In this article:
Identity theft and fraud protection for your finances, personal info, and devices.
If You Haven’t Been the Victim of Identity Theft, It May Only Be a Matter Of Time
Nearly 50% of Americans were victims of financial identity theft in the last two years [*] with losses in the billions. But like most people, you probably think identity theft could never happen to you — until it does.
So, what can happen if your identity is stolen? Is it really that serious? And how hard is it to recover?
In this guide, we’ll explain what can happen if your identity is stolen, from the minor inconvenience of replacing your wallet to the life-shattering impact of criminal identity theft.
Is Identity Theft Really That Big of a Problem?
Identity theft happens when someone fraudulently uses someone else’s personally identifiable information (PII) for their own gain.
For example, if a scammer discovers your name and Social Security number (SSN), they can apply for a credit card or take out a loan in your name. Or, if someone finds the password to your social media accounts after a data breach, they can publish whatever they want — pretending to be you.
But how often do these sorts of scams happen? And are you actually at risk?
The honest answer is: yes.
Today, there are more ways for criminals to access your personal information than ever before. Millions of websites store our personal data, and every year billions of these records are hacked and leaked to the Dark Web.
Watch: How data breaches happen, and what to do if your personal data has been leaked ↓
The Federal Trade Commission (FTC) received 1.4 million reports of identity theft in 2021, making it the worst year ever for identity theft [*].
While anyone can be a victim, identity thieves often target the most vulnerable. Children, the elderly, military personnel, and anyone looking for companionship or a chance to help are all frequent victims of identity theft.
Even worse, nearly all identity theft crimes go unpunished.
In 2020, New York state residents reported more than 67,000 identity theft cases [*]. But there were only 543 arrests and 201 convictions — representing fewer than 1% of the crimes. It’s hard to catch fraudsters because of internet anonymity and because many operate overseas, outside U.S. jurisdiction.
So if the perpetrators are so far away, how can they do so much damage?
How Does Identity Theft Happen?
Every criminal or gang has its own way of stealing your personal data. But there are a few common ways that identity theft can happen:
- Data breaches. Your private data is stored on servers worldwide, but hackers can infiltrate and steal the data to use themselves or to sell. For example, a valid U.S. SSN can cost as little as $5 on the Dark Web [*].
- Mail theft and dumpster diving. Any document with personal information is valuable to identity thieves. Unattended mailboxes and trash cans are perfect opportunities to steal your info.
- Phishing. Fake emails or phone calls from official sources — like your bank, employer, or the Social Security Administration — can trick you into giving away data.
- Hacking your Wi-Fi. Public networks, like those at coffee shops and airports, are notoriously dangerous. And even a friend of a friend with your home Wi-Fi password can steal everything on your network.
- Malware and other viruses. Scammers hide malware in legitimate software or trick you into downloading them with phishing emails. Once installed, these viruses can steal sensitive information or even spy on every word you type (including passwords).
- Social engineering.Fraudsters use human psychology to earn your trust, create a sense of urgency, and get you to act without thinking.
- Lost documents. If you’ve lost a wallet or purse, you probably think of the cash and credit cards you’ve lost. But your driver’s license and other documents can open the door for even more damaging fraud.
- Reused passwords. How many of your accounts use the same email address and password? If a thief gets their hands on just one of those accounts, all the rest are vulnerable.
Chances are, you’re vulnerable to more than one method of identity theft. And the results can be disastrous.
10 Ways the Problem of Identity Theft Can Ruin Your Life
The consequences of ID theft depend on the criminal’s intentions and how much of your information they can find. Here are some of the common consequences you could face if your identity is stolen.
1. You could lose your life savings
You’re in line at the grocery store when your debit card gets denied. Frantic and confused, you open your banking app and freeze. The account has been drained to zero.
If an identity thief gains access to your financial information — such as your account numbers or login information — they can empty your life savings and rack up debt in your name.
Scammers have a multitude of ways they can get your financial information. They might send you a phishing email pretending to be from your bank and ask you to “verify” your account information. But in many cases, your information is already available to them.
Millions of stolen financial account details are available on the Dark Web. In 2021 and 2022 alone, hackers stole data from financial giants like Robinhood, Cash App, Crypto.com, and more.
Cryptocurrency is even worse. If you act quickly, you may be able to recover some or all money stolen from a financial institution. But crypto assets don’t have fraud-detection systems or government-mandated consumer protections.
Crypto-related fraud cost victims $1.6 billion in 2021, according to the FBI [*].
What you can do: Study every bank account statement for suspicious activity, like charges from sellers you don’t recognize. If you have crypto assets, store them offline instead of in a public exchange.
Pro tip: Sign up for a credit monitoring service. Identity Guard uses Artificial Intelligence to constantly monitor your credit file, bank and investment accounts, and more for signs of fraud. See how it works →
2. You may left with a mounting debt and low credit scores
Credit card fraud was the most commonly reported type of identity theft in 2021, according to the FTC [*]. Thieves steal or buy your credit card information and max out your cards, leaving you with endless calls from debt collectors.
