What to know about identity theft

Incidents of identity theft have skyrocketed by nearly 600% in the last two decades.¹ Just in 2022, there were more than one million reports of identity theft in the U.S.² So how can individuals protect themselves?

In this guide, learn about identity theft, how to report it, ways to help stay protected, and common scams to look out for.

What is identity theft?

Identity theft refers to a type of crime where an individual's personal information is stolen and fraudulently used by someone else for financial gain or other malicious purposes. It normally includes one or more of the following occurrences:

• Unauthorized or attempted use of an existing account

• Unauthorized or attempted use of personal information to open a new account

• Misuse of personal information for a criminal purpose

How does identity theft usually happen?

There are a variety of ways identity theft can happen. Lost personal items, nefarious digital schemes and scams, and even eavesdropping can all pose a risk. While tactics and risks may vary, here are some common examples to be aware of:

• Phishing: Sending deceptive emails, messages, or websites that mimic legitimate organizations to trick individuals into revealing personal information.

• Lost or stolen items: Criminals steal wallets, purses, or bags containing identification documents, credit cards, and personal items.

• Skimming: Fraudsters use devices to capture credit card information when individuals make payments at ATMs, gas pumps, or other card terminals.

• Pharming: Scammers redirect victims to fraudulent websites without their knowledge, where they unwittingly enter personal information.

• Dumpster diving: Criminals search through discarded items such as documents, receipts, computers, or cell phones to find personal information.

• Social media: Criminals gather personal information from social media profiles, which may be used to impersonate victims or answer security questions for account access.

It’s important to note that the above examples are not all-encompassing. Criminals may use other tactics, like telemarketer and imposter scams or hacking personal accounts, to steal personal information and carry out identity theft.

Identity theft examples

Once a thief has stolen someone’s personal information, there are various activities they may attempt to engage in. Here are some examples:

• False applications for loans and credit cards: Criminals may apply for loans or credit cards in the victim's name.

• Opening fraudulent bank accounts: Thieves might open bank accounts in the victim's name, possibly using them for illegal activities.

• Tax fraud: Identity thieves may file fraudulent tax returns to claim a victim's tax refund.

• Employment fraud: Thieves may use stolen identities to secure employment and/or unemployment benefits.

• Medical identity theft: This involves using a victim's identity to obtain medical services, prescriptions, or insurance claims.

• Identity cloning: Thieves can assume the victim's identity entirely, using it for various fraudulent purposes, such as traveling under the victim's name or committing crimes.

How to report identity theft

There are several steps someone can take when reporting identity theft. Some general actions to take to report fraud are:

• Contact local law enforcement: Immediately contact the local police department to report the identity theft. Provide them with a detailed account of the incident and any evidence available.

• Contact the Federal Trade Commission (FTC): Visit the FTC's official website to report the identity theft. Complete the Identity Theft Report and create a recovery plan on the website.

• Notify credit bureaus: Contact the three major credit bureaus and request a fraud alert be placed on credit reports to help prevent further unauthorized activity. Consider placing a credit freeze to restrict access to the individual’s credit report.

• Contact financial institutions: Inform relevant banks, credit card companies, investment or brokerage companies, or other financial institutions that accounts are held with. Close or freeze compromised accounts and open new ones if needed.

What to do if someone’s identity is stolen

In addition to the above ways to report identity theft, here are some more possible strategies to keep in mind when someone’s identity has been stolen:

• Maintain a detailed record of all communication related to the identity theft, including dates, names of individuals spoken to, and reference numbers for any reports.

• Continuously monitor credit reports, financial accounts, and personal information for any further suspicious activity.

• Cooperate with law enforcement, creditors, and financial institutions to resolve fraudulent accounts and charges.

• Strengthen online and offline security measures, such as using strong passwords, enabling multi-factor authentication, and securing personal documents.

Make security a priority with PayPal.