How Does Identity Theft Work?

How Does Identity Theft Occur
Table of Contents

Have you heard of identity theft? It’s like a bad dream you never want to have. Imagine waking up one day to find all your money gone, big debts, and a ruined credit score. This happens when someone steals your personal information. It’s a scary problem that’s happening more often.

People can steal your identity in many ways, like data breaches, phishing scams, stealing your documents, or even searching through trash. They use your name, Social Security number, credit card details, and other private information to open accounts, take loans, or even commit crimes, leaving you to fix everything.

The results can be really bad. You could lose money, hurt your good name, and spend years trying to fix everything. Don’t let this happen. Keep reading to learn how to protect yourself from identity theft and keep your personal and financial life safe.

What Is Identity Theft?

What is Identity Theft

It’s when a bad guy gets hold of your most private info – stuff like your name, social security digits, credit card numbers, and more. With this stolen data, they can open fake accounts, get loans, buy things, and even commit crimes – all while pretending to be you!

It’s a total mess that leaves you stuck cleaning up their trail of destruction. Dealing with this headache is a hassle nobody wants to face.

Having your identity hijacked is no minor inconvenience. It can completely wreck your credit score, leaving you buried under mountains of debt you never racked up. And that’s just the start of your problems.

With a poor credit history, you may find it way harder to get approved for loans, credit cards, apartments, jobs, and more. Recovering from identity theft often takes months or even years of battling to get your good name back. 

Many victims say the crime leaves them feeling violated and struggling to ever feel truly secure again. Their private info is out there, being abused in ways they can’t control.

It Happens More Often Than You Think

You might be thinking “There’s no way that could happen to me.” But don’t be so sure. Identity theft has become increasingly common in our digital world. 

The Federal Trade Commission reports that identity theft is the number one consumer complaint they receive year after year. We’re talking millions of new cases annually across the country. Nobody is completely safe from these sneaky crooks.

With data breaches, online scams, and other crafty tactics exploding in recent years, swindlers have more opportunities than ever to get their hands on your sensitive details. That’s why defending your identity is so crucial nowadays.

Types of Identity Theft

While it comes in many devious forms, some of the most widespread types of identity theft include:

Financial Identity Theft

This is when thieves use your stolen info to open up new credit cards, get loans or financing, go on shopping sprees, and commit other financial crimes – all in your name. You’re then left holding the bag for whatever expenses and debts they racked up.

Tax-Related Fraud 

Another common scam is filing bogus tax returns using your Social Security number to steal your refund money right out from under you. Then you’re stuck dealing with the IRS to prove the return was fraudulent and get your cashback. Good luck with that headache.

Medical ID Theft

In this disturbing crime, crooks pretend to be you to get medical treatment, prescription drugs, and more under your name and insurance info. This not only sticks you with the bills but can critically mess up your real medical records with incorrect data.

Criminal Identity Theft

If an identity thief uses your info while committing crimes like fraud or theft, that can make it appear like you were the one who did it! You then have to go through the lengthy process of proving your innocence – a huge hassle nobody needs.

Employment Fraud

Believe it or not, bad guys will use stolen identities to get jobs under your name. This can lead to ugly tangles with the IRS, legal issues over jobs you didn’t hold, and loads of other bureaucratic messes to resolve.

Child ID Theft

And in a truly sickening case, even kids get targeted by these scumbags. Thieves will steal a child’s info and credit history to pull off their schemes, ruining the young victim’s financial future before they even get started.

How Does Identity Theft Occur?

How Does Identity Theft Occur 2

Identity theft can occur in many ways, some of which may surprise you. Here are some of the most common methods used by criminals to obtain your personal information:

Phishing, Smishing & Vishing

Phishing emails, smishing texts, and vishing calls are all devious tactics. Crooks pose as legit companies to trick you into exposing sensitive data like logins and credit card numbers. Or they try to get you to install malware on your devices to hijack control.

Lost or Stolen Stuff 

A lost wallet, smartphone, tablet, or laptop is like hitting the jackpot for identity thieves. They can rifle through to find your private info – your ID, payment cards, device passwords, and more. Don’t make it easy!

Data Breaches

Even big corporations get hacked sometimes, exposing customer databases full of names, birthdates, Social Security digits, and financial details. Millions can get their info leaked in a single corporate data breach.

Home Break-Ins

Robbers don’t just take your TV. They’ll also snatch up documents lying around with personal details. Bank statements, tax forms, and other crucial paperwork make great identity theft fodder.

Public WiFi Risks

Free WiFi is convenient but incredibly insecure. Hackers can spy on data passing through those networks, snagging things like login credentials, account info, and more straight out of the air.  

Dark Web Black Markets

There are underground black market websites on the dark web where criminals buy and sell people’s full identities. Social Security numbers, birthdates, you name it – all out there for the right price.

Malware Infections

Nasty malware like viruses and spyware infect devices to spy on you. Keyloggers can steal passwords, while trojans hand over full control of your machine to hackers remotely.

