Identity theft is a major concern for individuals and financial institutions, in fact identity theft is not confined to financial crimes only, and identity thieves use stolen identities, and copied identities to commit crimes and terrorist activities too. In fact there are 4 major sub categories of identity theft; however the focus of this article will be on how identity theft is used for financial crimes. With information exchanging hands freely, identity thieves are coming up with new ways to steal identities every day.
So how does identity theft work? The oldest form of identity theft is stealing a credit card and then using it to buying goods by posing as the owner of the card. Sometimes the owner of the credit card is unaware of the card theft for days, by then the thieves could have made purchases against the credit card for thousands of dollars. In fact credit card identity theft is so common that today almost all major credit card companies offer theft protection so that credit card users donâ€™t end up paying for credit card purchases they did not make.
Apart from stealing credit cards, another popular way of identity theft is Phishing. Phishing is the process of acquiring financial information like net banking passwords, and credit card numbers, by sending out fake emails that look like they are from banks or credit card companies. Phishing is perhaps the most popular way of identity theft, once a user actually sends a reply to an email with his financial details, the identity thieves actually change the password of the account, and start making financial transactions. It takes the user a few days before he can realise that his identity has been stolen. In fact this is the reason why many banks and credit card companies clearly mention that they will never request credit card or financial information via email or phone.
Identity thieves also use credit card bills, and bank statements to steal identities. By stealing credit card bills and bank statements, identity thieves actually contact the bank posing as the valid owner of the account, once they have changed the correspondence address to an address of convenience, they request an add on card, or a new credit card and then proceed to use the card. Sometimes the original owner is unaware of the theft till it is too late.
A newer method of identity theft is called â€œdumpster divingâ€ all most all companies and individuals dispose their credit card bills and old bank statements. Identity thieves sift through the dumpsters to find bank statements and financial documents. Once they have found the documents they need they can actually setup new business credit cards or add on cards. In fact the margin of financial loss is much larger if the identity thief manages to misuse corporate cards, or create add on cards.
Another popular method of identity theft is using financial information to open bank accounts, once an identity thief has created a bank account in someone elseâ€™s name; he then proceeds to write out delinquent checks. By the time the person whose identity is stolen, finds out, the identity thieves have actually made thousands of dollars of purchases using fake checks.
In fact another method of abusing identity theft is taking out personal loans or car loans, an identity thief actually offers documents that are otherwise genuine to buy cars, or take personal loans worth thousands of dollars. The person whose identity is stolen only finds out when he starts receiving bills for the instalments. In extreme cases an identity thief can setup a fake bank account, and billing address and the person whose identity has been stolen only finds out when civil action is taken against him.
Identity thieves have been finding newer ways to steal identities and misuse financial information to their advantage. The objective of this article was to educate people about the various ways in which identity thieves can steal a personâ€™s identity. The next time you feel that an email cannot be harmful, think again. The safest method of dealing with any credit card company or bank is by calling the number that they have printed on their paperwork. Not only are you sure you are dealing with a bank official, all your financial dealings are safe.