What Is Financial Identity Theft?
Financial identity theft occurs when someone uses another person’s personally identifiable information (PII) for financial gain. A simple example is someone accessing your bank account by stealing your debit card information and PIN. A more sophisticated version of the crime would be when a fraudster uses your PII to add their name to one of your financial accounts, something called an “account takeover.”
PII is any data that could potentially be used to identify a specific person. There are many examples, including these:
- Full name
- Social Security number
- Driver’s license number
- Bank account number
Financial identity theft is a significant crime, and potentially one of the more damaging types of identity theft. Consider the possibilities—an identity thief gaining access to your bank accounts or retirement accounts and stealing your hard-earned money.
How does financial identity theft occur?
How does it happen? While the use of a stolen debit or credit card qualifies as financial identity theft, criminals who pull off more sophisticated forms of the crime—account takeovers, for instance—would need more significant data than just a payment card number and PIN.
A critical piece of information is your Social Security number. That number is yours and yours alone. The fact that it’s a unique, government-issued identifier assigned to only you is one big reason why financial institutions depend on it for identity verification purposes. Try to open a checking or savings account without one—it likely won’t happen.
Once an identity thief has your Social Security number—through a data breach or by other means—it can be easier to dig up your other personal information to go with it. Then, the thief can then use a variety of tactics to convince a financial institution that they’re you or otherwise have the right to be added to your account.
Experts say that financial identity theft is often committed by someone who knows the victim, possibly a friend or family member. These are folks who may be able to easily put their hands on the necessary information and use it without the victim’s knowledge.
5 ways to help protect yourself from financial identity theft
A primary tactic to help protect yourself from financial identity theft is to safeguard your personally identifiable information. By being careful how, where, and with whom you share such things as your Social Security number and other PII, you’re minimizing the risk of exposure and having it land in the hands of an identity thief.
Here are five ways you to help limit PII exposure:
- Don’t carry your Social Security card or number with you, unless you intend to use it for a specific purpose. It is a critical piece of PII and you should do all you can to safeguard it.
- Provide your Social Security number only when it’s necessary to do so. If someone asks for it, ask why—and how they’ll help protect it. The number is too important to share freely.
- Shred financial statements and other documents containing important personal data before discarding. These may include old tax refunds, bank statements, or other documents. The Internal Revenue Service offers record-keeping recommendations on its website.
- Use a locking mailbox or secure mail slot to help protect important mail and new credit and debit cards from identity thieves.
- Limit what you share on social media. Seemingly innocuous information like your place of birth or dog’s name could be an answer to an online security question that an identity thief would love to have.
Another tip to keep in mind: Regularly monitor your credit report and bank accounts. Unfamiliar activity could indicate someone is using your personal information to open new credit accounts in your name or accessing your bank account without your knowledge.
Editorial note: Our articles provide educational information for you. Norton LifeLock offerings may not cover or protect against every type of crime, fraud, or threat we write about. Our goal is to increase awareness about cyber safety. Please review complete Terms during enrollment or setup. Remember that no one can prevent all identity theft or cybercrime, and that LifeLock does not monitor all transactions at all businesses.