What Is Identity Theft?
Identity theft occurs when someone uses your personal information — such as your Social Security number, bank account numbers, or passwords — to commit fraud [4]. Thieves may use this information to open new credit accounts in your name, drain existing bank accounts, file fraudulent tax returns to steal refunds, or take out loans [4]. As you begin managing your own finances, it is important to stay vigilant, as young people are often targeted by these tactics while their financial habits are still forming [8].
How Identity Theft Happens
| Method | How It Works | How to Prevent | | :--- | :--- | :--- | | Phishing emails | Fake emails trick you into entering passwords | Don't click links in unexpected emails [4] | | Data breaches | Hackers steal data from companies you use | Use unique passwords; freeze your credit [2] | | Lost wallet | Someone finds your ID and cards | Report immediately; don't carry your SSN [4] | | Mail theft | Thieves steal mail with financial info | Use a locked mailbox; sign up for informed delivery | | Public Wi-Fi | Hackers intercept data on public networks | Use a VPN; avoid logging into financial accounts | | Social engineering | Scammers trick you into revealing info | Verify identity before sharing information [10] |
How to Protect Yourself
1. Freeze Your Credit
A credit freeze restricts access to your credit file, which prevents anyone from opening new accounts in your name, even if they have your personal information [2]. It is free to place and remove, and it does not affect your credit score [2], [3].
| Action | Where | | :--- | :--- | | Freeze credit | Equifax, Experian, TransUnion (all three) [2] | | Thaw when needed | Temporarily lift freeze when applying for credit [2] | | Cost | Free (federally mandated) [2] |
Source: Consumer Financial Protection Bureau, 2024.
2. Use Strong, Unique Passwords
- Use a different password for every account.
- Use a password manager to keep track of complex credentials.
- Enable two-factor authentication (2FA) on all financial and email accounts.
3. Monitor Your Accounts
- Check bank and credit card statements weekly for unauthorized activity.
- Set up transaction alerts for all accounts.
- Review your credit report annually via AnnualCreditReport.com, the only federally authorized source for free reports [9].
4. Be Cautious Online
- Don't click links in unexpected emails or texts [4].
- Don't share personal information on social media [4].
- Use secure websites (look for "https://" in the URL) [4].
- If you are unsure about a potential scam, try our Scam Red Flag Challenge to test your instincts.
5. Shred Sensitive Documents
- Shred documents containing personal information before discarding them [4].
- Never carry your Social Security card in your wallet [4].
- Only share your SSN when absolutely necessary [4].
What to Do If You're a Victim
Step 1: Place a Fraud Alert
Contact one of the three credit bureaus to place a fraud alert on your credit report [3]. This notifies creditors that they must verify your identity before opening new accounts in your name [3].
Step 2: Report to the FTC
File a report at IdentityTheft.gov [10]. This creates an official record and provides you with a personalized recovery plan [4].
Step 3: Contact Affected Companies
Call the fraud departments of any companies where accounts were opened or compromised [4]. Close fraudulent accounts immediately [4].
Step 4: File a Police Report
File a report with your local police department [4]. This creates a paper trail that can assist creditors and credit bureaus in resolving the fraud [4].
Step 5: Dispute Fraudulent Charges
Dispute any unauthorized charges or accounts with the credit bureaus and the affected companies [4].
Step 6: Freeze Your Credit
If you haven't already, freeze your credit at all three bureaus immediately to prevent further unauthorized activity [2].
Key Takeaway
Identity theft involves the misuse of your personal information to commit fraud [4]. The most effective defense is a free credit freeze at all three major credit bureaus, which prevents thieves from opening new accounts in your name [2].
