How Identity Theft Happens

Identity or ID theft happens when someone uses your personal information for their own gain. An identity thief uses your name, Social Security number, date of birth, and any other personal and financial information they’ve obtained about you to apply for credit cards and loans, sign up for utilities, or steal money from your existing accounts.

A successful thief can steal thousands of dollars in a victim’s name. Often, the victim doesn’t even know about the fraud until months or years later, when their credit is wrecked and collection agencies start calling about delinquent accounts. 

Imagine trying to apply for a loan only to find that an identity thief has destroyed your good credit history. Banks won’t loan to you until you correct the damage, which can require thousands of dollars and hundreds of hours of your personal time to correct. The process of straightening out identity theft can put a strain not only on your wallet and your time, but also on your emotional well-being. 

How Identity Theft Can Happen

Identity theft can happen to anyone, and there is no way to fully protect yourself from the crime. Think of all the businesses that have your information on file: medical offices, insurance carriers, schools, banks, current and past employers, government agencies like the IRS, and retail businesses you patronize. Anyone in these offices could steal your information for personal gain, or fail to protect your information fully. Even trusted employees can make mistakes, like forgetting to lock a file cabinet, shredding sensitive documents, or losing a laptop or disc containing your sensitive personal information.

Computer databases are continuously threatened by the latest hacking techniques, resulting in potential security breaches. The Identity Theft Resource Center reports that there were 656 breaches in 2008 from well-known U.S. companies and government entities.

Thieves can also steal your identity directly from you. A lost or stolen wallet can be a goldmine, literally. A thief can raid your mailbox to obtain banking statements and other financial documents. You could contract a computer virus that puts your data at risk, or receive a phishing e-mail or phone call that cons you into providing personal information. Even your trash isn’t safe: dumpster diving continues to be a popular method for identity thieves to search for personal information. 

The latest findings show that the below six methods remain the most popular ways for identity thieves to obtain your information:

1. Lost or stolen wallets
2. Card-skimming, or stealing your personal information during a transaction
3. “Friendly” theft, or identity theft by friends, family members, or other people you know
4. Mailbox raiding and dumpster diving for your personal and financial information
5. Online methods, including e-mail phishing schemes
6. Data breaches, or hacking into company systems to gain customer information