7 Most Common Types of Identity Theft and Fraud

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The ability to conduct financial transactions online and share personal data provides huge benefits in terms of speed and availability of services that might not be possible otherwise. But this convenience can also come at a cost. Various types of identity theft and fraud are growing every year, thanks to data breaches and the ever-evolving sophistication of fraudsters.

By neglecting to take the necessary steps to protect your identity and personal information online, you may easily become a victim of criminal identity theft. Your debit card, credit card accounts, account numbers and other personal data will likely be used before you have time to react to the situation.

To help you avoid being the victim of online crime, let’s look at the common types of identity theft and how consumers and businesses can safeguard personal data through identity theft protection.

7 Most Common Types of Identity Theft

When people think of identity theft, they often think of criminals draining their bank accounts. But there are several ways fraudsters can use your identity. Here are seven of the most common types of identity theft that individuals and businesses should be aware of.

1. Medical Identity Theft

A common form of online fraud involves medical identity theft. Once a cyber-thief is in possession of your medical records, including your name, Social Security number (SSN) and medical insurance information, they can access medical services in your name. This includes purchasing prescription drugs, obtaining medical and dental care as well as other health insurance benefits.

Not only is this a potential financial risk should you require medical care, but it can also lead to incorrect medical records resulting in misdiagnosis. Doctors may even administer life-threatening healthcare and services not suitable for your medical condition.

To avoid medical identity theft, you should regularly review your medical bills, especially the explanation of benefits. These will quickly highlight any unauthorized charges, alerting you to potential health identity theft problems. Additionally, healthcare providers should implement Know Your Patient programs to ensure patients are who they claim to be.

If you suspect any medical identity theft, immediately contact your healthcare provider and the Federal Trade Commission.

2. Financial Identity Theft

One of the most common forms of identity theft is financial identity theft, which allows criminals to make unauthorized withdrawals or purchases from your credit cards or bank accounts.

To avoid becoming a victim of financial identity theft, take these steps:

  • Be very careful who you allow access to your personal data, especially financial information, PINs and authentication codes.
  • Make sure that you have notifications turned on so that you receive emails or text messages informing you of transactions being processed on your cards.
  • Don’t click links in emails purporting to be from your bank or credit card company. Only type URLs into your computer that you know are legitimate.
  • Be wary of strangers phoning you or contacting you saying that they are from financial institutions or government agencies.
  • Use any extra security features offered by your banks and financial institutions.
  • Check your bank and credit card statements regularly to look for unknown transactions. If you suspect financial fraud, immediately contact the credit bureaus and the Federal Trade Commission.

Banks, fintechs, credit card companies and other financial institutions should compare available identity verification methods and select the most advanced solutions to protect their customers from account takeover.

3. Criminal Identity Theft

The legal consequences of criminal identity theft can be devastating for victims. When cybercriminals steal your identity, they may use it to commit other crimes like fraud or theft in your name.

Most often, criminals use your driver’s license to commit crimes across state lines. This makes it difficult to detect and remedy the crimes.

Your best defense is to keep a close eye on your credit reports and background checks. Reviewing reports from the major credit bureaus (TransUnion, Experian and Equifax) will help to identify any potential problems.

You can even set up a fraud alert with these companies so that you receive a notification if there is suspicious activity on your account. If you do receive an alert, don’t hesitate to contact law enforcement immediately.

4. Child Identity Theft

The use of a child’s identity is a serious form of identity theft that results in their Social Security number and birth date being used to commit credit card fraud as well as various other forms of financial fraud. Fraudsters will impact your children’s credit scores when they open new accounts, and they may even access your children’s medical records.

Unfortunately, it is often family members or close acquaintances who commit child identity theft. So check credit reports and credit card statements regularly, and report suspected identity fraud immediately.

Businesses can help protect minors online by using identity proofing solutions that include age verification.

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5. Synthetic Identity Theft

Synthetic identity theft is a type of fraud that is difficult to detect. Fraudsters create fictitious identities by using both real and fake information. They use these identities to open bank accounts, access lines of credit, apply for credit accounts and take out loans.

These criminals use real Social Security numbers and other data to create a credit history by making small purchases and then paying them off on time. After they build a good credit score, they acquire larger loans and lines of credit, on which they default.

Thankfully, modern identity proofing solutions can help businesses prevent this type of fraud. Sophisticated technologies, including AI and machine learning, form a holistic picture of what constitutes normal transactional behavior.

For example, fraudsters often create falsified ID documents with different data points such as name or address, but use the same photo (sometimes even using their own face) when creating new accounts. Your identity proofing solution should flag potential fraudulent activity when it spots the same face being used across multiple verification attempts.

6. Social Security Number Identity Theft

Social Security number theft is one of the most common types of identity theft — and one of the most damaging. Victims must close existing accounts and freeze their credit reports to prevent identity thieves from opening new accounts in their name. Of course, it’s a real struggle to open new accounts for yourself after this happens, and it can take years to repair the damage and restore your credit score.

