identity theft

noun

Updated on: 26 Jul 2017

Definition of identity theft

:the illegal use of someone else's personal information (such as a Social Security number) especially in order to obtain money or credit

See identity theft defined for English-language learners

Examples of identity theft in a Sentence

How can we protect ourselves against identity theft?

First Known Use of identity theft

1964

Other Legal Terms

actionable, alienable, carceral, chattel, complicity, decedent, larceny, malfeasance, modus operandi

Financial Definition of IDENTITY THEFT

identity theft

noun

What It Is

Identity theft is the crime of using another person's personal information, credit history or other identifying characteristics in order to make purchases or borrow money without that person's permission.

How It Works

Let's say John Doe is at work and happens to see some paperwork on a co-worker's desk. The paperwork is a stack of applications for credit from customers. The applications list each person's name, birth date, social security number and bank information. John Doe photocopies an application for Jane Smith. He then uses Jane's information to apply for a credit card in her name, which he then uses to buy a motorcycle and a beer stein collection.

Jane is a responsible adult and therefore checks her credit every four months (once a year for each of the three credit bureaus). She notices the "new" credit card and the massive balance for the motorcycle and beer-stein spree. She calls the credit card company to dispute the charges and files a police report. In the meantime, she is unable to qualify for a mortgage because lenders feel she is carrying too much debt (thanks to the thief), and collection agencies are calling her for credit card payments.

Why It Matters

Identity theft often involves stealing electronic data. It is very time-consuming for victims to battle and takes a long time to recover from. Often, the perpetrators are never caught, and the victims' credit scores suffer tremendously. Accordingly, smart consumers check their credit often in order to detect identity theft before it gets out of hand (or statutes of limitation occur), they avoid giving data out unnecessarily, and they are alert to changes in normal financial routines, such as bills that no longer arrive, mysterious bank charges, or communications from the IRS that more than one tax return was filed in your name.

Source: Investing Answers