In another version of credit fraud, criminals apply for new credit using your name and SSN. They open as many new accounts as possible and spend each one to the limit, racking up tens or even hundreds of thousands of dollars of debt and ruining your credit score.
What you can do: Review your financial accounts regularly for suspicious activity, and review your credit report often for new inquiries or lines of credit. You can request a free yearly report from each bureau at AnnualCreditReport.com.
📚 Related: How To Repair Your Credit After Identity Theft →
3. Your online reputation could be destroyed
Social media account takeover attacks — when scammers hack into your accounts and lock you out — are skyrocketing. Account takeovers increased 90% between 2020 and 2021 [*]. Fraudsters can infiltrate your account by buying login information on the Dark Web or tricking you into giving them access.
One of the more common scams is to ask for “help” receiving a two-factor authentication code. The scammer will ask you to send you “their” code. But in reality, you’re giving them access to your own account.
Once a fraudster controls your account, they can collect your personal data, access other apps using “sign in with,” and scam your friends by posing as you.
What you can do: Protect your social media accounts with strong, unique passwords and two-factor authentication. Don’t give out your password to anyone, and ignore incoming messages asking you to change account settings or send verification codes. This same advice goes for all of your accounts.
Pro tip: Use a password manager to securely store all of your passwords (so you don’t have to worry about remembering them). A password manager will also alert you if an account has been potentially compromised or if you’re reusing weak passwords that hackers could guess.
4. You could be given erroneous medical advice
Stolen medical records can sell for 200 times more than a credit card number on the Dark Web [*].
Medical identity theft is lucrative because thieves can attack your finances, history, and sensitive information all at once.
Thieves can request treatments and procedures under your health insurance. But this incorrect history can be connected with your records, leading to inaccurate and dangerous diagnoses, prescriptions, and medical services.
In 2021, nearly 50 million people had sensitive health data breached [*]. Local health care systems often have inadequate security that leaves their data vulnerable. For example, an April 2022 hack of Adaptive Health Integrations in North Dakota exposed the data of over half a million people [*].
What you can do: Retrieve medical-related mail quickly and always shred it before throwing it away. Don’t share health insurance or medical care information with anyone who asks on an unsolicited call, email, or text message.
5. There could be a warrant out for your arrest
Law enforcement arrests someone, but they present your identification instead of their own. They can skip town, leaving you to face the consequences. Years later, you might be taken into custody after a routine traffic stop or find out there are active warrants for your arrest.
Martin Cervantes, an innocent man from Kansas City, discovered a man charged with disorderly conduct had provided his name upon arrest. Cervantes only found out when he received a letter asking him to attend a court hearing [*]. The charge still appears on Cervantes’ background check.
What you can do: The only way to discover criminal identity theft is by reviewing the names associated with recent arrest records. However, the best identity theft protection services can monitor court records and alert you if your name appears on any criminal or sex offender lists.
📚 Related: Is Identity Theft Protection Really Worth It? →
6. Your personal information could surface on the Dark Web forever
Passwords are easy to change. But once someone knows your name, Social Security number, birth date, or has biometric data like your fingerprints, your information is compromised forever.
The first quarter of 2022 marks the third consecutive year in which data breaches have increased [*]. And these include unchangeable data — 65% of U.S. breaches in 2021 included Social Security numbers [*]. For example, the 2021 T-Mobile breach exposed the names, dates of birth, and Social Security numbers of 40 million people [*].
That data never goes away, leaving you a potential victim of identity theft forever.
What you can do: Keep your information private, and avoid giving out your Social Security number. For example, just skip the field that asks for it on forms at the doctor's office or school. It’s a good idea to use a Dark Web scanner to see what information of yours is at risk.
📚 Related: How To Remove Your Personal Information From the Internet →
7. You could be audited by the IRS or lose your tax refund
Few letters are scarier than those from the IRS. But that’s what you’ll receive if a criminal submits a tax return in your name — your authentic return will be rejected as fraud.
You can also have a run-in with the IRS if a thief uses your Social Security number to get a job. When the employer submits income data to the IRS, you can face an audit for “omitting” wages you never knew about.
You can solve both problems, but the process is frustrating and time consuming. And you won’t see your refund until it’s finished.
Relevant government agencies say you may receive your refund up to nine weeks after submitting a claim and verifying your identity. Still, a 2021 government investigation reported that “even these timeframes can be unrealistic.” [*]
What you can do: File your tax return as early as possible to give thieves less time. Create an Identity Protection PIN, which works like two-factor authentication for your taxes.
📚 Related: Tax Identity Theft: How It Happens & How To Prevent It →
8. You may fail background checks
Bay Area Marine vet Johnny Wilson saw employers unexpectedly rescind a promising job offer after they found it impossible to run a background check [*]. Identity thieves had stolen his identifying documents and left his identity in chaos.
