How to Protect Yourself from Identity Theft?

As identity theft cases continue to rise, protecting your personal and financial information is more important than ever. In 2024, the Federal Trade Commission (FTC) received over 1 million identity theft reports, with related fraud losses totaling $10.2 billion. Additionally, the Identity Theft Resource Center reported a 211% increase in data breach notices issued in 2024 compared to the previous year, primarily due to five "mega-breaches" affecting over 100 million individuals each. These figures highlight the importance of safeguarding personal and financial information against identity theft.

What is Identity Theft?

Identity theft happens when someone steals and uses your personal or financial information without permission​. This could include your name, Social Security number, credit card number, bank account details, or other identifying data.

An identity thief might open credit accounts, take out loans, make purchases, or even commit crimes, posing as you​.

It could leave you with drained savings, ruined credit, and months or years of cleanup to reclaim your identity and financial health.

Identity theft impacts both creditors and debtors. Individuals may receive collection calls for debts they never took on, while creditors risk lending to fraudsters and facing financial losses.

In this blog, we will cover identity theft, its types, warning signs, impacts, and prevention. Understanding all about identity theft can help you protect your personal data and strengthen security. 

Common Types of Identity Theft

Identity theft isn’t a single, uniform crime; there are multiple ways a thief might misuse someone’s identity. Here are some of the most common types of identity theft:

1. Financial Identity Theft

This is the most prevalent form, where someone uses your personal details for financial gain. In 2024, 12% of U.S. identity theft victims lost over $10,000, 31% lost less than $500, and 18% lost between $1,000 and $4,999. Victims often discover this theft through unfamiliar charges or denied credit applications.

2. Medical Identity Theft

This occurs when someone uses your identity to obtain medical services or goods. In Q2 2024, nearly 200 individuals in the U.S. were charged in a nationwide crackdown on healthcare fraud, with false claims exceeding $2.7 billion.

Such theft can lead to financial burdens and incorrect medical records, potentially causing harmful misinformation about your health.

3. Child Identity Theft

Javelin Strategy & Research's 2024 study found that children from affluent households face higher cybercrime risks due to extensive social media use and multi-device access. Among child identity theft victims in the past six years, 96% were active on social media when their identities were compromised, often resulting in financial losses. Since children typically don't have credit histories, this fraud can go unnoticed for years, often discovered only when they apply for credit as adults.

Other forms include tax identity theft, where someone files a fraudulent tax return to claim your refund, and criminal identity theft, where someone provides your details during a legal incident. Understanding the ways these thefts occur is crucial for prevention and protection.

Ways Identity Theft Occurs

How do criminals actually steal your identity? Identity theft can happen through high-tech cyber schemes or low-tech tactics. Here are some common ways identity thieves gather personal information:

• Physical theft of documents: Thieves may grab your wallet, purse, or mail to get personal details like your ID, credit cards, or account numbers. Some even dig through trash ("dumpster diving") to find bills and bank statements.
• Skimming devices: Criminals install skimmers on ATMs, gas pumps, or store payment terminals to copy your card’s details when you use it. They can then use or sell your credit/debit card info and PIN.
• Data breaches and hacking: Hackers steal data from companies and banks, exposing Social Security numbers, logins, and personal info. They also use malware or public Wi-Fi to hack phones and computers.
• Phishing and social engineering: Scammers send fake emails or texts pretending to be from your bank, the IRS, or a trusted company. They trick you into clicking links or sharing personal info, which they then steal. Some even call, pretending to be officials, pressuring you to act fast.
• Social media and public info: Thieves scan social media for details like your birthday, hometown, or answers to security questions. Online quizzes and surveys may also trick you into giving away personal info.

Identity theft can go unnoticed for a while, and many victims don’t realize it until damage has already been done. That’s why it’s important to watch for warning signs that someone may be using your identity.

Warning Signs of Identity Theft

One challenge with identity theft is that it’s not always immediately obvious that it’s happening. In many cases, victims only realize something is wrong after significant damage is done. Here are some warning signs that someone may have stolen your identity:

• Unfamiliar Charges or Bills: You see charges you don’t recognize on your bank or credit card statements, or you get bills for things you never bought. Even small “test” charges can be a red flag.
• Debt Collection Calls: A debt collector contacts you about accounts you never opened. This likely means someone is using your identity.
• New Accounts on Your Credit Report: You find credit cards, loans, or accounts in your name that you never applied for.
• Credit Denials: You’re denied a loan or credit card unexpectedly because your credit score dropped due to fraud.
• Missing Mail or Emails: Bank statements, bills, or new credit cards stop arriving. Someone may have changed your address or tampered with your online accounts.
• Medical or Government Notices: You get medical bills for treatments you never had or find out someone has used your Social Security benefits or filed taxes in your name.

