Identity Theft

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Identity theft is the act of stealing another person’s personal identifying information in order to gain access to his financial resources, or obtain access to other benefits, such as money, credit, or insurance benefits. Identity theft, sometimes referred to as “identity fraud,” is a crime that carries serious consequences. To explore this concept, consider the following identity theft definition.

Definition of Identity Theft

Noun The act of fraudulently obtaining and using another person’s identifying information or personal financial documents, such as a credit card or bank account, usually for the purpose of financial gain.
Origin 1995-2000 English
identity theft

What is Identity Theft

With certain identifying information, dishonest individuals can assume the identity of another person, to act in his or her name to obtain financial gain. Information that might enable someone to obtain credit, make purchases, and even empty bank accounts includes the victim’s name and address, email address, social security number, date of birth, drivers license number, and other information.

Once a victim’s identity has been assumed, the perpetrator uses the information to access the victim’s financial assets or other resources. Most frequently, the victim does not realize that the crime has occurred, or that his information has been stolen, until he begins to see strange charges on his credit cards, or applies for some type of loan, and is unexpectedly denied. This is why it is important for each person to have an identity theft protection plan.

Identity Theft Laws

Each state has laws that define and punish the crime of identity theft. Additionally, the U.S. Department of Justice aggressively prosecutes identity theft cases under federal laws. Congress enacted the Identity Theft and Assumption Deterrence Act in 1998 in response to the significant and continuing rise in incidence of identity theft. The Act makes it illegal to possess or knowingly transfer or use another person’s personal identifying information without specific lawful authority by that person. It is also illegal for a person to possess another person’s personal identifying documents with the intent to commit fraud.

Identity theft laws are very strict, providing severe punishments for individuals convicted of the crime. Penalties for identity theft may include a fine, forfeiture of any assets or property obtained as a result of the act, and imprisonment for up to 15 years.

Types of Identity Theft

In addition to the obvious reason of obtaining direct financial gain, it is not uncommon for identity theft to be committed in order to facilitate other crimes. According to the Identity Theft Resource Center, there are five distinct types of identity theft. These include:

Identity Cloning and Concealment

This type of identity theft occurs when the perpetrator wants to take on the identity of another in order to conceal his true identity. For example, an illegal immigrant may steal a person’s identity in order to obtain a job in the United States.

Criminal Identity Theft

Criminal identity theft occurs when a person identifies himself as another person to avoid detection by law enforcement, to evade arrest, or to evade prosecution for a crime. Criminal identity theft might enable the perpetrator to commit a crime under the victim’s name, leaving the victim holding the bag. When this occurs, it may be difficult for the victim to clear his name completely, as it is an extensive process that involves the court system.

Synthetic Identity Theft

This crime involves the creation of a completely or partially fabricated identity. This is done by combining an individual’s real social security number with a phony name and made-up date of birth. This type of identity theft is difficult to track, as it may not appear on either person’s credit report. Instead, it may create an entirely new credit report file, or appear on the victim’s report as a sub-file.

Medical Identity Theft

The term medical identity theft, coined in 2006, is a form of insurance fraud. This involves an individual obtaining medical care under another person’s name, using the victim’s name and birth date, and possibly even his insurance policy information. The perpetrator’s medical information would be entered onto the victim’s medical records, and thus exposes the victim to financial losses for medical bills and insurance costs.

Child Identity Theft

The IRS requires that all children claimed as dependents on a parent’s income taxes have their own social security numbers. These social security numbers are valued commodities for fraudsters, as they have no information associated with them. Child identity theft may be committed by a family member or friend, but strangers might use the numbers to apply for loans, obtain credit cards, and even obtain a driver’s license. Because nobody thinks to obtain a child’s credit report, this crime may go undetected for many years.

Signs of Identity Theft

The best way for a person to detect identity theft is to keep track of their bank account and credit card transactions, and to check his credit report often. A credit report containing fraudulent or inaccurate information is a major red flag of identity theft, and the individual should immediately question the entries, inquiring further to determine where the information originated. Other signs of identity theft include:

  • Failing to receive bills in the mail
  • Seeing unexplained bank account withdrawals
  • Being denied credit unexpectedly
  • Having a merchant refuse to accept your check unexpectedly
  • Receiving calls from debt collectors about accounts you are not aware of
  • Receiving bills on accounts you did not know about
  • Receiving notification from the IRS that more than one tax return was received in your name

Signs of medical identity theft include:

  • Receiving a bill from a medical provider for services you never received
  • Having a legitimate claim denied by your health plan because their records show you have reached your benefits limit
  • Being denied coverage because your medical records show a condition you do not have

Identity Theft Protection

Identity theft cannot only damage their victim’s credit status, it can cost him dearly in money, and in valuable time trying to restore his good credit name. While wily fraudsters make it increasingly difficult for people to guard against identity theft, there are certain steps anyone can take to increase their vigilance in identity theft protection. The number one tip in preventing identity theft is to never carry personal identifying information, such as a social security card. The same goes for keeping such information in their car or other area that is relatively easy for thieves to access.

