Identity Theft vs. Fraud: They’re Not the Same (Here’s Why)

Identity theft and fraud sound similar, but they’re not the same thing. Learn how to recognize them and protect your private information from cybercriminals.
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Identity theft and fraud are crimes where someone steals your private info and uses it for their personal gain. They can have severe consequences and usually take a long time to roll back. Criminals can steal your money, home, and medical benefits and even target your children.

Identity theft occurs when someone steals your data and enters your online accounts. The fraud part begins when they start using this info for personal gain. They can also commit crimes in your name, resulting in criminal charges against you.

Adopting safe online habits and using the best identity theft services is essential. Learn how to stay safe and stop scammers in our expert guide on identity theft vs. fraud.

In this article
What is identity theft?
What is identity fraud?
Identity theft vs. fraud: What’s the difference?
How to protect yourself from identity theft
Identity theft vs. fraud: What’s the difference FAQ
Bottom line

What is identity theft?

Identity theft is a crime in which attackers steal your private data. They can do this in several ways, and the goal is usually financial gain. The prized targets for identity thieves often include your:

  • Social Security number
  • Driver's license number
  • Credit card number
  • Bank account details
  • Medical insurance information

Identity theft can happen to anyone at any age. Child identity theft is particularly sinister since it targets minors. Criminals can steal their info to fraudulently gain credit and other benefits. Victims might not discover the scam until they become adults and apply for credit. As you can see, not even your children are safe from these attacks.

How does identity theft happen?

These attacks are limited only by the scammer's imagination. Criminals are constantly discovering new hunting grounds and targeting methods. That said, here are the most popular techniques for committing identity theft:

  • Phishing scams: Criminals will impersonate a trusted entity (your bank, for example) and try to trick you into doing something. They can try to scam you into sharing your personal info or clicking on a link, which installs malware. They'll try to build trust and create a sense of urgency (telling you your bank accounts are blocked, for example). Then, they'll offer a solution; and if you do as they say, you'll get phished.
  • Data breaches: Your private info can leak out in a data breach. Hackers can attack the websites of banks, medical institutions, you name it. Stolen info can include names, email addresses, passwords, banking info, Social Security numbers, and more. Attackers can use this to make fraudulent transactions, commit credit card fraud, or steal your identity in another way.
  • Hacking: Once an attacker breaches your system or an account, they gain access to a lot of private data. They get even more by hacking companies.
  • Dumpster diving: Criminals will literally go through your trash, looking for data to steal. That's why you should never throw away anything with personal information. Attackers can wreak havoc with a password scribbled on a discarded sticky note.
  • Skimming: Scammers can use fake card readers (skimmers) to steal your credit card info. They usually place them over the original ATM card reader. So, if you're using an ATM, check for anything loose, damaged, or scratched on the ATM card reader. Cover your hand while entering your PIN code to block potential pinhole cameras. Finally, check the edges of the keypad in case of a keypad overlay.

What is identity fraud?

Identity fraud occurs when a criminal starts using stolen data for personal gain. So, stealing your information and usurping your accounts constitutes identity theft. However, identity fraud begins only when the thief actually commits a crime with your data. Although some experts might use these as synonyms, we like separating them for added precision.

What are the different types of identity theft and fraud?

Once a scammer has your personal details, they can use it to commit different crimes. Here are the most common types:

  • Tax identity theft: The scammer files a fraudulent tax return with your Social Security number and other details and uses it to unlawfully obtain a refund.
  • Employment identity theft: Your identity is used to gain employment.
  • Medical identity theft: Someone uses your stolen information to obtain medical services or submit fraudulent claims for services that were never provided.
  • Synthetic identity theft: Criminals combine information from different people to create an entirely new identity they can use to get credit or make major purchases.
  • Child identity theft: This involves stealing a child’s Social Security number or other identifying details and using it to establish a new credit record.
  • Criminal identity theft: Scammers use stolen information after they are arrested or when they are accused of breaking the law.
  • Home title theft: Thieves illegally obtain title to your property, often by using stolen information to transfer the deed to their name.

What are the consequences of identity fraud?

For most victims, identity theft doesn’t show immediate consequences. Instead, problems start when identity theft turns to identity fraud. After all, someone simply having your Social Security number isn't a major problem. However, if they use it to open an account in your name, you’ll start having serious issues.

When someone commits identity fraud, consequences could include:

  • Damage to your credit score: Thieves can open bank, utility, credit, and service accounts in your name. As they’re using them, they’ll slowly erode your credit score.
  • Financial loss: If a criminal steals money from your bank account or opens one in your name, you could lose money (although most credit card companies have fraud protections in place). You could also end up owing the IRS money for fraudulently obtained refunds. Even if you remove those charges, it can still take time and money to recover your identity.
  • Legal issues: Scammers will likely commit crimes in your name, which can lead to legal issues.
  • Medical complications: If someone commits medical identity theft, your records may contain inaccurate info about your health that causes complications when you get treatment.
  • Emotional damage: Having your identity stolen is beyond stressful, but trying to recover it is even more so.

Identity theft vs. fraud: What’s the difference?

As mentioned, identity theft and fraud are related crimes, but they’re not the same.

Identity theft is the first step. A scammer uses phishing or other techniques to obtain your personal info. They can then commit identity fraud with it. However, they don’t have to – they can simply sell your info to other criminals (probably on the dark web). If they choose to exploit your data, we’re talking about identity fraud.