Any one of these signs should put you on alert. Often, there’s more than one indicator when a thief is active. The sooner you recognize the warning signs, the faster you can take action to limit the damage.

Impacts of Identity Theft

Identity theft can wreak havoc on a person’s finances, credit, and sense of security. The impacts can be far-reaching and sometimes long-lasting:

• Financial losses and costs: Thieves may empty your bank account or run up charges on your credit cards. While banks often refund fraud, some losses might not be covered. You may also spend money on legal fees, notarizing documents, or mailing paperwork, costs that can add up to around $200 per case. 
• Credit score damage: Fraudsters can open accounts in your name or max out your credit cards, leaving unpaid debts. Missed payments and high balances lower your credit score, making it harder to get loans, mortgages, or even phone plans. Fixing credit damage can take months or years.
• Emotional distress and time spent: Identity theft is emotionally draining. Victims often feel violated and anxious. Resolving fraud takes time—on average, about 10 hours of phone calls and paperwork. Complex cases can take weeks, affecting work, personal life, and even health. Some victims struggle with sleep and ongoing worry.
• Legal consequences and complications: If a thief uses your identity when arrested, you could end up with a criminal record or warrants in your name. Clearing your name requires dealing with the police and courts. The IRS may also come after you if a thief earns income under your identity and doesn’t pay taxes.

How to Protect Yourself from Identity Theft

The good news is that there are many steps you can take to reduce the risk of becoming an identity theft victim. By being proactive and vigilant, you can protect your personal data and financial accounts. Here are some effective ways to safeguard your identity:

1. Secure Your Personal Documents

Store important documents like Social Security cards, birth certificates, and passports in a locked drawer or safe. Don’t carry them unless necessary. Shred old bank statements, bills, and credit card offers before discarding them. Collect your mail daily or use a locked mailbox. If you’re traveling, have the post office hold your mail to prevent theft.

2. Be Careful with Personal Information

Never share sensitive information (Social Security number, bank details, etc.) unless you initiate the contact and trust the recipient. Banks, the IRS, and government agencies won’t call or email unexpectedly asking for personal data—this is a common scam. When in doubt, contact the organization directly using a verified phone number or website.

3.  Strengthen Your Online Security

• Use strong, unique passwords for each account (at least 12 characters with letters, numbers, and symbols). A password manager can help store and generate passwords.
• Enable two-factor authentication (2FA) on financial and email accounts for extra security.
• Avoid clicking on suspicious links or downloading attachments from unknown senders.
• Don’t do sensitive transactions (like banking) on public Wi-Fi. If necessary, use a VPN to encrypt your connection.
• Keep your devices updated with the latest security patches and antivirus software.
  
  

4. Monitor Your Financial Accounts and Credit Reports

Check your bank and credit card statements regularly to spot unauthorized charges. Many banks offer free transaction alerts via text or email, enabling them to have extra protection.

Review your credit reports for unfamiliar accounts or inquiries. You’re entitled to a free credit report from each of the three major bureaus every 12 months at annualcreditreport.com. If you see anything suspicious, investigate it immediately.

5.  Freeze Your Credit

A credit freeze prevents new accounts from being opened in your name. It’s free to freeze (and unfreeze) your credit with the three major bureaus and doesn’t affect your credit score. With a freeze in place, lenders can’t access your credit report, blocking fraudsters from opening accounts even if they have your personal details. Consider freezing your credit, especially if you don’t plan on applying for new credit soon or if your data has been exposed to a breach.

6. Consider Identity Theft Monitoring

Credit monitoring and identity theft protection services can alert you to suspicious activity in real time. These services watch your credit files, financial accounts, and even the dark web for potential threats. They also assist in recovery if fraud occurs. While optional, they can provide extra peace of mind, especially for those managing multiple accounts or at higher risk of fraud.

