Identity theft is a crime in which a criminal acquires and uses someone’s personal information to impersonate someone else, usually for financial gain.
I’m sure you already knew that, yet many of us are still convinced that we’ll never become targets or victims of a cyber attack. With advancing security measures protecting our most sensitive information, we feel safe texting friends account passwords, emailing financial documents that contain your Social Security Number, and storing credit card information on e-commerce websites.
But, that comforting sense of security obscures the fact that massive security breaches are steadily on the rise, cyber theft techniques are more sophisticated than ever, and the residual effects of becoming a victim of identity theft can have a lasting impact on your digital, financial, physical, and mental well-being.
If you think your private information is completely safe or that you’ll never become the victim of a security breach, let alone identity theft, ask yourself these questions that will reveal the real costs of becoming an identity theft victim:
How can someone steal my identity?
Prior to the Internet boom, criminals would dig through your discarded trash for credit card receipts, bank statements, old tax documents, and other bills. Today, cyber criminals have created advanced computer hacking techniques–including malware, keyloggers, card skimmers, trojans, man-in-the-middle attacks, etc.–and deceptive phishing scams to steal your information from an online database or directly from your computer. Even the most security-aware Internet users fall prey to cyber attacks–some of which bypass the account holder altogether.
As a result, the U.S. Department of Justice’s Bureau of Justice Statistics (BJS) published a revealing report, that says an estimated 17.6 million Americans were the victims of one or more identity theft incidents in 2014. For 86 percent of these victims, the most recent incident involved the unauthorized use of an existing credit card or banking account. The BJS also noted that 45 percent of victims didn’t even know their information was stolen until they were contacted by a financial institution, and about 65 percent of all identity theft victims had absolutely no idea how a criminal gained access to their information.
Wow! 17.6 million Americans were the victims of one or more identity theft incidents in 2014! Share this Identity Theft Fact on Twitter!
How much money could I lose from Identity Theft
It comes as no surprise that many cyber criminals are opportunistic and motivated solely by financial gain. In 2014, two-thirds of identity theft victims experienced direct financial loss–which is the amount the criminal obtained from misusing the victim’s account or personal information–with victims reporting an average loss of $7,761. In total, identity theft victims lost $15.4 billion in 2014.
What about recovering from identity theft? “All you have to do is call your bank about any fraudulent charges, right? Or just sign up for an identity theft protection program in advance.” That sounds good, but the reality is that the identity theft recovery process is long and arduous, and you could end up losing much more money in the process than you thought. You could lose money to:
- Legal Fees: Many identity theft victims will hire an attorney to help investigate and resolve your identity theft case. According to Todd Spodek, a Criminal Defense Lawyer at the Spodek Law Group, estimated that the cost to hire an attorney can easily be at least $2,500. Found this fact surprising? Share it on Twitter!
- Late Fees and Penalties: If your bank account was emptied out by a cyber criminal, there’s a chance that you could miss a payment on your credit card, monthly rent, and a number of other expenses. For example, if you pay your credit card bill just one day late, you could pay $25-$35 with the possibility of incurring more debt each day. Identity theft can also impact your credit long after the incident has occurred. For example, your interest rates could increase to an annual percentage rate (APR) as high as 29.99 percent!
- Insurance: Identity theft victims would want to take every precaution possible to make sure an incident never occurs again. One such precaution is purchasing identity theft protection and insurance. “After people have become a victim of identity theft they spend around $25-$60 on insurance every year to protect their credit cards and accounts,” says Howard Dvorkin, CPA and Chairman of Debt.com. Would you pay up to $60 a year for identity theft insurance? Share your thoughts with us on Twitter!
- Credit consulting service: To restore any damage to your credit score had on your loans, housing, employment, and other financial situations, victims may also consider hiring a credit consulting or restoration service. “Typically, Identity Theft restoration experts will spend around $5,000 to return an identity to pre-theft status and will look for all potential misuses of a person’s identity including checking government records, the black market, criminal databases, DMV records, etc.,” says Eric Yaillen, President and CEO of The Identity Defenders. Yaillen also noted that victims who subscribe to identity theft restoration programs typically pay around $100 per month out of pocket for at least 12 months in order to improve their credit scores. Restoring your credit with a credit consulting service could cost you over $1,200! Share this surprising fact with your friends on Twitter!
Aside from money, what else could I lose from being an identity theft victim?
It could cost you thousands of dollars to recover from identity theft, but victims also face non-monetary costs as well:
- Emotional distress: Imagine the embarrassment, anxiety, and fear of telling your friends, family, or coworkers that you’ve become a victim of identity theft from a cyber attack, that you are hundreds or even thousands of dollars in debt, that you’re struggling to get a loan, or even struggling to make ends meet. In 2014, the BJS reported that 1 in 10 identity theft victims was severely distressed due to the incident. Victims also reported having significant problems a work or school or having significant problems with relationships between family and friends. The emotional distress victims experience can be more damaging and long-lasting than the monetary losses.
- Time: Between filing police reports, checking credit reports, calling banks, working with law enforcement, phone calls, sending and replying to emails, and other time-consuming processes, it should come as no surprise that identity theft recovery takes time, and lots of it. While a large majority of victims resolved their financial and credit problems in a day or less, in 2013, seven percent of victims said they were still recovering from problems related to their identity theft incident more than a year later.
- Harassment from Creditors: Once a victim is in debt, they could be harassed by creditors and their agents. About two percent of identity theft victims experienced credit or banking problems, and about three percent experienced problems with debt collectors.
- Your Legal Identity: Identity theft doesn’t always mean that a cyber criminal is attempting to steal your money. “Identity theft may include a number of activities that won’t necessarily affect credit,” says Yaillen. “This can include forging government documents to obtain a driver’s license, establish citizenship or obtain a green card, obtaining social security benefits, etc. Identity theft can also be used to obtain medical services or in the commission of crimes. This is where it could affect a person from employment opportunities among other things.”
Did you know Identity theft may include a number of activities that won’t necessarily affect credit, including forging government documents? Share this Identity Theft fact on Twitter!
What can I do to protect myself from identity theft?
If you want to save thousands of dollars in financial losses and the stress associated with identity theft recovery, here is what you can do to protect your money, your sanity, your credit score, and your good name:
- Manage and protect your passwords: Your one-stop shop to keep cyber criminals at bay is to use a password manager to store, organize, and encrypt your passwords and other private information. Password managers–like Dashlane––allow you to use more complex passwords without having to store them either written down or in a text.
- Frequently monitor your credit score: The faster you can identify identity theft, the less damage will occur. Monitoring your credit report will give you the information you need to act quickly. You can even sign up for an automated service that will alert you to suspicious changes.
- Learn more about potential cyber threats: Learn to detect phishing emails and other potentially malicious information gathering techniques. Scan your computer frequently for malware and avoid websites that don’t seem reputable. Be vigilant when you see something unusual, such as a request for a password reset that you didn’t ask for.
- Secure your devices: Use long and strong passwords that are virtually unhackable. If your account is hard to break into, smart cyber thieves run the numbers and don‘t even waste their time on you. Also, use unique passwords for every account so a thief can’t access the “whole portfolio” of your identity with your reused passwords.
- Protect your documents: Go paperless on your bills and statements and password protect them. Delete old and outdated files, and always shred your paper documents before throwing them out. For older documents you want to keep, save them on an external hard drive, CD, or USB storage device and store them in a safe place.
- Share your information wisely: Be extremely careful when sharing account passwords, your Social Security number, and other secure data via email or text message.
Learn something new about identity theft from this article? Tell me what fact or statistic you found the most surprising in the comments below!