Identity theft has become a major issue nowadays, especially due to the increasing use of online banking and e-commerce. In 2021, the Federal Trade Commission (FTC) received 5.7 million reports of consumer fraud in the United States. Out of these, more than 25% were related to identity theft, which had increased by 113% compared to the previous year. The total losses incurred by all types of fraud cases in 2021 were $5.8 billion.
Anyone, young and old, can become a victim of identity theft, and there are many warning signs. Luckily, we have a guide to the best identity theft protection to help keep your identity safe. In the meantime, here are a few more things worth knowing about the criminal enterprise.
What is identity theft?
Identity theft occurs when someone unlawfully obtains personal information about an individual and employs it to commit fraudulent activities. This personal information can consist of names, dates of birth, Social Security numbers, residential addresses, bank account details, credit card numbers, driver's license information, and so on. Once the perpetrator acquires this information, they can exploit it to open bank accounts and credit cards in the victim's name, steal their retirement or medical benefits, and even buy real estate illegally. These unlawful acts can severely damage the victim's credit status and require them to spend time and money to restore their good name.
What you might not know about identity theft
There are various details about identity theft that might surprise you including the ones below.
It's a growing problem affecting everyone
Identity theft in the United States has increased by 113% in 2021 compared to the previous year. Since the start of the pandemic in March 2020, cases have risen significantly. There were over 1.4 million reported cases in 2021, slightly more than the number in 2020. In contrast, the figure stood at 650,000 just two years before.
Rhode Island, Kansas, Illinois, Louisiana, and Georgia had the highest percentage of identity theft cases per 100,000 people in 2021. On the other hand, Alaska, Iowa, Wyoming, Montana, and South Dakota had the lowest. The most populated states of New York, Florida, Texas, and California ranked eighth, tenth, eleventh, and nineteenth, respectively.
Contrary to common belief, older Americans are not the most affected by identity theft. Those between the ages of 30 and 49 accounted for nearly 41% of cases. Meanwhile, those over the age of 60 accounted for just 12% of cases.
Bank and securities fraud saw the most significant increases in identity theft cases year-over-year percentage-wise. On the other hand, surprisingly, credit card fraud cases fell in 2021.
Data breaches are one of the reasons it happens
Data breaches, which hackers use to steal identities, are growing in numbers and effectiveness because they are better funded and organized. There are many types of data breaches, and almost all of them involve manipulating software through malware attacks. These breaches tend to find success because end-users aren't using protection software, don't have appropriate passwords, or are unknowingly giving over personal information to the wrong person. Physically breaking into stolen devices and insider company leaks are other ways hackers have found success.
In the past year, many of the most significant data breaches involved hackers breaking into corporate or governmental servers and stealing customer data.
For example, in early 2021, an unknown number of T-Mobile customers fell victim to a SIM swapping attack, allowing thieves to gain access to bank accounts and other sensitive information. Months later, 533 million Facebook users had personal information stolen and subsequently made available on a free hacking forum. Identifying information included full names, phone numbers, email information, etc.
And the list goes on. Microsoft, GEICO, the California Department of Motor Vehicles, and more suffered from data breaches.
Other scammer tricks
Beyond data breaches, there are other ways scammers attempt to steal personal information online. You can better protect yourself by understanding the buzzwords, including phishing, smishing, and vishing.
With phishing, scammers use deceptive emails, claiming to be company or organization you will trust such as a bank or online retailer. They want you to click on a link within the email to visit a bogus website and turn over personal information. You should avoid clicking on a link or opening an attachment and check the sent from email address. Legitimate companies will use recognizable extensions like @macys.com, @bankname.com.
Your personal information might be for sale
Those who perform data breaches aren't usually the ones who use the collected information. Instead, most of this information is sold in bulk on the black market, which is usually accessible on the dark web.
According to a 2020 Emsisoft report, there's huge money in this, especially when you consider most data breaches affect millions of users.
To going rate for personal information includes:
- Name, social security number and date of birth: $0.10-$1.50
- Medical notes and prescriptions: $15-$20
- ID/passport scans or templates: $1-$35
- Mobile phone online account: $15-$25
- Full ID packages (name, address, phone, SSN, email, bank account): $30-$100.
Recovery takes time
The short answer to how long it takes to recover from identity theft is that it depends.
As Allstate explains, there are three key factors that impact how long recover could take. These include how long the theft went undetected, how your personal data was used, and whether you're restoring your identity yourself.
The FTC, through its IdentityTheft.gov website, recommends beginning the process as soon as you detect a problem. This means calling the companies where the fraud might have occurred placing a fraud report and getting your credit reports. Perhaps most importantly, report the identity theft to the FTC.
Understand the stress
Identity theft can cause much more than financial stress. According to Equifax, self-blame, the feeling of being vulnerable, isolation, and family strife are common for anyone dealing with the fallout.
Most experts recommend trying not to panic and understanding you're not alone. Better still, there are organizations like the National Identity Theft Victims Assistance Group that can provide valuable insight and support.
The pandemic accelerated the problem
As noted above, the continuing pandemic has exasperated the identity theft crisis.
Also, according to Equifax, the early federal stimulus payments in the U.S., for example, became an easy target for scam artists. This included stolen payments and criminals acting as government agencies to steal identifying information. Everyone ordering more online for home delivery also didn't help as it gave scammers more reason to attempt data breaches.
Good news: credit cards are getting smarter (EMV)
Credit card fraud is a prevalent form of identity theft. However, there is some good news to report. The introduction of EMV chip card security, which replaces magnetic strips, has made credit cards more secure. EMV technology, which was slowly introduced in the U.S., was designed to prevent fraudulent transactions. In 2021, there was a decrease of 1% in credit card fraud cases for new accounts and 5% for existing accounts. Although these changes are not significant, they are steps in the right direction.
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