Other tips for identity theft protection include:

  • Protect PIN numbers by never writing them on credit/debit cards, or on a slip of paper in a wallet
  • Shield keypads when using ATMs or checkout systems
  • Collect the mail immediately
  • Have the post office hold mail when away for more than a day or two
  • Pay attention to whether bills arrive as scheduled
  • Keep all receipts and account statements
  • Shred unwanted statements or receipts
  • Keep all personal information in a safe place at home
  • Ignore unsolicited requests for personal information
  • Use firewalls on home computers
  • Always use secure passwords
  • Check credit reports annually, or any time theft is suspected

How to Report Identity Theft

When a person learns that his private information has been compromised, the next step is reporting the theft of personal information. Failing to take appropriate action as soon as the compromise or fraudulent activity occurs may result in greater damage to the victim’s accounts or financial situation. Important steps to remember include:

  • Make a report to local law enforcement
  • Contact the Federal Trade Commission
    Phone: 1-877-ID-THEFT
    Mail: Consumer Response Center, FTC, 600 Pennsylvania Avenue, N.W., Washington, DC 20580
  • Report the theft or breach to your financial institution
  • Contact the local post office if you believe your mail has been stolen
  • Contact the Social Security Administration to report social security number theft or fraud
    Phone: (800) 269-0271
  • Contact the Internal Revenue Service if improper use of identification information in used in connection with tax violations
    Phone: (800) 829-0433
  • Contact any credit or retail companies with which you have accounts which might have been compromised
  • Contact all credit-reporting agencies. In addition to phone and mail services, each agency provides online services for disputing claims, and for reporting identity theft and fraud.

Equifax
Phone: (800) 525-6285
Mail: P.O. Box 740250, Atlanta, GA 30374-0250

Experian
Phone: (888) EXPERIAN (1-888-397-37426)
Mail: P.O. Box 1017, Allen, TX 75013

TransUnion
Phone: (800) 680-7289
Mail: P.O. Box 6790, Fullerton, CA 92634

Identity Theft Statistics

Identity theft is a growing problem in the United States and other countries around the world. Each year, an estimated 15 million people in the U.S. alone have their identities stolen, or their personal information used fraudulently, which causes significant financial losses. The Federal Trade Commission’s Consumer Sentinel Network (“CSN”) compiles identity theft statistics.

In 2014, the CSN received more than 2.5 million complaints, 60 percent of which were fraud complaints, 13 percent of which were identity theft complaints, and 27 percent of which were other types of complaint. An analysis of these complaints provided some interesting information:

  • Government documents were the most common items used in identify theft, followed by credit cards
  • Only 32% of victims reported their identity theft to law enforcement
  • Of that 32%, only 88% of victims indicate a report was taken or accepted
  • Florida has the highest per-capita rate of reported identity theft, followed by Washington, then Oregon

Identity Theft Case

A notorious case of identity theft and fraud involved a convicted felon who incurred over $100,000 in credit card debt, as well as a $200,000 federal home loan, and purchased motorcycles and handguns in another man’s name, after stealing his identity. David obtained the man’s social security number and financial information and applied for the loan and credit cards. The man actually called his victim, taunting him, saying he could continue as long as he wanted, because identity theft was not a federal crime at that time.

The victim spent more than four years, and $15,000, attempting to restore his credit and good name. The perpetrator served only a short sentence for making a false statement to obtain the firearm, and was not ordered to make any restitution to the victim. This occurred prior to, and was one of the cases prompting enactment of the Identity Theft and Assumption Deterrence Act of 1998.

Related Legal Terms and Issues

  • Criminal Charges – A formal accusation by a prosecuting authority that an individual has committed a crime.
  • Fraud – A false representation of fact, whether by words, conduct, or concealment, intended to deceive another.
  • Intent – A resolve to perform an act for a specific purpose; a resolution to use a particular means to a specific end.
  • Perpetrator – A person who commits an illegal or criminal act.
  • Victim – A person who is injured, killed, or otherwise harmed as a result of a criminal act, accident, or other event.