Identity theft and identity fraud are two terms that are frequently used interchangeably, although their differences are significant. This article will attempt to distinguish one from another in a manner that will help people appreciate the differences between the two and take appropriate steps to protect themselves from the harm that each causes.
Think about this term exactly as it is written. Identity theft occurs when someone has stolen your identity for any reason whatsoever. If he or she is using any of your personal information to pretend to be you without your permission, identity theft has been committed.
RKN Global’s founder Ronald Noble offers some common examples of identity theft: Someone uses your passport that has been stolen from you or lost by you in order to board a plane or cross a border while pretending to be you. A minor steals and then uses your government-issued photo ID in order to buy alcohol or get into a nightclub where the minimum age is 21. Someone uses your personal information to create a fake online account in your name and then masquerades as you. Someone steals your online identity and then sends offensive messages to others as if it were you sending those messages.
Identity fraud is far more widespread than identity theft alone. Financial gain is usually the purpose of identity fraud. Again, let me give you some common examples of identity fraud: Someone uses your name, date of birth and social security number in order to trick the IRS into sending them a refund or credit. Someone steals your credit card and then makes charges under your name. Someone steals your bank debit card and withdraws money under your name. A bank account is opened online in your name without your knowledge or permission and the person who opens it obtains a credit card in your name. He then runs up charges to the limit, but makes no payment.
Which is easier to protect against, identity theft or identity fraud?
If you are a US citizen, it is probably easier to protect yourself against identity fraud. Why? Because in the US, banks, credit card companies and financial institutions systematically contact one of the three major credit bureaus (Experian, Transunion and/or Equifax) before opening an account in your name or giving you credit. You can contact each of these bureaus and advise them that you wish a credit freeze on your account. Whenever a bank, credit card company or financial institution contacts one of these three credit reporting agencies to find out your credit worthiness, they will receive a message indicating that at your request, no credit can be given or financial account can be opened under your name. Therefore, any person who is attempting to impersonate you for the purpose of opening a bank account, getting a credit card or obtaining a loan will be unable to do so.
You also can benefit from services that these credit bureaus and other companies offer to send you alerts any time there has been a change to your credit report. For example, assume that someone has obtained account information or passwords linked to bank accounts or credit cards that are in your possession. If one of those companies receives a request from someone to change your address or to issue an additional credit card, the credit reporting agency will send you an alert. Upon being notified, you could contact the relevant bank or credit card entity to advise them that you are most likely the victim of attempted identity fraud and ask them to cancel or invalidate any pending request.
Most credit card companies also allow you to receive online or SMS alerts for each and every purchase that is made using your name and account information. The alerts and messages arrive within seconds of the attempt or purchase being made. You can thereafter take swift action to alert your bank or credit card company so they can cancel or invalidate the transaction. Moreover, most credit card companies will insure you against any unauthorized or illegal purchases using your credit card; as a result, you are not harmed financially.
Take steps now to freeze your credit and to receive alerts from your bank or credit card company:
If you are a US citizen, or if credit reporting agencies exist in your country, then you should immediately request that your credit be frozen. Doing so will prevent criminals from stealing your identity or using it illegally in order to trick others into giving them money or other financial benefits. Freezing your credit is simple to do, and it can be unfrozen whenever you wish. There is therefore no need to worry if tomorrow you need a loan or wish to increase the credit limit on your credit card. Just unfreeze your credit and your request will be treated as if your credit had never been frozen.
Protect first what is easiest to protect against: Identity Fraud
Ronald K. Noble, RKN Global’s founder, emphasizes that criminals can be very clever and persistent in the ways in which they try to steal your identity. It is an overwhelming task to think about and to do everything possible to prevent someone from stealing your identity, but it can be easy to limit the type and amount of harm that identity thieves can cause by eliminating their ability to commit identity fraud; i.e. their ability to open new bank or credit card accounts and their ability to change your existing accounts so that they may cheat you or others out of money.
Right now, contact the credit reporting agencies in your jurisdiction and freeze your credit. After doing so, please comment and let us know whether it was as easy as this article suggests. Also, please give us any other insights that you believe might help others better prevent identity fraud.