What is Identity Theft: Meaning, Types & Tips to Prevent It

Identity theft has increasingly become a popular crime to commit where anyone is becoming a victim if not careful. But what is identity theft?

If you are wondering the same question, then the answer is that it is an act that happens when an individual uses your personal information, including birth date, name, etc., to impersonate you for monetary gains. If you want to avoid such a case, read this piece to learn about its types, preventive measures and other essential details.

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What Are the Types of Identity Theft and Their Warning Signs?

Listed below are the types of identity theft and warning signs that can help you to identify the same and take necessary precautionary measures:

1. Credit Identity Theft

Credit identity theft occurs when individuals access your personal details, such as your name and birth date, to obtain new credit.

Warning Signs: You may notice unexpected alterations in your credit score or account in your credit report that you are unfamiliar with. You may receive court judgments issued against you or notices regarding debt collection. The ideal way to prevent such a type of theft is to freeze the credit account immediately.

2. Synthetic Identity Theft

Synthetic identity theft happens when an individual utilises a patchwork of identity data to build a fictional character or develop a fake profile. After that, that individual can use this persona to avail credit cards, loans, or do other criminal activities.

Warning Signs: If you freeze the credit account, then you may find out that the criminal is using your 's Social Security number. In the case of India, a fraudster may use your child's Aadhaar card number. You may not discover such criminal activity until your child obtains a student loan.

3. Child Identity Theft

The fraudster steals the identity details of a child to apply for a loan in the name of the child. Sometimes, a child cannot find out about this until he or she applies for a credit.

Warning Signs: If you notice that your child is receiving offers for credits or calls speaking about delayed debt repayments, then investigate the matter immediately. You can freeze the credit account of your child to prevent this from aggravating.

4. Taxpayer Identity Theft

Often criminals use a Social Security number or, in the case of India, an Aadhaar card number for filing a tax return. In this way, they steal your tax credit or refunds.

Warning Signs: You may not file a return as the criminal has already filed it using your credentials. You may receive a notice referring to an activity you are unaware of. Alternatively, records may suggest that you worked under an employer which you did not.

You can prevent this kind of fraudulent activity by filing returns early. Besides, a few states also provide identity PINs and other types of extra security to avoid this type of fraud.

5. Account Takeover

Criminals use your personal data to get the details of your financial account and alter its address or password so that you cannot access it.

Warning Signs: If such kind of fraud happens to you, you may receive a letter, text or email from a financial institution where you hold an account, referring to actions such as changing email IDs or passwords or transactions that you have not done.

6. Medical Identity Theft

Fraudsters can use your personal details to access healthcare services in your name. This can become dangerous as it can mix your medical history with another individual. This will give misleading information to healthcare professionals who can make wrong decisions while providing healthcare services to you.

Warning Signs: You may see payments or claims against your health insurance policy that you cannot identify. This means that someone else is using the benefits of your health insurance plan. So, inform your insurer about the incident and your healthcare provider to check whether the medical records are actually yours or not.

7. Criminal Identity Theft

This type of identity theft occurs when an individual arrested by legal authorities utilises your name rather than providing his or her details. That criminal can pass off arrest by developing a false ID or showing a stolen ID to the police.

Warning Signs: Police authorities may detain you for reasons you do not know about. You may also get rejected for a promotion or employment offer because of some details found while doing a background check. If you face such a similar situation, seek legal help.

How to Prevent Identity Theft?

Here are some of the ways which can help you to protect yourself from identity theft:

1. Protect Your Personal Information

You must protect your personal data, especially if you have any outsiders working at your home or roommates. Here are some of the tips which you can follow to safeguard your personal details:

Tear or shred any sensitive documents that mention your credit offers, application, medical statement, etc., before dropping them into the trash. Follow this even at your workplace.
If you employ any house help, make sure that you keep your financial documents and other personal data-oriented files in a secured place.
Do not deposit your outgoing mail in an unsafe mailbox. Always drop it in a post office collection box. Make sure you check and collect your incoming mail at regular intervals. Take new checks directly from the banks instead of receiving them in emails.
Do not leave or throw away your debit cards, ATM receipts and other payment cards in any public place.
Check if all your personal information is properly secured in your workplace.

