Identity theft is a pervasive and insidious crime that can upend your life in myriad ways. At its core, identity theft involves a criminal stealing your personal information to commit fraud, whether that‘s opening illicit credit lines, draining your bank account, or even committing crimes in your name.
While identity theft schemes take many forms, some of the most pernicious involve fraudsters actively impersonating their victims. By posing as you, these scammers can rack up huge bills, decimate your credit, and even land you in legal hot water – all while you‘re left to clean up the mess.
In this in-depth guide, we‘ll take a magnifying glass to the 7 main types of identity theft, with a special focus on schemes where criminals steal more than just your data – they steal your very identity. Along the way, we‘ll explore eye-opening statistics, real-world case studies, and actionable strategies you can use to keep the fraudsters at bay.
Identity Theft by the Numbers: A Growing Epidemic
Before we dive into the different types of identity theft, it‘s important to understand the sheer scale of this mushrooming problem. The numbers paint a sobering picture:
- In 2021, nearly 42 million Americans were victims of identity fraud, a 45% jump from the previous year
- Identity theft losses hit $24 billion (USD) in 2021, up 79% from 2020
- Every 22 seconds, someone is hit with identity theft
- 1 in 20 Americans are now victims of identity theft each year
- The average loss per identity theft incident is $1,551
As these statistics illustrate, identity theft is a rampant crime that shows no signs of slowing down. And with our lives moving increasingly online, opportunities for fraudsters are only growing.
The 7 Faces of Identity Theft
Identity theft is not a monolithic crime, but rather an umbrella term for a variety of schemes criminals use to exploit your personal information for their gain. Here‘s a breakdown of the seven main types:
1. Financial Identity Theft
Financial identity theft is the classic form most people think of when they hear "identity theft." In this scheme, criminals use your personal data to make unauthorized transactions, open new accounts, or take out loans in your name.
Some common tactics include:
- Opening new credit cards with your Social Security number
- Taking over your existing financial accounts
- Applying for loans or lines of credit posing as you
- Filing fraudulent tax returns to collect the refunds
- Draining your investment or retirement accounts
2. Medical Identity Theft
In medical identity theft, fraudsters use your health insurance information to receive medical treatment, prescription drugs, or submit bogus insurance claims under your policy.
The consequences can be more than just financial – if scammers‘ medical information gets mixed up with yours, it could lead to misdiagnosis, improper treatment, or even denial of coverage due to "pre-existing conditions" you don‘t actually have.
3. Criminal Identity Theft
One of the most insidious forms of impersonation is criminal identity theft. Here, the fraudster literally poses as you while committing a crime. If they get arrested, it goes on your record – and you may not find out until you‘re pulled over for a routine traffic stop and cuffed due to an outstanding warrant you knew nothing about.
Criminals may also use your identity to:
- Rent housing and skip out on the payments
- Submit false insurance claims
- Obtain government benefits
- Get hired for a job and not report the income
Untangling yourself from criminal identity theft can be a legal nightmare, often requiring significant effort to clear your name.
4. Synthetic Identity Theft
In synthetic identity theft, fraudsters create a fictional identity by combining real and fake personal information – for example, your legitimate Social Security number paired with a made-up name and address.
Because synthetic IDs are crafted to look realistic, they can be harder for creditors and law enforcement to flag as fraudulent. Scammers may nurture these identities for months or years, building up a credit history before "busting out" – maxing out the credit lines and disappearing.
Synthetic identity theft now accounts for 80-85% of all identity fraud, making it the fastest-growing type of financial crime in the U.S.
5. Child Identity Theft
Shockingly, even children can fall victim to identity theft. Fraudsters prize kids‘ unblemished credit histories, which they can exploit to open credit lines, apply for government benefits, or even purchase homes or vehicles.
Child identity theft often goes undetected for years, as most parents don‘t think to check their youngsters‘ credit reports. By the time the child reaches adulthood and applies for student loans or a first credit card, the damage is already done.
According to a study by Javelin Strategy & Research, over 1 million children were victims of identity theft in 2017, costing families $540 million in out-of-pocket costs.
6. Account Takeover Fraud
In account takeover fraud, criminals leverage stolen login credentials to hijack your existing accounts. Once in, they can change passwords, drain funds, make unauthorized purchases, or even use the account as a springboard to infiltrate your other profiles.
Account takeovers often trace back to data breaches, where millions of username/password combinations are hacked and sold on the dark web. If you reuse the same credentials across multiple accounts, one breach can spiral into multiple account takeovers.
