Identity theft affects millions of people a year, and it's a problem that has been growing each year thanks to the rise of online banking and commerce. In 2021, for example, there were 5.7 million consumer fraud reports filed in the United States, according to the Federal Trade Commission (FTC). More than 25% of those were defined as identity theft, which increased by 113% from the year before. Total fraud cases accounted for $5.8 billion in losses in 2021.
Anyone, young and old, can become a victim of identity theft, and there are many warning signs (opens in new tab). We've previously identified eight types of identity theft. Here are a few more things worth knowing about the criminal enterprise.
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What is identity theft?
Identity theft occurs when someone illegally obtains identifying information about someone and uses it to commit fraud. This information could include names, birthdays, Social Security numbers, addresses, bank accounts, credit card numbers, driver's license details, etc. Once armed with this information, criminals can open banking accounts and credit cards in a victim's name, steal retirement or medical benefits, and even purchase real estate illegally. These acts, and many others, can damage someone's credit status and cost them 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
As noted above, identity theft in the U.S. grew by 113% in 2021. Since the pandemic's start, which occurred in March 2020, cases have gone up considerably. There were over 1.4 million cases reported in 2021, slightly more than the number in 2020. Just two years earlier, the number stood at 650,000.
The states with the highest percentage of identity theft cases per 100,000 in 2021 might surprise you. Rhode Island, Kansas, Illinois, Louisiana, and Georgia were at the top of the list. At the bottom were Alaska, Iowa, Wyoming, Montana, and South Dakota. The four most populated states ranked No. 8 (New York), No. 10 (Florida), No. 11 (Texas), and No. 19 (California).
Though some might assume older Americans suffer the most from identity theft, that isn't the case. Those between 30 and 49 are most affected, accounting for nearly 41% of cases. Those over age 60 account for just 12% of cases.
The type of identity theft cases that saw the most significant increases year-over-year percentage-wise were bank and securities fraud. Credit Card fraud, surprisingly, 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 (opens in new tab), 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 (opens in new tab), 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 (opens in new tab) 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 (opens in new tab), 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 (opens in new tab) 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 (opens in new tab), 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 one of the most prominent forms of identity theft. Luckily, there's some good news on this front. The introduction of EMV chip card security (and removal of magnetic strips) has made credit cards more secure. EMV technology, which came to the U.S. very slowly, is designed to prevent fraudulent transactions.
In 2021, credit card fraud cases dropped by 1% for new accounts and 5% for new accounts. These aren't significant changes, but they represent steps in the right direction.
You might also be interested in reading about the biggest ID fraud cases.