Preventing Identity Fraud Online: Warning Signs and Tips

Identity fraud has had a far-reaching impact to individuals globally and is considered one of the most common forms of cybercrimes. The falsification and misuse of identity-related data are now among the key factors affecting global consumer confidence about online data security.

According to a recent global survey on worldwide internet user attitudes regarding online identity theft, many people now feel more vulnerable to identity fraud than before. While some argue that the measures they’ve taken to protect themselves are sufficient, there’s a lot to be done to avoid falling prey to identity fraud.

Frequent data breaches due to identity fraud mean your information may already be exposed.

This blog covers everything you need to know about identity fraud, how it happens, the warning signs, and key measures to protect yourself.

What is identity fraud

Identity fraud occurs when someone steals your personal information and poses as you to make purchases or steal from you. They may steal your usernames, account passwords, credit card numbers, Social Security Numbers, and health IDs.

This data helps them to easily access your bank accounts, open new credit lines, and use it without permission to commit fraud and other crimes.

Identity fraud is a serious concern for individuals globally, and its frequency has doubled over the years due to emerging technologies. If not prevented, it can cause a tremendous strain on one’s reputation, leading to poor credit scores or even arrest for crimes you didn’t commit.

How criminals orchestrate identity fraud

Online fraudsters only require a few details of your personal information to access your bank accounts and do all things. They obtain this personal information in various ways, such as going through trash bins and looking for bank account and credit card details.

However, the proliferation of the internet and the increasing use of computer technology has made it even easier for them to obtain personal information and orchestrate their schemes. Here are a few ways fraudsters try to steal your personal information:

1.   Buying data from the dark web

The dark web is a black market where your personal data is sold as a hot commodity. Email addresses, passwords, account names, and usernames are all on sale for the willing buyer.

Once cybercriminals have that information, the possibilities are endless. From credit card fraud to opening up a dozen credit cards in your name, the list goes on.

2.   Phishing emails or texts

Have you ever received an email or text that seemed off? This is the work of identity thieves, using phishing emails, texts, and even calls to extract valuable data from you. They may disguise texts and emails to look like they’re from a bank, an online retailer, or even a friend.

They want to trick you into responding with bank account numbers, log-in information, or even your social security number. Then, boom! They’ve got you exactly where they wanted.

3.   Malware

Hackers are known to be sneaky. They tempt you with a link or a download, leaving malware behind. This malicious software could be anything, even spyware that goes sneaking around after sensitive data.  

Hackers can also up their game through Wi-Fi, intercepting data as it travels through the digital airwaves.

4.   Shoulder surfing

This could happen anywhere, either in a coffee shop or a library. As you type your credit card information into your laptop, a scammer could be nearby, just watching and waiting. They watch you key in personal information and live to use it later for their personal gain.

5.   Physical theft

Sometimes, the old-school methods are still in play. Identity thieves can also get your personal and financial information by stealing your wallet or targeting your mailbox. They look for crucial documents, such as credit and identification cards, that they can use to carry out fraud.

Types of identity fraud

From simple forms of identity fraud, such as financial identity theft, to more complicated ones, like synthetic identity fraud, the consequences of each are always too difficult to bear.

Let’s look at the various types of identity fraud that could threaten the safety of your personal information.

1.   Financial identity fraud

Financial identity fraud occurs when someone takes over your identity or financial information for their malicious gain. They can use the information to plan and commit identity fraud, obtain financial services in your name, or access your existing accounts.

2.   Synthetic identity fraud

This is the type of identity fraud where criminals use fake and real credentials to build an entirely new identity. The new identity becomes the tool for opening fraudulent accounts, making purchases, and carrying out all sorts of fraud.

3.   Child identity fraud

This form of identity fraud generally involves creating a clean identity associated with a child’s Social Security number. The identity is then used to secure residency, employment or loans. Fraudsters may create their identity from a birth certificate or other publicly available documents.

4.   Medical Identity fraud

Medical identity theft happens when someone else seeks free medical care in your name. They may use your personal information to submit fraudulent claims to a health insurer. This identity fraud endangers your health records and may require you to confront unpaid medical bills.

5.   Tax identity fraud

This occurs when someone uses your Social Security number to file a false state or federal tax return claiming a refund. The possible embezzlement is usually not noticed until you try to file your legitimate return.

6.   Criminal identity fraud

Criminal identity fraud is when a suspect is arrested and uses the identity of another who has a prior criminal history that will impede their freedom. Some use this form of Identity Theft to avoid creating a criminal record before being considered adults.

7.   Social security identity fraud

Criminals want your Social Security number to apply for loans and credit cards, leaving you with a hefty bill. But wait; there’s more. They can also use your Social Security number to apply for disability, medical, and other benefits in your name without your consent or knowledge.

Warning signs of identity fraud

Identity fraud happens in many ways, and fortunately, it’s easy to spot if you’re keen enough. Here are some of the common warning signs you should look out for:

1.   Unfamiliar charges on your bank statement

One thing fraudsters do after accessing your bank details is to carry out unauthorized transactions. So, if you notice any unfamiliar transaction you didn’t make, there’s a high chance someone else did it posing as you.

It’s always advisable to read and verify every transition as soon as you’re served with your monthly bank statements. Look for anything unfamiliar, no matter how small, and contact your bank if signs are there. It’s the only way to secure what’s remaining.

2.   Unrecognized credit card charges

The same way fraudsters can access your bank accounts is the same way they can do with your credit cards. If you find unauthorized transactions you don’t remember on your credit card, your card number or other personal details may have fallen into the wrong hands.

