What is Identity Fraud?

Identity fraud has occurred at a record pace since the creation of the Internet, becoming the most prevalent type of consumer fraud perpetrated in the United States. Criminals steal personal information — credit card numbers, ATM pin numbers, Social Security numbers, or even bank account numbers–and use them to defraud others. Identity thieves who have stolen a person’s identity have been known to empty bank accounts, run up huge credit card bills, purchase cars, and secure mortgage loans. Identity fraud is a serious matter, and is subject to federal prosecution in many jurisdictions.

The incidence of identity fraud has increased in large part thanks to the vast amount of private information that individuals unwittingly provide on blogs, websites, and social networking sites. The web is prime hunting ground for the identity thief, but pre-Internet methods of stealing a victim’s identity remain effective. Opportunities for identity theft exist in abundance.

Internet fraud can result from a criminal raiding a person’s mailbox, stealing credit card bills and bank statements to obtain private financial information. Fraudsters have also been known to “dumpster dive,” or pick through curbside trashcans for bills and invoices that were tossed away. A standard practice of the identity thief is to visit the post office and file a bogus change of address card in their victim’s name. All the victim's mail is forwarded to an anonymous address, and in many cases the diversion might not be noticed for a week or more.

Identity fraud sometimes takes place due to a criminal taking advantage of a potential victim’s good nature. The thief calls the victim’s house and pretends to be fundraising for a well-known charity or disaster relief effort. A compassionate individual who wishes to donate usually asks if she may pay with a credit card. The identity thief begins using that card number for nefarious purposes almost immediately. Social Security numbers are gained in similar fashion, with the identity thief pretending to represent an agency of the government.

The methods of obtaining personal financial information for the purpose of identity fraud are extremely numerous. The problem for a victim of identity fraud goes beyond the fact that her credit may be ruined. Merchants and banks defrauded with the stolen information are often slow to believe the victim’s protests of innocence. Virtually all of the victim’s electronic identity — from driver’s licenses to credit cards to loan numbers to email addresses — must be changed. The process of replacing this information can sometimes take years.