2. Put a Limitation on What You Carry

Take only those documents, debit or credit cards that you actually need. Avoid carrying payments or documents that you rarely use and keep them in a secure place.

3. Safeguard Your Personal Data Online

Avoid posting personal and financial details on social media platforms or other portals unless it is safe to protect yourself from online identity theft. You must check whether the site's URL initiates with 'https' instead of 'http' and has an unbroken padlock. You can right-click on the padlock to check whether the site is updated.

4. Change Passwords at Regular Intervals

Use passwords that are hard to guess. This further suggests avoiding obvious passwords, starting with numerals, your name or other personal details.

5. Be Cautious of Spoofing and Phishing

Scammers may call you that seem to come from reputed business entities or government-authorised bodies. Alternatively, they can send emails that may seem legitimate. All these are attempts to steal your personal data. Strictly avoid responding to such calls or emails.

Instead, check the details of the opposite party, such as their website, if available first in such cases before responding. Additionally, do not open attachments in emails coming from unofficial email IDs. Such attachments may contain malware.

6. Keep Your Electronic Devices Secured

Here are some of the ways through which you protect your electronic devices, like mobile phones, laptops, etc., from scammers stealing personal data:

Avoid downloading files from unknown websites
Use current virus protection software
Use a secured browser
Do not maintain an automatic log-in process that saves your password and account name
Delete personal data and reset the hard drive before disposing of your electronic device.

7. Monitor Your Credit Reports Regularly

You must check your credit reports regularly to identify any fraudulent activities, like accounts you are unaware of, so that you can report to the appropriate authority immediately.

8. Use a Digital Wallet

If you are doing any online transaction outside, using a digital wallet such as an application containing secured options debit and credit cards is preferable. Transactions using a digital wallet are usually encrypted and tokenised, making them safer.

9. Sign up for Alerts

You must sign up for notification from financial institutions. This way, you can receive emails or messages from them about when and where your debit or credit cards have been used and the amount deposited or withdrawn from your account.

10. Check Financial Statements

You should always carefully read the financial statements and know the due dates for payment. Besides, you must go through each transaction you make to identify any discrepancies.

Call the relevant authority if you do not get an expected bill. Apart from these, check the statements of 'explanation of benefits' to identify the services offered to safeguard yourself against health care fraud.

11. Be Careful While Travelling

Whenever you travel, keep your Social Security card or Aadhaar card (for Indians), chequebook and unnecessary items in your home's secure place.

Your mobile phone, laptop and other electronic devices must be protected with a password and have current internet security software to protect your device from malware.

Use a reputable place to connect your device with WiFi and remove the online history after using a computer in public cafes.

12. Avoid Unsecured ATMs

Always use ATMs set inside a bank or one protected by guards. Cover the keypad while typing the PIN for safety.

13. Use a Private Account

Use a temporary email service or a different email ID than the regular one when sharing details with random websites. This is essential to safeguard yourself from phishing.

How to Report Identity Theft in India?

If you find that your personal data has been compromised, report it immediately to the police. If your data in the SIM has been stolen, report the case to the Department of Telecommunication. Contact a cybercrime officer if you find that a fraudster has hacked your password or your system.

Sonam Chandwani, Managing Partner, KS Legal & Associates, said that it is important that you report identity theft or fraud associated with financial transactions to the police authority and bank immediately. This is because you cannot avail legal help without a police report, as the latter serves as proof and helps a legal expert to proceed further with the case.

Around 45% of adults in India have suffered from online identity theft. Therefore, knowing about such a topic is essential to protect yourself. Hopefully, this guide on 'what is identity theft' has provided insightful details about the same and proper knowledge about preventive measures to protect yourself from any such incidents.

FAQs About Identity Theft

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Does Indian law recognise identity theft?

Yes. According to the Information Technology Act (IT Act), 2000 and the Indian Penal Code (IPC), 1860, identity theft is considered a punishable offence.

What is the punishment given to individuals who have committed identity theft?

According to Section 66C of the IT Act 2000, individuals who have committed identity theft can be imprisoned for up to 3 years and may need to pay fines of up to ₹ 1 lakh. In certain cases, the imprisonment duration increases to 7 years and fines to ₹ 5 lakhs.