Identity Theft, Identity Verification

What Is Identity Fraud? Definition, Types, and Examples


What is Identity Fraud?

Identity fraud is the unauthorised use of a person’s personal information by another person to commit a crime or deceive or defraud that person or a third party in order to take advantage of the pleasures that come with that synthetic identity

The majority of identity fraud is performed for financial gains, such as gaining access to a victim’s credit card, bank accounts, or loan accounts. False or fabricated identification documents have been used in criminal behaviour (such as gaining access to secure locations) as well as contacts with official authorities such as immigration. 

Today, the identities of genuine people are frequently utilised in the creation of such copies. A person’s personal information can be stolen in a variety of methods, which is usually referred to as identity theft, which is used to commit the so-defined fraud; Identity Fraud

A fraudster may use another person’s basic personal information (such as name, address, username, and PIN) to get access to the victim’s online accounts, such as banking accounts, email accounts, and social media accounts. Such access might be used to gain further personal information on the target. More significantly, the information might be used to commit true fraud, such as creating a credit card account in the victim’s identity and then charging purchases to that account or entering into a loan arrangement in the victim’s name. 

Identity fraud can occur without identity theft, such as when a fraudster is given someone’s personal information for another reason but uses it to conduct fraud, or when the person whose identity is being used colludes with the person doing the fraud. Numerous incidents have been reported of organisations being hacked in order to steal personal information. 

Identity fraud is sometimes defined as the use of phoney identities, ID cards, faked or forged papers, and lying about their age to simply “conceal” their genuine identity. Reasons for this form of identity fraud is usually to gain access to services or products intended for different groups, this includes a desire to purchase cigarettes or alcohol as a minor, as well as a desire to continue participating on a sports team or organisation after the individual is too old to compete.

Difference between Identity Theft and Identity Fraud

Identity Theft

Identity theft is the criminal act of stealing personal, financial, or confidential private information with the intent of using it to assume another person’s identity. Most often, the stolen identity is used to make fraudulent purchases or to open credit cards and bank accounts. Additionally, a fake identity can affect insurance claims, taxes, and even criminal records. While many pieces of information can be stolen and used by identity thieves, there are a few important things that you should always keep safe and be careful of sharing:

  • Name
  • Social Security Number
  • Birth Date
  • Address
  • Passwords
  • Credit Card Numbers
  • Bank Accounts

Identity thieves can get or steal your identity in a variety of ways. In other circumstances, a stolen wallet is all that is required. Thieves frequently have access to your ID, credit cards, bank cards, and other personal information. A stolen smartphone also supplies crooks with a wealth of personal information. Home burglary, computer hacking, and dangerous internet connections or online transactions are examples of other approaches. The greatest method to defend yourself from identity theft is to safeguard your personal information.

Identity Fraud

Identity fraud is the use of stolen information and identity theft is the act of stealing personal, private, or financial information. This crime impacts both the individuals whose identities have been stolen and the companies that have utilised the stolen identities to conduct fraudulent transactions. Furthermore, the phoney identity utilised does not have to be that of a living or even genuine person. To perpetuate a crime, thieves frequently take the identity of the deceased or establish phoney identities of persons who never lived. Here are some examples of identity fraud:

  • Fake identification or a passport
  • Fraudulent credit card accounts
  • Fake bank accounts
  • False loan applications
  • Fraudulent withdrawals
  • Fraudulent transactions

Identity fraud, once committed, can have a long-term influence on your credit score. Thieves’ illegally created accounts and transactions may remain on your credit record and be your responsibility until contested. Regularly checking your credit report is an excellent method to protect yourself against identity theft. Look for any accounts or bills that you do not recognise and notify the company or credit agency as soon as possible that your identity may have been compromised. The more cautious you are, the more probable it is that you will be able to defend yourself from identity theft.

Understanding the distinction between identity theft and fraud is critical for preventing and resolving crime. Your credit score is crucial and should be safeguarded. Keep your confidential information protected, even if it takes some effort. This may help you avoid being a victim of identity theft or fraud in the future.

