Why Would a Criminal Steal Your Identity?

stack of social security cards
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When most of us think of identity theft, our credit cards are our first concern. Many of us who have had a credit card compromised believe that we have been a victim of identity theft. While credit card fraud is a type of identity theft, it is not the most damaging type of identity theft.

Credit card fraud is something that security professionals refer to as an "account takeover." This happens when a criminal takes over an account that already exists.

If your account is compromised, it is now your responsibility to report this loss to the bank within a set period of time, typically about 60 days, in order to get the funds back. When a credit card becomes compromised, the bank can usually rectify the situation within a day to weeks or couple of months.

Though credit card fraud is annoying, it pales in comparison to the real world of identity theft, such as when a criminal opens a new account under your name. This new account is not only using your Social Security number, it is also now attached to your credit history. In a society that is credit-driven, employers, creditors, and insurers will judge you only on your credit score, and you may be looked down upon, denied employment, credits, insurance or other services as a result of a stolen identity.

Groups Can Be Targets

It is important to understand that identity theft can happen to groups of individuals too, not just a single person.

Credit card companies, financial advisors, banks, hospitals, retailers, insurance companies and almost every other business that deals with your finances have been affected by a large-scale fraud or identity theft attack. For some of these companies, this is simply a nuisance. For others, it is the reality of doing their business.

Most, however, have heavily invested in security, but this does not mean they are not a target. Each business has its own set of issues to deal with, but at the same time, each company copes with the same thing: knowing that their customer is the most vulnerable variable in this equation.

How People Are Vulnerable

Whether they understand it or not, most people are they themselves the scammer's path of least resistance. This could occur due to their vulnerability to phishing emails, spoofed websites or by failing to update or protect their computers. People also leave themselves vulnerable by leaving a wireless connection open, not paying attention to bank statements, throwing away documents without shredding them, or carrying too much personal information in a wallet. Most people simply overlook their personal safety, which makes them a good target for a scammer.

When Identity Theft Goes Beyond Annoyance

Thus far, these threats have been described as an annoyance or damaging to credit, but the results can also be tragic. A guy named Larry is a good example of this. About 17 years ago, when Larry was 50 years old, another guy named Joseph stole Larry's identity. While he was operating under Larry's name, he got arrested, ended up in prison, and was ultimately paroled.

Joseph then obtained welfare and Medicare benefits in Larry's name and even got married.

Meanwhile, Larry had to deal with Joseph's actions from afar, just as if he himself was married, had a criminal record and was on welfare. Eventually, Larry was forced to spend 8 days in jail because of Joseph's crimes, had liens placed on his house, was denied health care and even lost his driver's license, all due to Joseph.

When people ask, "Why would someone steal my identity? I don't have money," tell the story of Joseph and Larry. When someone says "I have bad credit," tell them about Larry. When they say "I don't have credit cards or a computer. I pay for everything in cash," tell them about Larry.

This is what identity theft is. It goes well beyond the computer being hacked or your credit card being used without you knowing.

Do what you can to protect yourself now, as you don't want to become the next Larry.