on the Internet. You’ll probably be ok if you make the contact yourself, and if you know who you’re dealing with. But don’t take chances unless you’re very confident that everything’s secure.
Never give your SSN/SIN, your mother’s maiden name, your account numbers or any other personal information, to anyone you’re not absolutely sure of.
When mailing letters, use a secure official mailbox. Pick up your mail from outside your home as soon as possible. If you’re going on vacation, have the Post Office hold it for you until you return.
Tear or shred all your receipts, account forms, statements, credit offers – anything that has any personal information on it – before you throw it away. Identity thieves will go through garbage and recycling bins to find it.
Watch your billing cycles. If you don’t get a bill on time, phone the company who issues it. An identity thief may have changed your address to hide charges on your bill.
Protect your wallet or purse at all times.

Since so much crime is committed in relation to your computer, there are a number of things you need to do with that, too:

Update your virus protection. Viruses can allow files with personal information to be sent by email to identity thieves.
Download critical updates – they provide you with extra security against hackers. Check the downloads to make sure they’re official and secure.
Don’t open emails from anyone you don’t know. Many of them contain harmful viruses.
Use firewall protection, especially if you leave your computer on 24 hours a day.
Look for the “lock” icon on your browser’s status bar to see if information is secure.
Be very careful with laptops. Don’t use automatic logins and always log off. Laptops are easy to steal.
If you’re getting rid of your computer for whatever reason, delete all your personal information. And don’t just delete the files – they’re still in your computer. Get a software program that completely clears your hard drive.
When doing any kind of business or transaction on the Internet, read the website’s Privacy Policy. It may take a while, but it’s time well spent.

Another medium that circulates your personal information is mailing lists. Credit bureaus are one of many organizations that sell your information. No matter who it is, you always have the option to “opt out”, which takes your name off all mailing lists registered with those companies.

What can you do if you’re a victim of identity theft?

As we mentioned before, it’s difficult to completely protect yourself against identity theft. No matter how vigilant you are, your personal information can get out. If you do become a victim, prepare yourself for a hard road back to reclaiming yourself and re-establishing your credit. Here are the steps you need to follow if you’re a victim:

Immediately contact the fraud department of the credit bureau. You only need to notify one – the other two will be notified automatically. The credit bureau will subsequently contact you if anyone tries to open a new account or make any changes to your information.
If you’re not already using a credit monitoring service, get a copy of your credit report. Check it for inaccuracies and report them.
Close the affected accounts, including credit cards and bank accounts.
File a police report and give copies of the report to your creditors.
Chart your course of action. In the U.S., for example, the FTC or Federal Trade Commission has a form you can use for a good guideline. Follow these steps systematically and everything will eventually come together.

Identity theft is rampant

In the past 5 years, in the U.S. alone, there have been 27.3 million victims of identity theft. Those crimes cost American businesses billions of dollars. And think of the dire straits the victims ended up in.

Laws are severe in handing out penalties for this terrible crime. In the U.S., for example, a conviction for identity theft carries with it a maximum 15-year jail sentence, together with a fine, and seizure of any property used, or involved, in committing the crime.

But the sad fact remains – many identity thieves go unpunished. So that’s why it’s imperative that you follow the guidelines above in protecting yourself. And if you’ve done that, for the most part, you’ll probably be ok. Then you can relax and just be you – and remain you!

About The Author

Gareth Marples is a successful freelance business writer providing valuable tips and advice for consumers purchasing a credit report, consumer credit counseling and those looking for a credit card application. His numerous articles offer moneysaving tips and valuable insight on typically confusing topics.

This article on "How Identity Theft Works" reprinted with permission.