What Is Identity Theft? Definition & Examples

TL;DR

Identity theft occurs when criminals steal personal data — such as Social Security numbers, login credentials, or financial details — to commit fraud. It takes many forms, from financial and tax fraud to medical and synthetic identity theft. Protecting yourself requires both physical precautions (shredding documents, securing mail) and digital habits (strong passwords, multi-factor authentication). If you become a victim, report it immediately to the Federal Trade Commission (FTC) and relevant authorities to limit long-term damage.

Identity theft is one of the top concerns for consumers. In 2020, the Federal Trade Commission (FTC) received more reports of identity theft than any other form of complaint, with these reports making up nearly a third of all complaints with close to 1.5 million reports about identity theft.

What is the definition of identity theft?

Identity theft is a crime where someone steals the personal data of another person and then uses it to commit fraud, typically for financial gain. The following information can be stolen during identity theft:

• Name
• Address
• Phone number
• Social security number
• Login information (username/password)
• Bank statements and/or account numbers and information
• Credit card numbers
• Biometric data

What is the difference between identity theft and identity fraud?

Identity theft can involve a thief literally sifting through discarded documents or trash to obtain personal identity information or stealing off a person directly. It can also involve cybercrime where bad actors steal information or data through scams, malware, hacks, or security breaches. 

Identity theft is usually performed in order to commit identity fraud, which is the use of another individual's personal information without permission. Identity fraud is when one person claims to be someone else. 

Identity fraud is committed to steal information, get access to restricted resources, or for financial gain. 

Financial losses from identity theft continue to rise. In 2021, they were projected to be close to $725 billion in the United States alone.

Types of identity theft & identity fraud

There are a number of ways that identity theft can occur. Different forms of identity fraud, which can include the following:

• Financial identity theft and fraud: This type of identity theft involves stealing bank account information, credit card numbers, or personal information to use in financial fraud to obtain goods, services, benefits, credit, or money directly. Financial identity theft is the use of stolen identity for the purpose of financial gain, and it is the most common form of identity theft.  
• Child identity theft: Children are increasingly becoming the victims of identity theft. This occurs when a child's personal information, such as name, date of birth, and/or social security number, is stolen and used for fraud. Fraudsters may open accounts with this information or apply for services, loans, or government benefits. Child identity theft is often not discovered until years later when the child attempts to use their own information for credit applications or services.
• Tax identity theft and fraud: This type of identity theft involves stealing personal information like a social security number and using it to then file a federal or state tax return for the purpose of obtaining a bogus tax refund.  
• Social security identity theft and fraud: When someone steals a social security number, it can be used to commit fraud by applying for loans, credit cards, medical benefits, disability, and government benefits. This type of identity theft and fraud can dramatically impact the legitimate person's credit score and make it more difficult for them to obtain necessary benefits they are entitled to.  
• Medical identity theft and fraud: Medical identity theft often involves stealing of a person's medical ID or insurance information, and posing as them to get medical care or send bogus bills to a medical insurance company for payouts.  
• Criminal identity theft and fraud: When someone is arrested, they can commit criminal identity theft by posing as another individual to avoid arrest, avoid a summons, or prevent discovery of a warrant in their name. This type of identity theft can also go unnoticed until consequences come up on unpaid tickets or missed court dates.  
• Senior identity theft: Senior citizens are often more vulnerable to identity theft due to being more trusting and less likely to monitor financial and credit information as closely. Senior identity theft can involve the stealing of personal information for a variety of fraudulent purposes, including tax fraud, medical fraud, and social security fraud.  
• Employment or unemployment identity theft and fraud: With employment identity theft, a person steals another person's identity to pose as them to obtain a job or pass a background check. With unemployment identity theft, fraudsters use someone else's personal information to file bogus unemployment claims.  
• Estate identity theft: This type of identity theft involves stealing personal information from a deceased individual or estate to commit fraud, like opening accounts or setting up services.  
• Synthetic identity theft: Synthetic identity theft typically involves a combination of both stolen (real) personal information and made-up (fake) information to create a fraudulent identity that is then used to make fraudulent purchases or open bogus accounts.

What are some examples of identity theft?

