What is Identity Fraud?

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  • Written By: Ron Marr
  • Edited By: Bronwyn Harris
  • Last Modified Date: 21 December 2019
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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.


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Post 3

@literally45-- Yes, be careful. A friend of mine was a victim of identity fraud and he's certain that someone went through his trash to get the information. The thief used his information and ran up a huge bill on his credit card. His card information was used to pay for all sorts of things. He was lucky that his bank had fraud protection and worked with him on the issue. Some banks do not have this policy and do not care.

If possible, get a paper shredder and shred all important documents with personal information before throwing them out. Also be careful when discarding things like expired credit cards, old IDs and checkbooks. These are some other things that thieves and fraudsters look for.

Post 2

I always throw out old bank statements and the like with my account information on them. It never occurred to me that someone would go through the trash to find them and use them! I will be more careful from now on.

Post 1

I often wonder about this when I have to prove my identity by confirming my social security number over the phone. This is something that banks, government agencies and loan services often require. I don't think it's a good idea, but I usually don't have a choice.

The only truly safe way to confirm identity is through fingerprints. But technology isn't advanced enough so that we can do this over the phone. And many institutions wouldn't be able to afford it either. But using social security numbers, account numbers and previous addresses to confirm identity are no longer safe. Like the article said, identity fraud is very common now and people have easier access to this type of information than we realize.

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