Preventive measures for Identity Fraud

Know the most common ways criminals steal your identity

Criminals require access to your PII in order to steal your identity. Unfortunately, some of it may have already been disclosed in a recent data breach. However, this is not the only method to becoming a victim of identity theft.

Learn where you’re most vulnerable to identity theft assaults to prevent it:

  • Phishing attacks: Scammers send spam emails and messages or contact you on the phone pretending to be someone you trust, which is known as an imposter scam. For example, they may pretend to be from the IRS and ask you to “confirm” your identity by providing your Social Security number. They may also attempt to persuade you to click on a link that would infect your device with malware.
  • Physical theft: Everything an identity thief needs to steal your identity may be found on your driver’s licence, ID, or even in the mail.
  • Shoulder Surfing: When you use your gadgets in public, you are subjected to this “assault.” A scammer monitors you as you input your online banking password. If they’re more clever, they may intercept your Wi-Fi connection and eavesdrop on you via a man-in-the-middle assault.
  • Social engineering attacks: Social engineering tactics, like phishing, employ psychology to manipulate you into doing what thieves want (like giving up your PII). Identity thieves do background checks on you and exploit your personal information against you.

Simply put, you may be vulnerable if you get an unwanted message or call, misplace a piece of mail, use your devices in public, or surf the internet openly.

Watch out for the warning signs of a phishing attack

Scammers mostly use phishing attempts to lure you into providing personal information. These texts and phone calls might appear and sound credible. However, any information you submit or sites you click on may jeopardise your identity.

So, how can you detect whether a message is fake?

Scammers frequently attempt to counterfeit their contact information in order to seem to be coming from a legitimate phone number or email address. However, if you look closely, you’ll see that they differ from what’s published on the alleged sender’s official website.

Phishing letters seldom mention you by name, may contain mistakes, and frequently utilise threats, urgency, or promises to entice you to act. They’ll also frequently contain links, files, or QR codes with compelling reasons to click or scan them.

If you have any doubts, do not react to these communications or click on any links or attachments. Instead, use the information on the company’s website to contact them directly.

Safeguard your IDs and wallet

Identity thieves rely on more than just clever hacking. Criminals can take your identity with only the ID in your wallet or handbag. As a result, the less personal information you carry, the better.

  • Carry no more than your driver’s licence and one or two credit or debit cards. Your passport, Social Security card, birth certificate, and extra credit or debit cards should be left at home.
  • Even so, it’s critical to keep your physical identification protected from fraudsters.
  • Keep a running list of what’s in your wallet or handbag at all times. If your wallet is taken, you’ll know which accounts to shut down and how you could be vulnerable.
  • Keep essential papers in a locked safe at home in case of burglary for further security. If you’re going to pay with a credit card, opt for a chip or contactless reader rather than swiping.

Avoid public Wi-Fi (unless you have a VPN)

It is convenient to have free wireless internet at an airport or a neighbourhood coffee shop. However, it also provides an ideal chance for criminals to steal your information.

Wi-Fi networks in public places are notoriously simple to intercept. An identity thief can take your usernames and passwords if they intercept your connection.

  • If you must connect to public Wi-Fi, utilise a cellular hotspot. Tether your phone to your laptop to prevent hackers from exploiting insecure Wi-Fi networks.
  • Make use of a virtual private network (VPN). Using a VPN is a better alternative since it can mask your information with encrypted keys.

Secure your online accounts and use two-factor authentication (2FA)

Strong passwords are frequently your first (and only) line of defence against identity theft. However, a startling 22% of individuals use their names as passwords for online accounts.

This effectively grants an identity thief permission to access your email, take over your online bank account, or hijack your social media profiles.

