At a Glance
The last thing anybody wants is to have their identity stolen. From creating a hassle that’s difficult to rectify to leaving you wondering how secure your information is, identity theft is a serious matter. However, when looking at identity theft people often only consider the identity aspect. Financial identity theft is another form that is equally as devastating given that it targets a person’s financials.
In this article, you’ll learn:
What is financial identity theft?
For those who have never heard of the financial identity theft definition, it simply refers to the compromise of a person’s existing financial accounts or the creation of new accounts in a person’s name that were not authorized. Financial identity fraud can have long-lasting implications that affect a person’s debt and can lead to bankruptcy in serious cases.
Types of financial identity theft
When it comes to financial theft of identity, there are a number of different types. Garnering financial identity theft protection can be challenging when you don’t know what type of debt you are dealing with, which is why looking at the types of financial identity theft is so important:
- Basic financial identity theft:As mentioned, the most basic form of financial identity theft occurs when a person assumes the identity of another person through their payments, credit cards, new account openings, and similar financial moves.
- Tax identity theft:This form of financial identity theft occurs when a person uses another’s social security number to file tax returns or steal tax refunds from another person.
- Unemployment fraud theft:Unemployment fraud identity theft happens when one person files an unemployment claim using the information of another.
- Mortgage identity theft: This type of financial identity theft occurs when someone files for a home equity loan or mortgage using the name of another person.
- Student loan identity theft: Student loan identity theft occurs when a person uses a child’s information (specifically on in school) to secure grants or loans.
Financial identity theft examples
Even after looking at what is financial identity theft and covering the definition of various types, it can still be a confusing topic to understand. To that end, below are a few financial identity theft examples that may be seen:
- An individual steals another person’s credit card information and begins making online purchases using their card number
- A person acts as if they are from a credit union or trusted company and calls stating you have been locked out of an account and they need your personal information to get back in
- A person steals your tax refund by filing under your name
- A trusted friend sees your bank account login information and decides to start slowly wiring funds out of your account from their personal devic
How can you spot identity theft?
When it comes to stopping financial identity theft early on before too much money is lost, early detection is everything. To that end, there are a few key ways to spot the signs of identity theft. Keep an eye out for any strange transfers of money out of your accounts. On top of this, take action if you receive any sort of payment confirmation or statement in the mail that seems to indicate you made a payment or were sent funds. If eligible, sign up for credit monitoring so that you will be notified if a new account is created under your name.
How to report a financial identity theft?
In looking at how to prevent financial identity theft, sometimes you will only be able to be reactive. By reporting the event as soon as possible, you can ensure everyone knows you are not responsible for what is occurring. If you have been the victim of identity theft, you should contact:
- The Federal Trade Commission at 1-877-438-4338
- The three major credit bureaus in order to request a freeze on your account
- The fraud department of each of your accounts
How to protect yourself from financial identity theft?
There are many financial identity theft consequences, which is why learning how to protect yourself is so important. Use the following tips to prepare your accounts and yourself:
- Never answer phone calls from strangers who are requesting to be from somewhere
- Never share any personal information such as your Social Security Number
- Always check your mail or place a hold on mail if you aren’t certain you’ll be in town
- Never carry personal cards such as your Social Security Number card out in the open
Other types of identity theft that can affect your finances
Beyond the above types of mentioned financial identity theft, there are a number of other types that can impact your finances as well:
1. Medical identity theft
When dealing with injuries, the last thing anybody wants is to have to deal with fraud. However, medical identity theft can occur and is when a person uses your name to receive healthcare services by impostering you. If the services they received aren’t covered by your insurance, you might be charged for what they had done.
2. Employment identity theft
In some cases, people will use the information of others to secure a job or to pass a background check, so keep an eye out for any emails or notices that this may have occurred.
3. Synthetic identity theft
This form of identity theft is unique in that it occurs when a person combines real and fake information to steal accounts. For example, they may claim they own a certain bank account only to create a new identity under that account.
Generally, in looking at how financial identity theft happens, a thief will steal a person’s name, credit card information, or social security number to gain access to their accounts to steal money.
The first signs of identity theft are often a small amount being transferred out of your account at a time or receiving a letter in the mail that seems to indicate you made a payment or opened an account. If this occurred, it’s likely someone got access to your information.
Identity fraud is when someone uses their information to impersonate you, whereas identity theft is when they do the above and then take action to steal assets that you own.
Generally, you can see what accounts have been opened in your name by requesting access to your credit file as maintained by the three credit bureaus.
Recovering from identity theft can take weeks, months, or even years depending on the severity of the theft. If you had accounts hacked and lost large amounts of money, it could take a while to recover the funds depending on what was insured.