What is Identity Theft?

Identity theft is a crime where someone wrongly gets and uses another individual’s personal data, usually for financial gain. Your name, social security number, credit card information, checking and banking data, employment records, credit reports, telephone calling card or phone number -- these are the most common types of information that are compromised in an identity theft incident. Once the thief gets this type of information, he can use it to buy, charge, and otherwise ‘steal’ things pretending to be another person.

The high cost of identity theft

Identity theft is the nation’s fastest-growing financial crime, and the damages to consumers are becoming ever more pernicious. It is affecting the lives of millions of people in the United States. Monetary losses in the billions. Worse yet, costs are eventually passed on to all consumers. The toll on victims is heavy, too.

According to the Privacy Rights Clearinghouse, a nonprofit advocacy group, it takes victims two years on average to clear their names. Some victims say that during that time, they haven’t been able to get a car loan or a mortgage; they couldn’t even use their cell phone. Moreover, all consumers end up paying for ID theft: The $4.2 billion that businesses will lose this year to the crime, a figure expected to mushroom to more than $8 billion by 2006, they recoup by charging you higher fees and prices.

The effects of being impersonated by someone else who then commits fraud in this way can have an impact on your credit rating and may prevent you from obtaining credit in the short term. There are even more far-reaching concerns, as a fraudster could go on to literally commit criminal acts in your name, and it can often take many months after the discovery of a fraud using your details before your name can be cleared.

Regularly checking your credit report is important to detect identity signs early.

In many cases, identity theft is so effective because it's so difficult to detect. Many victims don’t learn of the crime for a year or more, only after something goes terribly wrong, because thieves often shield their actions by using a different address when they open new accounts in the victim’s name.

Recently, identity theft increasingly occurs not because of the carelessness of the individual consumer, but because of the carelessness or vulnerability of the organizations they deal with. Identity theft is a problem largely because financial institutions, merchants, credit bureaus, and the government do not adequately safeguard vast databases and other records containing consumers’ sensitive information, making it relatively easy for thieves--often insiders--to access these data.

If someone steals your money, you don't have money anymore, and you know it. However, if they steal data, it's copied. It's still there, but it's not like it's missing.

Credit reports can be useful in revealing whether someone other than the consumer has run up an existing account or created a new one.