Remember that scammers will often start on a lower note to verify if your credit card is active. So, however small it appears, any strange activity on your credit card is a big red flag that you should never ignore.

3.   New credit cards or loans in your name

Do you have a notification for a new credit card you don’t remember signing up for? Better yet, are there any new credit card loans you can’t remember applying for? If so, then a fraudster most likely impersonated your identity and signed up for a new credit card or loan in your name.

This is a clear warning sign that you’re a victim of identity theft, and the best you can do is freeze your credit card immediately. Sometimes you won’t get notified by a bank when this happens, as most fraudsters will associate the card with another address.

4.   Plummeting credit card score

It’s not a tangible asset like cash or credit cards, but your credit score is one of your most important financial assets. Identity thieves sometimes pretend to be you while they open up new cards and loans that they have no intention of paying. The result is a quick place in the 500 club.

  • New purchases” verification

Is your bank calling, emailing, or texting to ask if you really tried to make an unfamiliar purchase? That’s a classic identity theft red flag. Take all such inquiries from your financial institutions seriously.

It’s also one of the most common phishing scams and the only information you should provide is a simple “yes” or “no” to verify or flag the transaction.

6.   Unexpected calls from debt collectors

If you receive a call from a debt collection agency demanding for a loan repayment that you have no idea of, then it’s possible an identity fraudster has racked up a debt in your name. This often happens when scammers steal your credit card, hack your bank account and get their hands on crucial bank details that can help them secure credit financing.

7.   Bounced checks even if you have enough funds in your account

You normally wouldn’t expect this, but it’s possible to write a check only for it to bounce on account of low funds available. This often happens when a fraudster has accessed your bank account and withdrawn everything.

If you experience such a scenario, quickly review your bank account activity and confirm if there are more scams.

8.   Depletion of your health insurance benefits

This is a red flag associated with medical identity fraud, where a fraudster impersonates you in order to receive healthcare. They’ll receive free medical treatment under your insurance policy, depleting your health coverage and leaving you uncovered.

So, if your health insurance company notifies you that you’ve reached your benefits limit, or they deny you a legitimate medical claim, treat it as a red flag and investigate immediately.

How to protect from identity theft

Criminals are constantly devising new ways to lure you into the traps of identity theft. So, to protect yourself, it’s important to be proactive about your approach. The goal is to implement a few practices and build a shield that discourages fraudsters from trying to victimize you.

Here is how to protect from identity theft and stay ahead of the online fraudsters.

1.   Secure your gadgets with a passcode

Your gadgets, such as smartphones, tablets, or laptops, all require a password to keep them protected in case they fall into the wrong hands. Not securing them with a passcode is like walking out of your house with the door open.

Your email, bank accounts, and other private information saved on any of the devices will be readily accessible if it ends up in the hands of a fraudster.

2.   Be wary of phishing attempts

Refrain from clicking on any links in emails or texts that appear dubious. Identity fraudsters use emails and websites that appear to be from your bank, credit card Company, or another financial institution in an attempt to deceive you into entering your account information.

They know that these emails will trick you into opening an attachment that will infect your device with a malicious virus.  To stay safe, never enter your login information on an unfamiliar screen, and never click on links you don’t think are real.

Also, learn to stop someone from tracking your phone just in case they send spyware your way.

3.   Employ a password manager

Having passwords is just the beginning—you need to ensure extra safety by employing a password manager. There is a significant security risk when you use the same password for all of your electronic devices and important bank accounts.

If you do, all it takes for a fraudster to access the rest of your accounts is figuring out just one password. To prevent identity theft, it’s a good idea to use different passwords for each account and to vary them occasionally.

4.   Review credit cards regularly.

The activity on the bank accounts in your name, together with their most recently reported amounts, is included in credit reports. So, monitoring your credit report on a regular basis is an excellent approach to identifying any anomalies.

Early detection of suspicious activity, such as the presence of an unknown account on your report, will allow you to take prompt action to solve the issue and prevent it from getting worse.

5.   Don’t share personal information over the phone

A fraudster may call you pretending to be a bank or credit card company employee, just to trick you into sharing sensitive information. The truth is that no reputable company will ever request personal information from you, such as your Social Security number or PIN from a bank.

If you receive such a call, then the best thing to do is ask for the caller’s credentials, end the call, and reach out to the organization via their official contacts.

What to do in the event of an identity fraud

The sooner you take steps to address anything suspicious you discover, the better. In most cases, identity fraudsters will test you first to see how you respond to their schemes. If they realize you’re unaware of what’s happening, they’ll become more active and commit an even bigger fraud.

Take the following steps if you suspect something is off:

  • Check your credit history: Take some time to verify that everything on your credit report is accurate, regardless of the kind of fraud that has happened. Always be on standby to take quick action if you come across an account that you are not familiar with.
  • Implement security freeze or fraud alert: Security freezes and fraud alerts can aid in preventing fraud in the future. A fraud alert alerts potential creditors to the possibility that you are a victim of fraud. On the other hand, a security freeze inhibits someone from establishing a credit account in your name.
  • Challenge any erroneous data you discover in your report: Make sure you dispute any inaccurate information about you with the relevant credit agency if you think there is fraudulent information on one or more of your credit reports.

Final thoughts

Identity fraud is a challenging experience that can seriously harm your creditworthiness and leave you with lots of unpaid bills that you did not incur as a result. For most people, the warning signs of identity theft are obvious in hindsight, and all it needs is to always be on the lookout.

Your safety starts from routinely checking your credit card and bank statements for any indications of fraud. If by any chance it’s too late, then there are ways to stop the fraud and prevent the fraudsters from accessing your personal information.