Credit Fraud and Identity Theft: What’s the Difference?October 27, 2016
Identity theft is like ice cream in that it comes in a variety of flavors—but you’re not likely to enjoy a single one of them.
People often think credit fraud and identity theft are the same thing, but in fact credit fraud is just one of the many unpleasant “flavors” of identity theft. Credit fraud occurs when cybercriminals, friends, or even family members open up credit cards in your name. That’s what happened at Wells Fargo, where it was recently revealed that thousands of employees had opened millions of fake bank and credit card accounts in customers’ names—and had been doing so since 2011.
Identity theft can take place in many other ways that may do even more damage than credit frauds. For instance, scammers could use your Social Security number to steal your tax refund or to receive government benefits. Or they could steal your medical identity, filing false workers’ compensation claims or visiting a doctor under your name, leaving you with the unpaid bill.
The number of identity thefts each year are staggering. According to the Department of Justice, identity theft affects 17.6 million U.S. consumers a year, and complaints rose nearly 50 percent in 2015. Medical identity theft and tax refund frauds are two of the fastest-growing types of identity thefts, with millions of victims each year.
In many cases, credit frauds don’t result in any direct financial loss, just a lot of headaches as you work to restore your credit. It is likely that your financial institution or credit card company will pay for any monetary losses you’ve suffered, although it’s worth noting that you’ll be on your own to deal with the emotional fallout.
Other forms of identity theft can be more troublesome and result in substantial financial losses. For instance, medical identity theft costs an average of $13,500 per victim, according to the Fifth Annual Study on Medical Identity Theft by Ponemon Institute. The Department of Justice’s study found that identity theft victims as a whole suffered an average loss of $1,343.
Whether you’re the victim of credit fraud or one of the many other types of identity theft, the Federal Trade Commission offers a 68-page guide detailing how exactly to respond. If the crime involves theft of your Social Security number, you’ll need to take some specific steps.
And if you’re tired of worrying about all the different forms of identity theft, you might want to consider an identity monitoring solution, like MyIDCare, that can help protect you from identify theft and recover your identity quickly if and when it does happen.