Identity theft can occur in the following ways:

• Shoulder "surfing" or watching over someone's shoulder to steal personal information or credentials
• Physically stealing a wallet or purse to obtain personal identity information
• Dumpster diving to retrieve documents that contain sensitive information
• Stealing mail to obtain credit cards, checks, or documents with personal information
• Stealing files or information from a medical office or business
• Credit card or Automated Teller Machine (ATM) card skimmers that steal credit card information physically
• Phishing scams often sent through email as bogus attachments or links prompting an individual to log in to a fake website to steal login credentials, gain access to a personal account, and steal sensitive identity information
• Hacking or breaking into computers, systems, or services to steal personal information
• Data breaches when business or government accounts are illegally accessed
• Malware attacks tricking users into uploading malicious software that can "take over" a computer or network and steal data

Identity theft protection best practices

There are several physical and technical methods for protecting your identity, both in the physical world and in the digital one. These are tips for physically protecting oneself from identity theft:

How can you physically protect yourself from identity theft?

• Protect your social security number. Keep your social security card in a secure location and do not carry it on your person.
• Do not share personal identity information with an untrusted source.
• Shred documents containing sensitive information, even unopened invitations for credit cards.
• Collect your mail daily and keep it secure.
• Watch your financial statements and bills for any discrepancies.
• Be aware of billing cycles. If statements are late or do not arrive, contact the company immediately.
• Review your credit reports once per year.
• Store your personal information in a safe and secure place.

How can you protect your digital identity from theft?

• Protect your passwords and login information. Do not store it in an easily accessible place or share it with others.
• Create a strong password, change it often, and do not use the same password across multiple accounts.
• Beware of suspicious emails, links, attachments, and social media messages, and be sure to log in to secure websites directly.
• Use security features on your phone, laptop, and electronic devices.
• Turn on two-factor authentication when possible.
• Use security features, including firewalls and virtual private networks (VPNs), when on a public wireless network.
• Ensure security features are updated, and personal and business networks and devices are secure.
• Use multi-factor authentication (MFA), which can include the use of biometrics as well as strong passwords, verification codes, and physical tokens.
• Practice good cyber hygiene.

What should you do if you're already a victim of identity theft?

If you believe that you are the victim of identity theft, it is important to act promptly. Report identity theft to the proper authorities right away. 

If you are the victim of tax fraud, contact the Internal Revenue Service (IRS), while if you are the victim of unemployment fraud, contact your state's labor department. For medical identity theft and fraud, contact your medical provider, Medicare's fraud office if you have Medicare, and/or your insurance company.

You should also report identity theft to the FTC. Identity theft can be prevented a lot of the time. When fraud does occur, quick action can prevent long-term damage and greater financial losses.

Frequently asked questions

What is the difference between identity theft and identity fraud?

Identity theft is the act of stealing someone's personal data, while identity fraud is the use of that stolen information to impersonate someone else for financial gain or to access restricted resources.

What types of personal information are targeted in identity theft?

Criminals commonly target name, address, phone number, Social Security number, login credentials, bank account details, credit card numbers, and biometric data.

What are the most common forms of identity theft?

Financial identity theft is the most common form, but tax, medical, child, and synthetic identity theft are also prevalent.

How can I protect myself from identity theft online?

Use strong, unique passwords, enable multi-factor authentication (MFA), avoid suspicious links and phishing emails, and keep security software updated.

What should I do if I think I'm a victim of identity theft?

Act promptly, report to the Federal Trade Commission (FTC) at IdentityTheft.gov, and contact the relevant authority depending on the type of fraud (IRS for tax fraud, state labor department for unemployment fraud, Medicare's fraud office for medical fraud).

Why are children and seniors especially vulnerable to identity theft?

Children's stolen identities may go undetected for years until they apply for credit, while seniors are more trusting and less likely to monitor their financial and credit information closely.

References

• Consumer Sentinel Network Data Book 2020. (February 2021). Federal Trade Commission (FTC).
• Facts + Statistics: Identity Theft and Cybercrime. (2022). Insurance Information Institute, Inc. 
• Types of Identity Theft. (2022). Equifax, Inc.
• How to Protect Your Child From Identity Theft. (April 2021). Federal Trade Commission (FTC).
• Taxpayer Guide to Identity Theft. (October 2021). Internal Revenue Service (IRS).
• Report Unemployment Insurance Fraud. U.S. Department of Labor (DOL).
• Submit a Hotline Complaint. U.S. Department of Health and Human Services (HHS).
• Report Identity Theft and Get a Recovery Plan. IdentityTheft.gov.