Although identity fraud usually starts with identity theft, it can also exist independently. In some rare instances, skillful scammers can create fake identities from scratch and use them to commit crimes. We also refer to this as identity fraud, even though the information wasn’t stolen from an actual person.

How to protect yourself from identity theft

If you manage to prevent identity theft, you’ll also put a stop to subsequent identity fraud. Here’s how to do it:

  • Safeguard your private information: Don't share your personal details with anyone and shred documents that contain private information.
  • Freeze your credit: The three major credit reporting agencies (Equifax, Experian, and TransUnion) allow you to freeze your credit. This prevents anyone from checking your credit score without special authorization. If creditors can’t check your score, they won’t extend credit.
  • Learn to recognize phishing attacks: Many identity thefts start with a simple phishing message. So, learning to spot and avoid phishing scams is essential.
  • Create strong passwords: Don't reuse passwords and avoid basic passwords that scammers could easily guess. 
  • Use two-factor authentication: Enable two-factor authentication for an extra layer of login security.
  • Use financial alerts: You can set up alerts to warn you of suspicious activity on your accounts.
  • Monitor your accounts: You should check each bank and credit report regularly and report identity theft if you see any unrecognized charges.
  • Protect your mobile devices: Protect your mobile devices with a password and avoid unsecured public Wi-Fi networks.
  • Destroy documents a criminal can steal from your garbage: Shred or burn any papers with identifying information instead of throwing them in the trash.
  • Check your medical and financial statements regularly: Careful examination of your bank statements and insurance benefit summaries can help you spot misuse.
  • Install a good identity protection program: An identity protection program can help you keep your accounts secure and alert you to potential identity fraud.

What are the best programs for identity theft protection

Identity theft protection programs can monitor your accounts, check for your information on the dark web, and assist with recovery. Here are the best tools you can use to keep your information secure.

  • Aura offers individual, couple, and family plans and provides monitoring of your credit reports with all three bureaus as well as dark-web monitoring. You'll get up to $1 million in ID theft insurance and extra features such as access to a VPN and spam call protection.

    Get Aura | Read Aura Review

  • Norton LifeLock provides individual and family coverage, although three-bureau credit monitoring and credit reports are available only with its upgraded Ultimate Plus plans. You'll get up to $3 million in identity theft insurance as well as phone takeover monitoring and monitoring of file-sharing networks for your information.

    Get Norton LifeLock | Read LifeLock Review

  • Identity Guard harnesses the power of AI to provide proactive credit monitoring services for individuals and families. It offers up to $1 million in identity theft insurance, but again, you will need the upgraded plan for three-bureau monitoring.

    Get Identity Guard | Read Identity Guard Review

Identity theft vs. fraud: What’s the difference FAQ


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Can identity theft lead to identity fraud?

Yes. Identity theft can lead to identity fraud. When scammers steal your personal info via phishing or other techniques, they can use it to commit fraud. They can open new accounts in your name, commit crimes, ask for loans, and even steal your home.


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What are the most common methods used for identity theft?

The most common techniques include phishing and other social engineering attacks, hacking, data breaches, ATM skimming, and dumpster diving. All of these methods result in scammers stealing your data and using it for personal gain.


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How can I tell if I’m a victim of identity theft or fraud?

The usual red flags include accounts opened in your name, damage to your credit score, and unusual activity on your online accounts. It's important to monitor accounts carefully, including children's accounts, to prevent child identity theft. A credit monitoring service or identity theft protection tools can also be helpful in catching these red flags.


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What should I do if my identity has been stolen?

If you've fallen victim to identity theft, you should contact the police and report the incident to the Federal Trade Commission. The FTC has a special website you can use to help you begin the recovery process. You may also want to freeze your credit so criminals can't keep using your information, and you should alert your bank and credit card providers.


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How can I protect my information from identity theft?

You can prevent identity theft by using secure passwords, shredding documents with sensitive information, and learning the signs of phishing attacks such as phone calls, emails, or texts asking for personal details. You can also use an identity theft protection service to help you keep your information safe and identify early warning signs.


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Can identity theft or fraud affect my credit score?

Identity theft does not hurt your credit score, but identity fraud can. When criminals use your stolen information to open accounts in your name or charge purchases without authorization, you can end up with a maxed-out account, late payments, or even judgments against you. All of these will damage your credit.

Bottom line

Identity theft and fraud are not synonyms, but they often go hand in hand. Identity theft is the act of stealing your private info and usurping your online accounts. Identity fraud, on the other hand, starts when scammers use your info and accounts for personal gain.

Both can severely deteriorate your finances and well-being. The good news is you can learn to protect yourself from identity thieves by adopting good security habits and using the best identity theft protection services.

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  • Excellent identity theft protection service
  • Includes a password manager and VPN
  • Robust tools for children’s security
  • Provides VantageScore and not FICO score updates

Author Details
Christy Rakoczy, an identity theft expert with a JD from UCLA’s School of Law, has over a decade of experience writing about cybersecurity issues and laws surrounding identity fraud. Formerly a college instructor, she taught courses focused on legal issues surrounding internet privacy. When it comes to cybersecurity, Christy is deeply interested in promoting responsible practices such as keeping software up-to-date with security patches, selecting proper anti-virus software, and following best practices for passports.