Instead, use encryption to protect your online accounts.:

  • Passwords. Passwords must be at least eight characters long. Make use of a mix of upper and lowercase characters, numerals, and symbols. 
  • Two-factor authentication vs. multi-factor authentication (2FA or MFA). These offer an additional degree of security to your accounts by requiring a secret code in addition to your password. However, avoid using SMS for authentication because it may be hacked or circumvented if your phone is stolen. Rather, use an authenticator tool.
  • Fingerprint or biometric device security. Hackers can steal your identity if you’re signed into accounts on your mobile device or laptop (such as your email). Biometric security is far more difficult to breach (although there have been cases of fingerprint identity theft). Combine biometrics with a strong passcode for the greatest device security.

Finally, keep a watch out for password-related alerts, particularly unsuccessful login attempts or password changes. Set up a remote security feature for your phones, such as Apple’s Find My iPhone app or Google’s Find my phone feature to wipe the phone remotely or locate it in case of theft.

Read more this blog to know more about Identity Verification : Identity Verification – Digitizing the Verification Process

Monitor your credit report and consider a credit freeze

The warning indicators of financial fraud caused by identity theft are subtle at first. Scammers sometimes use tiny transactions to “test” accounts and credit card details. However, if abnormalities are not detected early on, the consequences can be devastating.

Identity theft may cost you thousands of dollars as well as hours of your time as you try to rebuild your credit.

Paying close attention to bank and credit card statements might help you detect financial theft early on. Look for odd charges, such as those from unknown merchants, on your account statements.

If you suspect identity theft, contact the company, card issuer, or financial institution. They should be able to reverse the charges, close the compromised accounts, and provide you with a new account number.

Reduce your digital footprint

Your online footprint is comprised of everything you do online, from Google searches to social network posts. This information is used by identity thieves to create phishing emails, guess your passwords, and contact your close ones.

While it is impossible to remove your internet trail, here are some suggestions for limiting access:

  • Avoid oversharing on social media. Think twice before posting. Many of us inadvertently divulge sensitive information, location data, and even personally identifiable information (PII) in social media posts.
  • Change your privacy settings. Only allow close friends and relatives to see your account. You can be a little more liberal with what you post.
  • Delete any outdated or unused accounts. Inactive accounts are used by identity thieves to operate fraud or obtain passwords. If you no longer use an online service, you should disable your account and remove your data.
  • Make a Google Alert with your name in it. This will notify you if your name appears on a website. While it increases your web presence, it also displays auto-generated content that you should remove.

Use antivirus to protect your devices from malware 

Malware is harmful software used by hackers to spy on you, steal your personal information, or lock your gadgets until you pay a ransom.

A keylogger is used in one particularly devious sort of cyber assault. Once installed, they capture everything you input — including passwords, logins, and emails — and deliver it to a hacker remotely.

Many phishing emails contain hidden links or files that download malware.

With so much personal information on your devices, you must keep it secure from hackers. Do not open any suspicious attachments or links in emails, no matter how appealing they appear.

Antivirus software can protect your devices and alert you to potential phishing attempts.

But what if you unintentionally opened a spam email or clicked on a potentially harmful link?

To begin, search for evident indicators of a virus. This includes lags in speed, new browser plugins, and persistent pop-ups.

If you see any indicators of infection, unplug from the internet right away. Without an internet connection, hackers have a considerably more difficult time stealing your information.

Then, seek expert assistance after securing your device by turning it off or deleting automatically opened windows in your browser or automatically installed apps.

Safeguard your mail from scammers

As simple as dumpster diving or mail theft may appear, they are valuable sources of sensitive information for identity thieves. If you don’t already have one, buy one and shred everything containing personal information before tossing it away. This includes the following:

  • Account statements
  • Credit card company correspondence or offers
  • Insurance claim for healthcare
  • Statements for personal or student loans

Whatever contains your phone number or other contact information

Collect your mail on a daily basis so that thieves have less time to steal your documents. Set up a temporary mail hold with the post office until you return if you’re travelling.

Check your mailbox for unusual letters, such as debt collection reminders from lenders you don’t know or news of new accounts you didn’t open. All of these warning signs indicate that identity theft is in the works.

Finally, keep an eye out if your mail stops arriving. A criminal may have redirected your address to their own via a change-of-address fraud.

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