One of the fastest-growing types of identity theft combines the data from several people into one fake persona. Even if someone hasn’t stolen all your personal data, you may have a ruined background due to this so-called synthetic identity theft.
What you can do: Look for any suspicious activity on your credit score. Pay attention to strange or unexpected letters — even junk offers — especially those addressed to someone else. Sign up for credit monitoring to spot any warning signs early on.
9. Your children may be impacted, too
Your child has been accepted to their top college, and the only step left is the student loan application. But they’re denied — they already have tens of thousands of dollars in unpaid debt.
Child identity theft is more common than you’d think. Last year alone, more than 1.25 million American children had their identities stolen [*]. Even worse, the perpetrators are often unscrupulous family members.
Fraudsters leverage kids’ empty credit histories using the loophole that birth dates are rarely verified. When your child turns 18, you may be shocked to find someone else has been accumulating credit in their name for years.
What you can do: Freeze your child’s credit, which denies all inquiries. Since minors can’t apply for credit anyway, it won’t affect your child until they turn 18, at which point they can unfreeze it.
📚 Related: Do You Really Need Identity Theft Protection? →
10. Your house could be at risk
You probably think your home is yours, right? But that proof lies in a piece of paper — your home’s deed — that is surprisingly easy to forge or steal.
With the right amount of personal data, a thief can file official documents showing they own the home, then take out loans with the house as collateral or even resell the property to someone else.
You only find out that you're the victim of home title theft when you get the lender’s foreclosure notice. And regaining legal ownership of your home is a complex process that takes years to resolve.
Deed fraud has increased in the post-pandemic housing market boom, with Fulton County in Georgia county spotting 94 suspicious filings in just the first few months of 2022 [*].
What you can do: Sign up for home title monitoring to get fast alerts about any suspicious activity. Pay careful attention to second homes or properties you own that no one lives in, as these are the easiest target for thieves.
Few identity theft problems are straightforward to resolve, and none of them are fast or easy to clear up.
📚 Related: Home Title Lock vs. LifeLock: Which Is Better? →
How Do You Recover From Identity Theft?
If you’re a victim of identity theft, what steps should you take once you realize your identity has been stolen?
Each type of fraud requires a slightly different process, but many follow similar steps. For example, if you realize a thief has racked up debt in your name, you’ll need to:
- Contact the impacted credit card companies to report identity theft.
- Set up a fraud alert by calling one of the major credit bureaus and, optionally, freeze your credit by calling all three credit reporting agencies (Equifax, Experian, and TransUnion) individually.
- File a report with the Federal Trade Commission at IdentityTheft.gov and get a recovery plan.
- File a police report with local law enforcement.
- Start the arduous process of rebuilding your credit after identity theft.
📚 Related: 11 Steps To Take Immediately If Your Identity Has Been Stolen →
How Long Do the Effects of Identity Theft Last?
These steps take time and effort. In one survey of victims of financial identity theft, 30% or respondents said it took over 100 hours of their time to resolve the issue.
And the impacts of common types of identity theft can last forever.
Explaining your Facebook was hacked won’t refund friends the money they lost, and a corrected student loan application won’t help after the enrollment deadline has passed.
With everything that goes into resolving an identity fraud case, it’s best to make sure it doesn’t happen in the first place.
📚 Related: The Best Identity Guard Alternatives of 2024 →
How to Prevent Identity Theft
Thankfully, you can take a few steps to prevent identity theft. To protect yourself:
- Freeze your credit. This blocks all new credit requests. You’ll need to unfreeze it, which can take up to an hour, before applying for a loan or a mortgage.
- Review statements and credit reports often. Review each bank account and credit card statement carefully. You can also request a free yearly credit report from each credit bureau at AnnualCreditReport.com.
- Protect your mail and trash. Collect mail quickly and always shred documents with identifying information before recycling them.
- Use strong passwords and enable 2FA. Strong, unique passwords are one of the best stumbling blocks against fraud. Two-factor authentication, or 2FA, uses a code from your phone for additional security.
- Use a secure password manager. A password manager helps you store passwords securely.
- Avoid links and attachments. Never click links or download files in emails or texts from someone you don’t know. And if you think you recognize an email, always verify the address is correct before opening a link or attached file.
- Sign up for identity theft protection with credit monitoring. These tools monitor your sensitive information and alert you of any fraudulent activity.
📚 Related: How To Protect Yourself from Identity Theft in 2024 →
Identity Theft Is a Problem That Isn’t Going Away
Identity theft can have far-reaching impacts that can stay with you for a lifetime. Thieves are constantly looking for new ways to attack, and almost everyone is vulnerable.
But with the right safeguards, you can defend against common threats and be ready to protect yourself if the worst were to happen.