Family Identity Theft

In some horrific cases, even family members steal relatives’ identities for illicit gain. Few things are more violating than having your flesh and blood rob your private info.

Impersonation Scams

Scammers frequently pose as government agencies like the IRS or law enforcement to pressure marks into handing over sensitive details. They can sound extremely convincing to the unwary.

Synthetic ID Nightmares 

One sneaky form of identity theft is when criminals combine fake and real personal data to create entirely new “synthetic” identities for nefarious purposes like opening fraudulent accounts.

Real-Life Stories of Identity Theft

To better grasp the true terror of identity theft, here are some real cases that demonstrate how damaging it can be:

  • A woman had over $50,000 in phony charges racked up after her Social Security number was used to open dozens of credit cards under her name.
  • A man’s details were stolen and abused to get extensive medical treatment and surgery he never received, permanently corrupting his medical files with bogus data.
  • One family discovered a child identity theft ring had been using their young son’s Social Security digits to open multiple credit cards and loans before the kid was even old enough to understand what was happening!

These true accounts show that identity theft is far more than just an inconvenience. For many victims, it can derail their entire lives and financial futures.

Warning Signs Your Identity is Compromised

Signs Your Identity is Compromised

With such high stakes, you can’t afford to miss any red flags that point to identity theft taking place. Some of the top warning signs to watch out for include:

  • Mysterious charges, accounts, or lines of credit show up on your credit reports using FCRA and bank statements that you didn’t authorize.  
  • Getting bills or statements in the mail for credit accounts you do not know to open.
  • Having credit applications unfairly denied due to what appears to be a poor credit history that isn’t yours.  
  • Receiving calls from debt collectors about unpaid debts and accounts you never opened.
  • Realizing mail like bank statements and bills have stopped arriving at your home is a sign of potential address fraud.
  • You can get notifications from your employer or the IRS about wage income or jobs you have never actually worked.
  • Seeing medical bills and insurance claims for treatments or prescribed medications you never received.

If you spot any of those weird occurrences, it could indicate your personal information has been hijacked. The quicker you act to shut down the fraud, the better your chances of mitigating the damage.

Take These Urgent Steps If Identity Theft Happens to You

The instant you suspect your identity has been compromised, time is of the essence. Here are the urgent steps you need to take immediately:

Contact Companies Where Fraud Occurred

Call or email any companies, financial institutions, medical providers, or others involved to report the identity theft. Explain the situation, provide any documentation you have of the fraud, and demand to have any fraudulent accounts shut down or disputed charges removed from your records.

Place Fraud Alerts and Freezes

Next, contact any of the three major credit bureaus (Experian, Equifax, or TransUnion) and request they place an initial 1-year fraud alert on your credit file. This flags your account as having been potentially compromised and requires extra verification whenever credit is requested in your name. 

You should also go ahead and enact a full credit freeze with all three bureaus which blocks new credit from being opened under your identity without your consent.

File an Identity Theft Report with Authorities

File a detailed identity theft report through the FTC at or call 1-877-ID-THEFT. Print out and keep copies of the affidavit they provide for your records. You’ll want to file a police report with your local department as well, getting paperwork for your case file.

Monitor All Your Accounts Non-Stop

Going forward, you need to monitor all your financial accounts, credit reports, insurance files – anything connected to your personal information. Scrutinize every statement for any suspicious new activity that pops up. You may even want to sign up for quarterly credit report checks to stay ever-vigilant.

Clean Up Your Digital Tracks

If any of your account logins or online profile passwords were potentially exposed by thieves, change them all now to secure new codes. The last thing you need is for the crooks to keep accessing your accounts.

Be Prepared for a Long Road Ahead

Unfortunately, recovery from identity theft is rarely quick or easy. It takes most victims many months to fully get their lives back in order after being victimized. Some report a multi-year battle to clear their records and credit histories.  

Staying organized, keeping detailed records, and continuing to doggedly check for and report any new theft signs will be crucial throughout the whole ordeal to regain your identity.  But once you start taking those first vigilante actions, you’ll be on the road to restoring your good name.

Report ID Theft to These Official Authorities 

Formally reporting identity theft to the proper authorities is a key part of launching the recovery process and protecting your rights. Here are the government bodies you need to alert:

Federal Trade Commission

Visit or call 1-877-ID-THEFT to report your case to the FTC, which will provide you with an identity theft affidavit – documentation you’ll need for resolving the fraud with creditors and others.

Your Local Police Department 

Going in person to file a report at your local police station creates an official record of the crime. Be sure to get a copy of the police report and incident number for your records.

The Major Credit Bureaus

You’ll need to contact Experian, Equifax, and TransUnion; the three nationwide credit reporting agencies – to get fraud alerts and credit freezes implemented on your consumer credit files. This stops thieves from opening any new credit lines in your name.  

