What Happens When Someone Steals Your Identity?

Identity theft occurs when someone illegally obtains your personal information with the intent of committing fraud. Although criminals can retrieve your physical information, such as your mail, it's likely that they will resort to online activities. 

Personal losses are no longer as simple as credit card fraud, as criminals have become more sophisticated in committing various identity crimes. These crimes range from obtaining fraudulent loans to selling your information on the dark web. 

However, there are proactive steps you can take to restore your identity and prevent future theft. We also share our top identity theft protection services. 

What are the consequences of identity theft?

Identity theft is a serious crime that can have a lasting impact on your life. If your personal information is stolen, it can be used to open new accounts or make unauthorized purchases. Cybercriminals can even commit other crimes in your name. These actions can cause personal financial upheaval or unexpected legal issues for you.

Damaged credit score

It takes ample effort to build and maintain a good credit score but only a few fraudulent transactions for a scammer to drag your credit score down. If the thief opens accounts in your name and doesn’t pay bills on time, you could pay higher interest rates on loans and insurance premiums.

Stolen credit cards

If your credit card numbers are stolen, you will have to cancel your card and wait to receive a replacement. It could take weeks to get everything sorted out with your credit card company. During the time it takes to receive your new credit cards, you will need to ensure you have enough money on hand to handle life’s essentials.

Loss of control of personal accounts

Losing control of your email account is an especially harmful consequence of identity theft. Even if you take cybersecurity measures and use a password manager, your accounts are not safe from hackers. These thieves can target password reset links from your email and lock you out of your online accounts.

Loss of home due to mortgage or deed fraud

Identity theft could also cause you to lose your home. Through title fraud and reverse mortgage scams, identity thieves can transfer ownership of your home to their name to steal your home equity.

You may not even become aware that the fraud has occurred until years later unless you utilize a home title monitoring service. You may only discover you have been defrauded if you receive remarks from your lender or if your credit report publishes the mortgage details.

Time and money spent

If your identity is stolen, you will need ample time to secure all of your online accounts. In fact, the average victim takes between 100 to 200 hours to resolve their identity theft. The specific amount of time it will take for you to recover your identity and settle your issues depends on a few factors, particularly what type of identity theft transpired and how quickly you discovered fraudulent activities.

Moreover, if you do not use an identity theft protection service, you may not discover your identity is being used for quite some time, which can make it more difficult to track down and compile an actionable list of fraudulent activities.

Repeat identity theft and fraud

Thirty percent of identity theft victims have been exploited previously. Repeat identity theft occurs in a few ways, such as if the hacker still has access to your information or if your information was sold to other criminals on the dark web. Furthermore, you could be repeatedly targeted if you have not taken action to prevent future theft.

Personal data on the dark web

Cybercriminals sell data on the dark web in a few ways. They can post it for sale in online marketplaces, or they may have an avenue to get in touch directly with buyers. In rarer cases, criminals may have made their own websites to sell your stolen data.

As a decentralized and anonymous payment medium, cryptocurrency is the favored way to sell data on the dark web. 

Increased phishing and smishing scams

When your identity is stolen, you become more susceptible to phishing and smishing scams. The more information a hacker has regarding your personal life, the more likely it is that they can obtain what they really want — your financial details. This information can be received by scammers sending a counterfeit email or text message asking you to “secure your account,” for example.

Your family could become victims of identity theft

You may have shared financial accounts with your family members that could succumb to phishing scams that install malware on your home devices. Additionally, a scammer may have a few of your login credentials and could try them on various accounts. Thus, it’s important to change all your individual and family passwords immediately following identity theft.

Because children’s information is less protected overall, child identity theft is common. Children have a clean credit history, so their information is more valuable to criminals. Their data can be exploited through data breaches, schools that market to third parties, and unfortunately, even family members.

Psychological harm and distress

A possibly unforeseen consequence of identity theft, psychological distress can take a toll on your mental health. The theft and financial losses can make you feel vulnerable and susceptible to further mistreatment, which can lead to anxiety and stress. The feelings you may encounter are natural, and there are resources available to help you recover.

What fraudsters can do with your identity

You may wonder why your personal information is so valuable to cybercriminals. Here is a list detailing the most common identity theft crimes.

Create new financial accounts

Cybercriminals may use stolen information to create new accounts in your name, including credit cards and loans. Because they don’t intend on paying back any credit extended to them, these actions can ruin your credit rating.

They also may target your existing accounts and use them for their own criminal purposes. By applying for loans on your current accounts, they can also access your other data with phishing emails. Phishing emails can install malware on your device, and give the hacker control of your device and unlimited access to create new loans.

Steal your healthcare benefits

With 45 million individuals affected by cybercrime in the healthcare industry in 2021, your protected health information (PHI) is a hot commodity for cybercriminals. Armed with your Social Security number (SSN) or other insurance information, criminals can use this information to get “free” medical care or commit medical fraud.

This fraud leads to inaccurate medical records and bills, as well as the hassle of dealing with fraudulent insurance claims. There is also a major risk to your health if you receive an incorrect diagnosis. Most severely, you could lose access to health benefits due to the abuse of your insurance plan and, if the abuse was severe enough, possibly be confronted with criminal charges.

