What is Identity Theft?

Last Update: May 23, 2020 Fraud Identity Theft

Identity theft is one of the biggest consumer theft crimes. It affects millions of Americans every year and costs them billions of dollars.

We at ElitePersonalFinance have done our research and published a plethora of content on the subject of identity theft, credit monitoring, and personal finance in general. We have decided to condense this treasure trove information into a single article and tell you exactly what you NEED to know.

Without further ado, let’s answer the most basic question…

What is Identity Theft, Definition?

Identity theft is the crime of obtaining the personal or financial information of another person for the sole purpose of assuming that person’s name or identity to make transactions or purchases.

Identity theft or identity fraud occurs when someone uses your identity to pose as you in order to make purchases, take out loans, see the doctor, or open a new credit card.

The most common form of identity theft is a result of a stolen credit card. The thief will take a stolen credit card and make purchases on it. Sometimes, they will use the credit card as proof of identification, as well.

What Kinds of Identity Theft are There?

There are many types of fraud, but some are more common than others. The most common types are:

  • Credit card fraud

This happens when someone takes your credit card or your CC number and CVV code and uses it to make purchases. This is the most common type of identity theft and is easily detected and prevented. Or when someone pretends to be you and tries to take out a loan, change your address, or create a new credit card in your name, they’re impersonating you and are committing identity theft.

  • Social Security fraud

This is when someone uses your SSN to collect benefits in your name. Social Security monitoring can help prevent this theft from going too far.

  • Mail fraud

Typically, someone will try to change your address using your identity, and then collect your mail looking for more personal information or pre-approved cards.

Here you can find a list of many more types of identity theft.

Who is at Risk?

Everyone is at risk, but some are more at risk than others. Students, who have new credit histories and are offered pre-approved cards all the time, are one of the most at-risk groups for fraud.

Elderly people, who often rely on others to do simple tasks for them such as going to the bank, paying their taxes, or picking up packages, are also at a very high risk.

How Can I Protect Myself from Identity Theft?

Unfortunately, there is no way to prevent identity theft in full!

Fortunately, there are many things that you can do to lower the risk of identity theft!

One of the most common things people do is they buy identity theft protection services. These companies can only help, but not prevent identity theft in full. These days there are many free identity theft protection companies!

Next – educate yourself! Here at ElitePersonalFinance we spend a lot of time to help people find the right information!

There are a few simple tips for protection that anyone can follow.

  • Be careful what you share on the Internet.
  • Use different passwords for everything, and only enter banking information on HTTPS shopping sites.
  • Keep sensitive documents locked away, and shred those you don’t need.
  • If your wallet gets stolen, cancel all your cards right away. And don’t keep your Social Security card in your wallet! Sometimes your SSN is all a thief needs to use your identity to get loans, jobs, and credit cards.

Here we have a list of 100 ways to prevent identity theft.

What to Do if My Identity has Been Stolen?

If you find out that you are the victim of fraud, here is a short list of steps to follow.

  • Don’t panic. Most identity theft is not life ruining, and your credit is not in as much danger as you might think.
  • Request a credit freeze. Call each of the three bureaus up (Experian, Equifax, and TransUnion) and request a freeze to be placed on your credit reports.
  • File a fraud report with the police. They may help you figure out what’s going on with your identity and may be able to figure out who is doing it.
  • Cancel any compromised credit cards.
  • Unfreeze your credit when the problem is resolved.

There may be more that you have to do depending on your case. Typically, though, you are dealing with a compromised credit card or someone trying to take out credit in your name.

Read Our guide on how to recover from identity theft.

What are Identity Protection Companies and what Do they Do?

Identity protection companies are companies that are aimed at resolving identity theft when it happens and alerting you to potential threats.

They are NOT a foolproof way to protect against identity theft, but they WILL keep you safer and more in-the-know about what is happening on your record.

Here are the most common features of these services:

  • Identity theft insurance. Most companies offer a sizable amount of insurance in case your identity is stolen.
  • Dedicated restoration support. Your typical identity fraud prevention company will have a team on staff to guide you through the process of restoring your good name.
  • Credit monitoring. They monitor changes in your credit history and alert you if anything seems out of character.

Read our Full list of features that identity theft companies offer.

Do I Need a Company Protection?

No, you do not NEED it if you are okay with spending the time and money to track your own credit, monitor your SSN, and resolve identity theft on your own over the phone.

It takes time to resolve a lot of issues on your own. It takes multiple phone calls, potentially legal fees, and weeks of waiting to get your new cards.

The purpose of purchasing protection suites from these companies is to give you a peace of mind that you would not have if you are doing all the work yourself.

A good protection company will cover out-of-pocket costs, assist you with credit freezes and cancelling your cards, and have a solid strategy in place to lower the possibility of fraud happening.

What are The Best Protection Companies?

There are a lot of companies out there that promise to safeguard your identity by whatever means necessary. They also promise to cover out-of-pocket costs related to fraud.

We made a list of the best identity theft protection companies here at ElitePersonalFinance to help you in the process of choosing a company to use.

We made this list by sorting by important criteria, such as the insurance you get, the features they have, and how much you would benefit from using it.



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