Did you enjoy your recent trip to Maui? How about the new Mercedes? And then your home loan was turned down because of a mysterious bankruptcy you never filed. What is going on? Two words: identity theft. This crime is on the rise, but you can avoid being a victim by being aware of how these scammers work.
Thieves skilled in identity theft use a variety of ways to gain access to your personal information. For example, they may get information from businesses or other institutions by stealing it while they're on the job, bribing an employee who has access to these records, hacking these records and conning information out of other employees. They may also use computer viruses and malware to get information that is stored on your computer or smartphone.
How identity fraud happens
Your identity can be stolen when thieves:
- Steal your wallet or purse.
- Steal your personal information through email or the phone by saying they're from a legitimate company and claiming that you have a problem with your account. (This practice is known as "phishing" online, or as "pretexting" by phone.)
- Steal your credit or debit card numbers by capturing the information in a data storage device in a practice known as "skimming." They may swipe your card for an actual purchase, or attach a device to an ATM machine where they may enter or swipe your card.
- Get your credit reports by abusing the authorized access that was granted to their employer. Or they may pose as a landlord, employer or someone else who may have a legal right to your report.
- Rummage through your trash, the trash of businesses or public trash dumps in a practice known as "dumpster diving."
- Steal personal information they find in your home.
- Steal your mail, including bank and credit card statements, credit card offers, new checks and tax information.
- Complete a change-of-address form to divert your mail to another location.
How identity thieves use your personal information
Once identity thieves have your personal information, they may use it to commit fraud or theft.
For example, they might:
- Call your credit card issuer to change the billing address on your account. The imposter then runs up charges. Because the bills are being sent to a different address, it may be months before you realize there's a problem.
- Open new credit card accounts in your name. When they use the credit cards and don't pay the bills, the delinquent accounts are reported on your credit report.
- Establish phone or wireless service in your name.
- Open a bank account in your name and write bad checks on the account.
- Counterfeit checks or credit or debit cards, or authorize electronic transfers in your name and drain your bank account.
- File for bankruptcy under your name to avoid paying debts they've incurred under your name, or to avoid eviction.
- Buy a car by taking out an auto loan in your name.
- Get identification -- such as a driver's license -- issued with their picture, in your name.
- Get a job or file fraudulent tax returns in your name.
- Give your name to the police during an arrest. If they don't show up for the court date, a warrant for arrest is issued in your name.
Next up: How to stop identity theft >>