If you’ve ever lost a considerable amount of money, then you would know how difficult it can be to track down your bank account, ID, credit cards, and other important financial-related documents. This is why the need for financial identity theft protection is growing at a rapid rate. The level of sophistication of these crimes is also on the rise, with criminals stealing personal information, including Social Security numbers, credit card details, passwords, and other sensitive financial data.
What Is Financial Identity Theft?
Financial identity theft is the act of stealing another person’s personal information and using it to make fraudulent financial transactions. This can include a range of activities, from opening lines of credit in someone’s name to laundering money through their bank account.
Identity theft is the fastest growing crime by far and one that will only get worse. The Federal Trade Commission estimates that there are at least 1.5 million identity theft victims every year.
Similar to other types of identity theft, financial identity theft puts your creditworthiness at risk because of unauthorized purchases. Furthermore, it can also ruin your reputation with employers, lenders, and other financial institutions. It is to be noted that financial identity theft is one of the typical consumer frauds that can result in massive financial loss. Similar schemes and fraudulent activities are advance-fee fraud (i.e., debt-relief scams), affinity scams, and investment frauds.
How Does Financial Identity Theft Work?
Most people are aware that identity theft occurs when someone illegally uses another person’s personal information to obtain credit cards and other loans or to open a new bank account in that person’s name. But what many people don’t realize is that there are many other ways to commit financial identity theft.
This conduct usually involves criminals acquiring important financial information such as your credit and debit card number. They can also commit the act by obtaining your Social Security number and driver’s license through illegal means. Direct theft and deception are among the methods that are being used by these perpetrators to steal your personal information.
After they get your information, they will start doing fraudulent activities and crimes. Of course, regardless of the activity, it will always end up badly for the victims. Many of those who suffered from financial identity theft have experienced excessive debts, drained financial accounts, and poor credit. Moreover, there are instances where the victims became liable for the crimes they weren’t involved in.
The most alarming thing is that financial identity theft can happen to anyone. It can take place any time of the day, especially if you aren’t careful. The Internet became a hotspot for these criminal activities. An excellent example of this is a phishing email. Criminals send phishing emails, disguising themselves as legitimate financial institutions and credit companies. The emails are sent to individuals, asking them to verify information on their accounts. The format of their emails is pretty similar to the legitimate ones. Hence, if you aren’t that careful, you can easily get victimized.
Once you click the link embedded in those emails, you will be sent to a fraudulent website. The website will ask for your account number, passwords, and other sensitive information. If you are going to supply this information, then the thieves will get access to them. And that’s where the fraudulent activities will kick in. The criminals will drain all of your accounts, and you will end up with insurmountable debts.
Types Of Identity Theft
There are ways criminals can seize your financial information. Here are some of them:
- Snatching – Criminals may get into your personal account by stealing your backpack, purse, and wallet. If your passport, driver’s license, or bank cards are stored in those items, there’s a good chance that your sensitive information will be taken.
- Diving to dumpsters – Thieves are quite persistent and resourceful. They are not afraid to dig dumpsters and trash cans to see if there are bills and documents that include someone’s personal information.
- Impersonation – This is a classic strategy, but it still works. Impersonation refers to thieves disguising themselves as legal businesses and financial institutions. They send calls and emails to their victims, copying the styles of the companies they are pretending to be. By doing so, they can extract information from their victims.
- Eavesdropping – Technology is advanced these days and it can allow thieves to listen to your communication via smart devices or the Internet.