Take over your email accounts

Cybercriminals take over email accounts during identity theft because they contain a wealth of sensitive information such as bank account numbers, contact lists, and possibly Social Security numbers. Any combination of this information can be used to steal your identity.

Your contact list can also be used to spread phishing emails to your contacts, gathering information about other potential victims and possibly spreading malware. Furthermore, an email account takeover can be utilized to reset passwords for other accounts, including trading accounts or bank accounts. This gives the criminal access to even more of your personal financial information.

Steal your tax refund

Criminals may want to file a tax return in your name and take your refund, likely claiming it with a prepaid debit card. This can be a substantial amount of money lost if you live in a state with no income tax.

In normal situations, filing a tax return is a transparent process. What happens when your identity is stolen is that you surprisingly discover that you cannot file your tax return because the hacker has already used your Social Security number. In other cases, you may receive official communications from the IRS regarding tax preparation actions you have not yet taken.

Hack your social media accounts

Another way that identity theft can impact your life is through your social media account. Cybercriminals can make money from your accounts by using them to send spam messages that contain phishing links to your friends and followers.

They can also engage in illegal activities by creating a fake social media profile in your name. Moreover, once the scammer has access to your account, they can attempt to find sensitive photos or videos they will use to attempt to blackmail you. In this type of hack, your finances and reputation are on the line.

Commit crimes under your name

During standard identity fraud, a criminal will use your personally identifiable information (PII) to obtain a new credit card, for example. However, some cybercriminals want to go beyond stealing and selling your information to commit massive financial crimes and leave you with a criminal record.

One way they achieve this is by creating a synthetic identity: an identity made up of bits of your personal information combined with false facts to create a new identity for the attacker. With a “new” synthetic identity, criminals can repeatedly abuse loans and credit cards or conduct money laundering schemes to hide the source of their criminal activities.

This type of fraud is harder to detect and resolve because it uses a combination of real information and falsified information. Full restoration may require you to work with multiple agencies and deal with unforeseen legalities.

Action steps to take if you are a victim of identity theft

You may wonder if you have taken all the necessary steps to settle your identity theft. Don’t worry, we have you covered. Read below for steps to take to resolve identity theft and stand strong against further exploitation.

• Call your financial institutions to alert them of the identity theft and have them either closed or frozen.
• Change your login information, including usernames, passwords, and any account PINs.
• Place fraud alerts on your credit reports by contacting the three credit bureaus.
• Obtain your free credit reports and review them for any suspicious activities
• Report identity theft to the FTC.
• Go to your local law enforcement department with a copy of your FTC report and file a police report.
• Write a letter to the three credit bureaus and ask for fraudulent information to be removed from your credit report.
• Alert debt collectors that you will not be paying any fraudulent debts by writing a letter and including your identity theft report case number.
• If your driver’s license or other government-issued ID was stolen, quickly make replacements.
• Continue to monitor your credit reports for any unknown accounts or charges.

How to protect yourself from identity theft

There are several actions you can take now to protect yourself from becoming a victim of identity theft:

1. Along with monitoring your household’s credit reports regularly, you also have the option to freeze your credit. Conducting a credit freeze will prevent criminals from being able to open new accounts in your name.
2. Close all open but unused financial accounts. Although this could negatively impact your credit score for a time, closing unnecessary accounts can prevent those accounts from being used fraudulently.
3. Obtain a post office box, check your mail often, and shred any documents containing PII. Securing a mailbox outside of your home address gives you peace of mind that thieves cannot quickly raid your home mailbox and gain access to your personal details.
4. Frequently review your banking and credit card statements.
5. Use online safety tools like a virtual private network (VPN) and antivirus or antispyware software. Only use strong passwords together with two-factor authentication.
6. Subscribe to an identity theft protection service, including a service that monitors your home’s title.

Service
Individual monthly price	Starts at $7.50/mo (billed annually) for first year	Starts at $9.00/mo (billed annually)	Starts at $10.00/mo
Family monthly price	Starts at $18.49/mo (billed annually) for first year	Starts at $17.00/mo (billed annually)	-
ID theft insurance	Up to $3 million	Up to $1 million per adult	Up to $2 million
Credit monitoring
3-bureau credit reports
Details	Get LifeLock Read Our LifeLock Review	Get Aura Read Our Aura Review	Get Omniwatch Read Our Omniwatch Review

FAQs

Bottom line

Identity theft violations expose you to numerous emotional and financial consequences. The discovery of the theft is typically surrounding a time when you will need to use your credit, further worsening your situation.

You will have to take the time to address the damages, including contacting multiple organizations, filing police reports, writing letters, and implementing security measures. It's best to stay proactive and take steps now to protect your identity from being stolen in the future. For additional protection, consider using a top identity theft protection service.

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Author Details

Robin Moore

About the Author

Robin Moore is a freelance writer and editor specializing in blockchain technology, including wallet security and data privacy. She is the current Managing Editor for Watcher.Guru, a startup blockchain and finance news publication with 1.7 million followers on Twitter. Robin has also been the lead content editor with Genfinity.IO, another startup blockchain research publication. Before entering the Web3 space, she was a business analyst within the oil and gas industry. When she is not offering advice on the best ways to protect data privacy, she is hiking, doing yoga, or networking with her Web3 family on crypto-Twitter.