Dark web scammers often obtain your SSN and account numbers through phishing scams or a data breach. Once they have this information, they can apply for loans, government benefits and tax refunds, laying waste to your financial landscape. By the time your damaged credit score and legal problems come to light, it is often too late, and you may even face fraud charges.

The best way to protect yourself from this form of fraud is to avoid revealing your SSN to anyone. Be aware of phishing scams and make sure that you destroy any documents that contain sensitive information. If you suspect your SSN has been compromised, place fraud alerts or a lock on your credit reports. Freezing your credit reports will prevent anyone from opening new credit cards or accounts in your name.

7. Tax Identity Theft

Tax identity theft is closely associated with Social Security number identity theft. Scammers will often use your SSN to file fraudulent tax returns and claim refunds. Not only can this type of identity theft result in significant financial losses, it may also delay the processing of your legitimate tax return.

Tax identity theft is on the rise due to the relative ease with which criminals can obtain personal information on the web. Make sure that you file your tax returns early and monitor your IRS account regularly.

Warning Signs

The distress caused by identity theft makes it imperative that you avoid becoming a victim. But, you can only take the necessary steps to minimize the damage by recognizing the signs that your data has been compromised.

Here are some of the common warning signs:

  • Unauthorized transactions — Suspicious activity on your bank account or credit card could indicate identity fraud. Investigate any unusual charges, transfers or withdrawals.
  • Mail from unfamiliar lenders — If you receive letters of demand or bills from debt collectors, don’t ignore them. Likewise, investigate bills or notifications from banks for loans or credit cards for which you did not apply, as it is proof that identity thieves have stolen your data.
  • Debt collection phone calls — It is a major red flag if you are being phoned for debts you have no recollection of owing. Don’t provide your SSN over the phone, and do not give out any personal information before verifying the identity of the caller. Take their contact details and phone back after verifying that the numbers are correct, or phone the company’s head office.
  • Denial of credit — If you are told that your credit history is poor when you apply for credit, but your last credit report showed a good score, you likely have fraudulent activity on your credit report.
  • Internal Revenue Service notifications — If the IRS sends you information about multiple tax returns, contact them immediately.
  • Unusual medical bills — Receiving bills for treatment or prescriptions you never received is cause for investigation. It’s a telltale sign that your identity is being used to secure medical benefits illegally.
  • Fake social media accounts — If you notice that your details are being used to create fake social media accounts, your data may have been compromised. Report the accounts and take steps to secure your online identity by changing passwords.
  • Denied Social Security benefits — If your Social Security benefits are denied because someone else is claiming benefits using your SSN, contact the Social Security Administration immediately.

How to Avoid Becoming a Victim of Identity Theft

Data breaches and phishing scams together with the theft of personal information are just a few of the ways that identity theft is made possible.

Phishing scams target people by tricking them into giving sensitive information like usernames and passwords through the use of fraudulent emails or websites.

Hackers make use of malware to steal bank account numbers, credit card information and Social Security numbers.

The physical theft of personal documents from wallets and mailboxes, or by going through your trash and recycling, are just some of the ways that criminals gather information about you and your family. ID theft — whether it’s your passport, driver’s license or medical insurance card — often leads to identity theft.

To avoid becoming a victim of identity fraud or employment identity theft, monitor your credit report and bank statements and avoid supplying personal information over the phone.

Resources for Victims

Victims of identity theft have the following helpful resources available:

  • The Federal Trade Commission (FTC) — The FTC will provide you with their guide that includes step-by-step instructions on how to report the theft at IdentityTheft.gov. They also assist with creating an identity theft report, and help you to repair your credit.
  • Identity Theft Resource Center (ITRC) — The ITRC offers free resources together with a toll-free hotline and online chat service to offer you advice on how to recover from identity theft.
  • Local law enforcement — Your local law enforcement agency should be your first contact. By obtaining a police report, you take the first steps in repairing the damage done by the identity theft. The report will provide proof that you reported the fraud in time and record the steps you took to mitigate your losses and prevent further fraud from occurring.
  • Identity theft insurance — A proactive step you can take is to purchase identity theft protection. After sending your insurance provider the police report of the theft, they can assist you with resolving the problem. They also help to recover any financial losses and restore your credit.
  • Credit bureaus — Contact the three major credit bureaus (Equifax, Experian and TransUnion) as quickly as possible. Place a fraud alert on your credit report as well as request a copy of your free credit report to help monitor suspicious activity and take steps to protect your credit.


We have highlighted the importance of protecting oneself from the various types of identity theft and fraud. Keep a close eye on your credit reports, bank statements and credit card statements, and secure your personal data. It also helps to have identity theft protection.

When transacting online, always use strong passwords and enable two-factor authentication. You should also educate your children, as child identity theft is a major new form of fraud to guard against.

Businesses play a major part in stopping identity thieves. By implementing ID verification and authentication solutions, businesses can keep fraudsters away from their platforms and protect their legitimate customers.


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