The Definition of ID Theft

Much of a person's identity is tied to how he uses his money. Consequently, if his identity is robbed, potential lenders may also mistakenly suspect that he has lost his trustworthiness. Identity theft may occur in a variety of ways, but it usually involves the unauthorized use of sensitive information related to a person's identity in order to commit unlawful activity. Even the intention to commit such an act may constitute identity theft if the person in possession of this sensitive information has procured it illegally.

Federal Crime

Not only is identity theft unlawful, but it is also a federal crime. Anyone who knowingly transfers or uses someone else's identification, in the absence of lawful authority, is subject to prosecution under the terms of federal law. The person responsible for the theft may be sent to prison for up to 15 years. Plus, property used when committing the theft or that was gained as a consequence of the theft will be subject to seizure by the government.

Compromised Data

In certain circumstances, data may be compromised from a security failure on behalf of parties other than yourself. For example, even high-profile organizations like the U.S. President's Cabinet have suffered security breaches. Such events may expose great numbers of people to identity theft. Sadly, even when we are guardians of our own data, we run the risk of being taken advantage of. For example, restaurant employees have been known to run up charges on credit cards that were used by their customers to pay for meals.

Sensitive Information

Identity theft is a centuries-old practice, employed by con men to deprive targeted individuals of their rightful ownership to property, privileges and even information. Military espionage strategies are sometimes little more than sophisticated examples of identity theft. Thus, perpetrators of identity theft are often just as interested in gaining control of information as they are in getting access to bank accounts or credit cards. Sensitive information can be used to both undermine a person's power and influence as well as to fuel a blackmailing scheme.

Methods Used By Criminals

Exposure to identity theft is heightened when potential victims express a lack of vigilance. Common ways that a victim's identity may become compromised include phishing scams, shoulder surfing and Dumpster diving. Invasive emails or other content transmitted over the Internet may urge an Internet user to disclose sensitive data in order to reap a proposed benefit. These invasive solicitations are known as phishing scams. Dumpster diving occurs when a person roots through trash cans or Dumpsters (an act not typically illegal in itself), in order to find documents like discarded credit card applications that provide criminals with the means to assume this person's identity. Shoulder surfing is a method used by criminals to collect data through direct observation. The criminal may watch as a person enters his debit card PIN number at a gas station terminal or read his checking account number as he writes a check at the grocery store.

Effects on Credit

Three major credit reporting agencies provide information to the U.S. banking system as well as a multitude of business entities. These three credit reporting agencies are Equifax, Experian and Transunion. At a cost, individuals may receive credit reports from each of these three agencies. However, if you believe yourself to be a victim of identity theft, you are allowed to receive one credit report from each of the three agencies per year, under the terms of the Fair Credit Reporting Act. Of course, if you seek to contact these agencies, be sure that the contact information used to reach them is reliable and accurate.