If you've never heard of identity theft, then welcome to our planet and we need to talk. But what about identity fraud? Is it the same thing or something different?
This debate has been going on for years, causing plenty of confusion and even heated discussion, so I thought we should clear up the mystery. The truth is, most of what we discuss as identity theft is in fact identity fraud.
The term identity theft is usually reserved for the worst kind of identity theft — where someone obtains enough personal and financial information about you to become you. They then use this clone to cause long term damage to your life, with horror stories of cloned identities taking over the victim's financial life, owning their home, making extravagant purchases, running up enormous medical bills, and sometimes going bankrupt.
In some cases, cloned identities have even died in the name of the victim, leaving a huge mess to be cleaned up. These scenarios are frightening, and unfortunately no longer rare. And they can haunt and financially hog-tie victims for the rest of their lives. Which is why we're so adamant that you want to avoid identity theft at all costs.
But identity fraud is slightly different and should be understood better in order to prevent it. Identity fraud is less of identity cloning and more about single isolated incidents of fraud. Simple examples of identity fraud might include someone stealing and cashing one of your checks, using your credit card to make a small payment.
These cases are usually isolated, meaning the fraud beings and ends with a single incident that can quickly be resolved and probably won't change your life. Even if it changes the way you trust the thief.
One of the main reasons so many identity frauds are characterized as identity thefts is the media. For the last few years the media has lumped characterizes almost every kind of fraud as identity theft, and the security industry has done the same thing. And while some still argue that it's misleading and maybe even scaremongering, I don't think it matters any more.
First of all, I think it's always important to make any security awareness message as simple as possible for the consumer, so it's also as simple as possible to maintain a high level of education and awareness. Discussions that seem to split hairs could also split focus and have a negative effect on the discussion.
And because many identity frauds grow up to look more like their sinister cousin, especially if not caught early and dealt with, calling them all identity theft can be a big help.
The cops and the courts have also played a role in mixing the two crimes, defining many kinds of frauds as identity theft if the thief pretended to be someone else, or used some form of borrowed, stolen, or invented identity to commit the crime.
The bottom line is that you don't want to be a victim of either identity fraud or identity theft. Even a relatively simple incident of identity fraud can be costly and time consuming to fix. And if it's not discovered and addressed quickly, it can often escalate to something bigger, more complex, and more life altering. Like identity theft.
Is this a case of identity theft or identity fraud? Here’s the story of a California billionaire who was the target of a $1.4 million scam.
Learn about identity theft protection.