7. Tax Identity Theft
Tax-related identity theft occurs when someone uses your Social Security number to file a tax return and claim your refund. Often, victims don‘t realize they‘ve been scammed until they go to file their legitimate return and find that one has already been submitted under their SSN.
Tax identity theft exploded during the COVID-19 pandemic, with the IRS receiving 5.2 million reports of fraudulent returns seeking to steal Economic Impact Payments and tax refunds.
Case Studies: Identity Theft Impersonation Schemes in Action
To understand just how sophisticated – and devastating – identity theft impersonation schemes can be, let‘s explore a few real-world case studies.
The Cautionary Tale of Frank Abagnale
Perhaps the most famous case of criminal identity theft is that of Frank Abagnale, whose exploits were immortalized in the film "Catch Me If You Can." In the 1960s, Abagnale posed as an airline pilot, doctor, and lawyer, cashing over $2.5 million in fraudulent checks across all 50 states and 26 countries – all before his 19th birthday.
While Abagnale‘s story has a happy ending – he served prison time and went on to work as a security consultant – it illustrates the audacity of identity impersonators and the difficulty of stopping them.
The Synthetic ID Ring That Racked Up Millions
In 2013, the Justice Department busted an 18-person crime ring that created 7,000 synthetic identities to obtain tens of thousands of credit cards. The fraudsters maintained detailed records of each identity, including which banks they‘d used the identity at, and even created fake businesses to bolster the identities‘ legitimacy. All told, the scammers racked up over $200 million in losses.
The Thief Who Stole His Infant Daughter‘s Identity
One particularly egregious case of child identity theft involves a father stealing his own daughter‘s identity. In 1998, just after his daughter‘s birth, the man used her SSN to open credit card accounts and even buy a house. His scheme wasn‘t discovered until 2012, when his daughter was denied student loans due to $75,000 of debt and poor credit. It took months – and a felony charge against her father – to clear her name.
Fighting Back: How to Protect Yourself Against Identity Theft
While the specter of identity theft can feel overwhelming, there are concrete steps you can take to insulate yourself from would-be impersonators:
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Guard your personal information: Be extremely judicious about giving out your Social Security number, birth date, or other sensitive details. Before providing info, always ask why it‘s needed and how it will be protected.
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Use strong, unique passwords: Craft passwords that are long, unpredictable, and different for every account. Consider using a password manager to generate and securely store complex passwords.
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Enable two-factor authentication: For an added layer of security, turn on 2FA whenever offered. This requires a second form of verification (like a code texted to your phone) beyond just your password to log in.
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Monitor your credit: Regularly review your credit report for any suspicious activity or accounts you don‘t recognize. You‘re entitled to one free report from each of the three major bureaus (Equifax, Experian, and TransUnion) annually.
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Freeze your credit: If you suspect you‘ve been a victim of identity theft (or just want extra protection), consider putting a freeze on your credit. This prevents anyone from opening new accounts in your name until you lift the freeze.
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Safeguard your kids‘ information: Be extremely cautious about sharing children‘s personal details online, and consider freezing their credit to prevent opportunistic fraudsters from exploiting their pristine records.
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Stay alert for phishing: Be wary of unsolicited emails or calls pressuring you to reveal personal info or click suspicious links. When in doubt, contact the supposed sender directly via a verified number or email.
By cultivating good security habits and staying vigilant, you can drastically reduce your risk of falling victim to identity impersonators and other fraudsters.
The Bottom Line
Identity theft is a harrowing crime that can impact every facet of your life, from your finances and credit to your medical care and even criminal record. And when fraudsters go beyond just stealing your data to actually impersonating you, the fallout can be especially devastating.
As our world grows ever-more digital, opportunities for identity theft are mushrooming – but so too are our defense mechanisms. By understanding how these schemes work, staying alert for red flags, and implementing common-sense security measures, you can keep the fraudsters at bay and protect the sanctity of your identity.
But even the most cautious among us can still fall prey to determined impersonators, as the above cases illustrate. If you do find yourself a victim, swift action is key to minimizing the damage. Report the fraud immediately, loop in the relevant agencies and law enforcement, and don‘t be afraid to lean on resources like the FTC‘s IdentityTheft.gov for guidance.
It may be a long road to recovery, but with perseverance and vigilance, you can reclaim your identity – and your peace of mind.