Affected Financial Institutions and Companies

If you know which banks, lenders, merchants, utility companies, or others were involved in the fraudulent accounts opened, you need to contact each one individually. Provide them copies of the ID theft affidavit and police report to begin disputing illegitimate debts.  

For Major Monetary Losses, Contact the FBI  

If your case of identity theft has resulted in confirmed losses of a significant monetary amount, you may also report it to the FBI’s Internet Crime Complaint Center at Their resources could help in the investigation of serious cases.

Creating this official documentation trail helps validate your status as an identity theft victim. This makes it easier to work on removing fraudulent items from your credit history and records. It also aids law enforcement in tracking down the perpetrators.

Ways to Safeguard Your Identity & Prevent Theft

Ways to Safeguard Your Identity & Prevent Theft

While anyone can potentially be a victim of identity theft no matter how careful you are, there are still smart precautions you can take to make your personal information much harder for crooks to pilfer. Try implementing as many of these preventative tips as possible:

  • Always shred or destroy any documents containing sensitive details like account numbers, birthdates, Social Security numbers, etc. before discarding them. Get a good cross-cut shredder for your home.
  • Use maximally secure passwords and codes across all your important online accounts. Avoid easily guessable phrases or words based on your identity. Use a password manager to generate and store tough passwords.
  • Take advantage of two-factor or multi-factor authentication options on any sites that offer it. This adds an extra layer of security beyond just passwords.
  • Keep a very close eye on your financial statements, credit reports, medical files, and other records that contain your personal information. Spotting any irregularities quickly is key to limiting potential theft damage.
  • Speaking of which, take advantage of free credit monitoring services to frequently check for any unauthorized activity across your full credit profile. Many are offered through credit card companies.
  • Be extremely cautious when accessing any sensitive accounts or data over public wifi networks. It’s easier for hackers to snoop on traffic over public hotspots. Use a VPN service like ExpressVPN or NordVPN to encrypt your data if you must use public wifi.
  • Avoid opening suspicious emails, links, or attachments, especially from unknown sources. These can often be phishing attempts designed to steal your login information. Many contain malware threats as well.
  • Don’t overshare personal information online or over the phone. Be wary of any cold callers asking for private details like account numbers or passwords.  
  • Keep physical copies of important documents like Social Security cards, birth certificates, and tax forms locked away securely in your home. A fireproof safe or locked cabinet is recommended.

While none of those measures alone can prevent identity theft entirely, utilizing a “defense in depth” strategy with multiple layers of protection can make you a much tougher target for identity thieves to crack. One effective way to do this is using a robust VPN. You can get one from


What is identity theft exactly?

Identity theft is when a criminal illegally obtains and misuses someone’s personal identifying information like their name, Social Security number, credit card details, and more. They use this stolen identity to commit fraud like opening accounts and credit lines, getting loans or benefits, making purchases, getting medical care, and more, all under the guise of being that innocent victim.

What are some of the most common types of identity theft crimes?

Major identity theft categories include financial identity theft, tax-related identity theft, medical identity theft, criminal identity theft, synthetic identity theft, and child identity theft.

How do thieves obtain people’s private data to commit identity theft?

Identity thieves use sneaky methods like data breaches, phishing scams, stealing devices or documents, infecting devices with malware, buying stolen data online, exploiting poor security, and even dumpster diving. These crooks stop at nothing to steal your identity, so staying aware of their shady tactics is key.

What are some red flags that might indicate I’m already a victim of identity theft?

Signs you may be a victim of identity theft include unexplained charges, bills for unknown accounts, denied loans due to poor credit, calls about unfamiliar debts, missing mail indicating address fraud, income reported from jobs you never had, and fraudulent medical claims. If you notice any of these red flags, act quickly.

If my identity gets stolen, what should I do first to start recovering?

If your identity is stolen, act fast. Contact affected companies to dispute fraud and freeze accounts. Notify credit bureaus for alerts and freezes. File reports with the FTC and police. Closely monitor all accounts for further issues during the recovery process.

Is there any way to completely prevent identity theft from ever happening to me?

While you can’t completely prevent identity theft, you can make it much harder for thieves by using strong passwords, two-factor authentication, VPNs from, watching for phishing, securing documents, monitoring credit, and updating security software. Staying diligent with smart habits helps protect your identity.

The Bottom Line

Identity theft can devastate your finances, credit rating, personal life, and prospects when criminals take over your identity. But by understanding exactly how this crime works and taking proactive steps, you can make yourself a much harder target while minimizing the damage if you do get victimized.

Stay alert for common red flag warning signs of potential identity compromise. Take immediate protective actions like freezing credit, filing official reports, and securing accounts if theft does occur. Always practice preventative security habits like using strong passwords, VPN encryption, and limiting how you share personal details. Contact today to get a powerful VPN that will protect you from identity theft.

It takes work, but guarding your identity and personal information is worth the effort when the alternative could mean years of chaos, debt, and anxiety trying to untangle a single identity theft crime. By staying vigilant, you can save yourself an enormous headache in the future.

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