What is identity theft and identity fraud and how does it happen?

Identity theft is always personal. It occurs when someone illegally gets and uses the data of another person without their consent. Identity fraud occurs when this info is used for deception or material gain, benefit or theft. Either or both of these actions are serious crimes in most countries and carry heavy penalties, even for first-time offenders.

The top of anyone’s personal fraud prevention list has got to be identity theft. It is the fastest growing crime on the planet – by far. Three words best used to describe it are; blatant, vile and plague. These in any order you care to choose. It is a classic example of fraud at its ugliest for so many reasons. Most people only know what it is and the misery it causes after they become victims. Like any fraud out there, you really don’t have to understand it, you just need to know what it is.

The size and scale of identity theft globally is massive. The exact numbers, wherever you find them are in doubt. You must assume any such data to be at best, educated guesses. The reasons are many. If you dig deep into the research, most of the numbers found online or in the media are trends and guesses multiplied by assumption. Mostly created for strong headlines and sound bytes to draw in readers or viewers, aka “eyeballs”.

Identity theft statistic and costs

However, there is some truth to be had from all this rhetoric. This is truly a mass fraud systemic. The cost and scale of identity theft run to hundreds of billions per year. The number of victims is in the hundreds of thousands. The heartache and suffering from this crime know no limit. According to an online  2018 Harris Poll, one of the best known, almost 60 million people in the USA alone have been affected one way or another by identity theft. That’s 20% of the population. In just one year. What about the rest of the world?

This is why you have to know what it is and be prepared for it. If not, your chances of becoming such a fraud victim escalate from a maybe to a certainty real fast. When it comes to fraud, education is the best prevention!

The FTC (US Federal Trade Commission) monitors identity theft as much as it can and regularly publishes a list of the top types of this crime. Identity theft and identity fraud have six main headings.

Employment and tax frauds

This fraud costs billions of dollars in the US every year. This is when a Social Security number (SSN) or other ID data is used to file a fake tax return. Usually to claim a fraudulent refund or to get tax or health benefits. While this crime has heavy penalties, it’s still quite common. Victims may also lose a chance of a good job or have serious tax issues that take years to get sorted out. This fraud often goes on for months or years before it is discovered.

Credit card fraud

The thief will use uses your credit (or debit) card data to buy goods for instant resale. The card will get maxed really fast unless the bank or card owner spots the fraud early. Most banks are obliged to offer consumer protection and cover the losses on this type of fraud. It adds to the illusion of fraud as a victimless crime. However, this cover does not extend to most debit cards, so special care is needed.

Phone or utilities fraud

The criminal uses the stolen data to open a mobile phone, utility or other accounts. This can be very damaging for consumers. Years of careful planning and credit building can get wiped out in hours.

Bank fraud

This is using a victim’s personal info to take over a live bank account or to open a new one. Also used to obtain checks for a criminal purpose. The damage this does to any credit rating and good standing can also take a very long time to resolve.

Loan or lease scam

The criminals will also use the stolen data to obtain a loan or lease a product. This fraud gives the criminal plenty of time to act and wreaks havoc. Often the cost for the victim can be huge.

Stolen info-pensions and other benefits

Stolen info is used to obtain benefits and/or pensions. Sometimes the fraud can go on for years. Often fraudsters get caught stealing pensions long after the victim has passed on.

Healthcare fraud

The stolen identity can also be used to obtain healthcare services and products. This fraud in itself has become a cottage industry. Even doctors and medical people have been jailed for this. There’s also the risk of a wrong diagnosis based on false claims made. So check your own medical history before taking advice. You just never know.

While identity theft grows at a steady pace globally, the top three countries for ID theft crimes are: The United Kingdom, USA and then Canada. It is all over the EU countries and you can take your pick of who is next.

It’s all about where the money is and how easy the victims make it for the thieves. The base fact is, all ID theft info or data comes from the victim, despite events like the Equifax breach. This tells us no one is safe, so be ready for it. The reality is, like almost all fraud crimes, governments and institutions don’t suffer anything like the way the victims do. Just one reason why there is a global failure to deal with it. That’s why it remains the victims’ problem and will go on. And on.

The aftermath of identity theft

It is most vital to know what comes after an ID theft event. Even though when these criminals are rarely caught and imprisoned for years, it makes little or no difference to the problems already created. It has to be known that every fraud crime has its’ own story for the victim and there are no happy endings. There is no such thing with any fraud.