What to Do if Identity Theft Happens

Even with precautions, identity theft can still occur. Data breaches and clever scammers sometimes slip through the cracks. If you suspect or confirm that you’ve become a victim of identity theft, acting quickly is crucial to minimize damage. Here are the immediate steps to take if your identity is stolen:

1. Report It to the FTC

Visit IdentityTheft.gov to file a report with the Federal Trade Commission (FTC). This creates an official Identity Theft Report, which helps prove you’re a victim when dealing with creditors or credit bureaus. You can also call the FTC at 1-877-382-4357, but the website is usually faster.

2.  Notify the Credit Bureaus

Contact at least one of the three major credit bureaus (Equifax, Experian, or TransUnion) and request a fraud alert on your credit file. This lasts one year (or seven years with a police report) and warns lenders to verify your identity before issuing credit. You only need to contact one bureau—they’ll inform the other two.

Consider a credit freeze for stronger protection. A freeze blocks new credit inquiries until you lift it and prevents identity thieves from opening accounts in your name.

Suggested Read: Identifying Scams in Debt Relief and Debt Management Services

3.  Contact Banks and Affected Companies

Immediately notify your bank, credit card issuers, and any companies where fraud occurred. If someone opened an account in your name, contact that company to report it wasn’t you. Most institutions will close fraudulent accounts and issue new cards or account numbers.

Also, review all your existing accounts; if one is compromised, others could be at risk. Consider getting new card numbers as a precaution.

4. File a Police Report

Go to your local police department and file an identity theft report. Bring your FTC report and any fraud evidence (e.g., collection notices credit report entries). Get a copy of the police report, as it may help dispute fraudulent charges or clear your record, especially in cases of criminal identity theft.

5. Dispute Fraudulent Charges and Accounts

Work to remove fraudulent accounts from your credit report. Contact each of the three credit bureaus to dispute incorrect information and submit your FTC and police reports as proof. By law, credit bureaus must remove fraudulent data after receiving evidence.

Also, notify businesses where the thief opened accounts or made unauthorized charges. Ask them to close fraudulent accounts and absolve you of any debt related to identity theft. Keep records of all correspondence in case you need further proof.

6. Reset Passwords and Stay Vigilant

• Change passwords for your email, bank accounts, and other sensitive accounts, especially if the thief accessed them.
• Use strong, unique passwords and enable two-factor authentication (2FA) for extra security.
• Keep monitoring your bank statements and credit reports for suspicious activity. You can get free weekly credit reports at AnnualCreditReport.com through at least 2024.
• Consider credit monitoring services, especially if you were part of a data breach. Many offer free trials for victims.

Taking these steps helps stop further fraud and restore your identity. Keep notes on your actions, including phone calls, names of representatives, and emails, as a paper trail makes it easier to resolve issues.

Remember, if you feel overwhelmed, you don’t have to go through it alone. You can seek assistance from professionals or victim advocacy organizations. For instance, the team at Shepherd Outsourcing Services can guide you through resolving fraudulent debts and repairing your credit history. With expert help, you can navigate the recovery steps more smoothly and get advice tailored to your situation.

Summing Up

Identity theft is a growing risk, but staying informed helps you prevent it. By recognizing the warning signs and using smart security habits like shredding documents and using strong passwords, you can reduce your risk. If fraud occurs, acting fast can limit the damage.

At Shepherd Outsourcing Services, we help individuals and businesses protect their finances with identity theft prevention, credit monitoring, and fraud recovery support. Do not wait until it is too late. Contact us today for expert guidance and proactive protection.

FAQs

1. Can identity theft ruin my chance to buy a home or rent?

A: Yes. Fraud can damage your credit, making loans or rental approvals harder. Check your credit before applying.

2. Can someone steal my identity with just my name and birthday?

A: Not alone, but combined with other details, it’s risky. Avoid oversharing personal info online.

3. What if someone files taxes in my name first?

A: File an IRS Identity Theft Affidavit (Form 14039) and call the IRS at 1-800-908-4490. Get an IRS IP PIN for protection.

4. What if my driver’s license is stolen?

A: Report it to the DMV, monitor your credit, and check your driving record for fraud.

5. Can an identity thief use my info if I have no credit history?

A: Yes. They can open fraudulent accounts in your name. A credit freeze prevents this.

6. What if a family member stole my identity?

A: Check your credit report, secure your accounts, and consider filing a police report if needed.

7. Am I more likely to be targeted again after identity theft?

A: Yes. Once your data is stolen, it can be resold. Freeze your credit and use monitoring services.