For many reasons, law enforcement will not involve itself in most of these crimes. There’s too much of it. Inquiries take time, money and resources. However, it is important to report these crimes because identity theft is mostly a networked crime. That means that there are usually several players involved. One steals, two buys and sells your data and three uses it for criminal purposes. When law enforcement succeeds in a prosecution, it’s big news because they usually bring down a whole network. Prosecuting fraud crime, especially identity theft, is like digging into the frosty ground with a blunt spade.


The Police usually don’t even want to provide a report to the victim. Their policy is banks and debt card companies are the true victims. This is based on the archaic idea that they carry the losses. That might be true with debt card theft, but only up to a point. Victims do need a police report to show their innocence as new effects show up months after the event. This is where a smart lawyer or good advocate can really help.

The biggest cost for most victims can be their time – and lots of it. Dealing with an identity theft crime can take up hundreds or even thousands of hours for the victim. Everything else is replaceable, but not our time. People have to take time out from work and family to deal with the issues arising. This can drag on for years. Many victims complain at length about the lack of support from banks, debt, and finance companies or credit reporting agencies. It’s as if they’re getting a piece of the criminals’ action.

Reporting identity theft does not always stop the thieves from stealing your credit.

Asking these companies what they will specifically do for you in the event of an identity theft incident will inform you. This one question goes straight to the bottom line of fraud prevention. If you’re not happy with their answers, step away from them. They will get the message quick enough. If enough people do that, they will have to respond. Remember the recent Equifax scandal? Their conduct after the fact was, to say the least of it, disgusting for the victims. So call now and see where you stand in the event of identity theft.

Then there’s all the abuse. It gets very ugly. This can be from the debt card companies who were informed months ago about the theft. Collection agencies who are practiced and skilled at intimidating folks. Threats of taking their homes from them. Bad credit ratings and a reputation crash are common. Ah sure, the first thing any criminal will tell you is that they are innocent. So are identity theft victims, but who cares? The list gets longer by the day. Phone calls. Emails. Letters. Lawyers. Affidavits. On and on it goes. There is no balance here.

It is often said that identity theft is another form of rape.

It does have the same awful sense of harsh abuse. Frustration. Anger. Fear. Real Pain. Anguish. The hassle arising from many simple things we take for granted. Buying a car. Renting a home. Traveling through an airport or security check. Getting a job. Buying a mortgage. The entire weight and onus for the crime are placed on its victim – that’s you. There is very little support or sympathy because this situation is hard to believe. It only becomes real when you get caught up in it.

Just when you think it can’t get worse, it does. It’s not unusual for a criminal to use someone else’s identity for crimes. Innocent people get interrogated, accused, arrested and charged for crimes they had nothing to do with. Then there are crimes against the banks and revenue services. That’s rough stuff too. Hard to believe, but sometimes in handling these situations, the victim needs to become more than assertive. So hiring a lawyer is an option early in the process. A paid pro to share the load – if you can afford it.

Key Identity Theft Flags and Prevention.

  • Do not share your Social Security number (SSN). If you do, ask what steps are being taken to protect this data. Is there a bond or insurance? Don’t carry your card in your wallet or write this number down anywhere. Memorize it. Always be aware that your SSN is the master key to your identity. It is your material reality. It’s who you are in the world – just a number – you don’t have to like it.
  • Do not readily share your name, birth date or bank details with anyone or by any method. Unless you know who, what, when, where and how it is to be used. Yes, it’s that important – because you are.
  • Don’t leave your papers lying around. Put a hold on your mail if you are away for more than a few days. Always read your money, card, and bank statements. Make sure you know about any payments made. Anything strange is a red flag, so check it out now. If this info does not show up when it’s supposed to, you have to act urgently.
  • Mobile phone theft is also on the rise. Have good security apps on your mobile device(s) and use them!
  • Check your firewall and share settings any time you use a public wi-fi network. Always aspire to use a virtual private network at all times.
  • Buy a cross cut shredder and use it for anything with your name on it. That includes old receipts, credit offers, statements, and old bank or debt cards. You will know people search through trash for this kind of info and sell it on or use it as soon as they get their hands on it.
  • Use anti-virus and firewall all your computers and tech gadgets. Use strong, abstract passwords that no one else knows or can even guess.
  • Be on the alert for any data breaches and act if anything is of concern to you. Start here by changing your passwords.
  • Check your credit report regularly. There are plenty of ways to do this free.
  • If you are an Identity Theft victim, report it immediately.


You must know we now live in a new era. Identity theft has been around since the beginning, but these extreme levels of it are all new. It has become a human virus like no other. What we’re seeing now is crime aided and abetted by AI. We have only one simple choice to make – to get in front of it or suffer the consequences. So make your choice and keep moving.