Many people underestimate the emotional and time cost.
The financial loss from identity theft is bad but the emotional fallout is worse.
This week’s article will share what really happens when someone’s life gets hijacked.
Have you or someone you know ever dealt with this?
Identity theft doesn’t just hurt your wallet. It can turn your life upside down, damage your reputation, and take months to fully recover from.
In this week’s post, I’m breaking down what identity theft really looks like and how to protect yourself starting today.
Identity theft is a type of fraud that occurs when someone steals personal information—name, Social Security number, credit card number, and more—to commit fraud or other crimes. It can lead to various issues like unauthorized financial transactions, damage to your credit score, and even legal trouble if a crime is committed under your identity.
In the United States, this crime has escalated significantly in recent years—with alarming statistics emerging. In 2024, nearly 1.4 million cases of identity theft were reported nationwide. This suggests that soon the country is on track to exceed 2 million identity theft complaints, a number far higher than any year on record, dating back to 2001.
Estimated losses due to identity theft in 2024 total around $23 billion. The median loss for each fraud victim is approximately $500. In 2023, there were over a million reports of identity theft. This comparison indicates a continued rise in identity theft incidents year over year.
Experts estimate there is a new victim of identity theft every 39 seconds. Approximately one in 10 people will be a victim of identity theft. Additionally, nearly 33 percent of Americans have faced some form of identity theft at some point in their lives, a rate nearly three times higher than in other countries.
Government documents and benefits fraud are at the top of the identity theft list. Losses to government imposter scams increased $171 million from 2023 to a total of $789 million in 2024. Credit card fraud is also a major type of identity theft.
A global threat
Identity theft remains a significant and prevalent issue worldwide. While specific statistics can vary by region, several key trends highlight the scope of the problem. The frequency of identity theft incidents globally has been rising, partly due to the increasing digitization of personal information and the proliferation of internet usage. This trend is exacerbated by the growing sophistication of cybercriminals.
No country is immune. It’s a global issue, affecting millions of people. Identity thieves use a range of methods, from traditional means like stealing mail or dumpster diving to more advanced techniques involving cyberattacks, phishing, and hacking into databases.
The consequences of identity theft are significant, affecting not just individuals but businesses, too. Victims may face financial loss, damage to credit scores, and the complex process of restoring their reputation and credit. Businesses, on the other hand, can suffer from financial losses, legal consequences, and damage to their reputation.
Identity theft is often thought of in terms of dollars lost, but its true cost goes far beyond finances. Victims can face a prolonged and emotionally draining journey to reclaim their identities, restore their reputations, and recover their sense of personal security.
Here’s a detailed breakdown of the non-financial consequences of identity theft:
Emotional and Psychological Impact
Stress and Anxiety: Victims often report intense stress after discovering their identity has been stolen. The feeling of being violated can trigger ongoing anxiety about future attacks.
Loss of Trust: Many lose trust in systems meant to protect them—banks, credit bureaus, or even government agencies. This distrust can extend to technology and institutions as a whole.
Shame and Embarrassment: Victims sometimes blame themselves for “falling for” a scam or not securing their data better, even when they did nothing wrong. This can lead to feelings of shame.
Sleep Disruption: The stress and uncertainty of identity theft can cause insomnia, nightmares, or a fear of checking financial or personal information.
Depression: In prolonged cases, identity theft can contribute to feelings of helplessness, hopelessness, and depression, particularly when resolution is delayed.
Time Loss and Administrative Burden
Countless Hours: Victims may spend dozens to hundreds of hours contacting banks, credit bureaus, government agencies, and companies where fraud occurred.
Long-Term Monitoring: Identity theft victims must often monitor their credit reports and financial statements for years to ensure no new fraud occurs.
Paperwork and Documentation: Filing police reports, affidavits, and fraud claims requires relentless documentation and follow-ups—often repeatedly explaining their case to different representatives.
3. Damage to Personal Reputation
Legal Consequences: In cases where an identity thief commits crimes using the victim's identity (e.g., DUIs, theft), victims may be wrongfully associated with criminal records.
Employment Issues: Background checks for jobs can be impacted, especially if fraud led to bad credit or criminal records appearing under the victim’s name.
Social Embarrassment: Friends, family, or coworkers may be contacted by fraudsters pretending to be the victim or may hear about identity-related issues, leading to awkward or damaging perceptions.
4. Interference with Major Life Events
Home and Auto Purchases: Identity theft can tank a credit score, delaying or ruining opportunities to buy a home or car.
Student Loans and Education: Students may lose access to financial aid or have loan applications denied.
Travel Disruptions: Fraudulent use of passports or IDs can raise red flags during travel or result in a blocked identity, limiting mobility.
Medical Identity Theft: If a thief uses someone’s identity for healthcare services, it can result in medical files being altered—potentially putting the victim’s health at risk in future emergencies.
5. Family and Relationship Strain
Marital Tension: Joint accounts or shared financial goals can be derailed, straining marriages or partnerships.
Children Targeted: In some cases, a child’s Social Security number is stolen, and the damage may not be discovered for years—creating emotional turmoil for the entire family.
6. Fear of Recurrence
Ongoing Vulnerability: Once data is compromised, it can circulate on the dark web indefinitely. Victims often live with the fear of being targeted again.
Hypervigilance: Many become overly cautious or fearful of online activity, often limiting digital participation or withdrawing from technology out of fear.
Ways to defend yourself
Credit freeze
This is the absolute best protection against identity theft. A credit freeze, also known as a security freeze, means potential creditors cannot access your credit report, which will make it more difficult for identity thieves to open new accounts in your name.
This prevents a common repercussion of identity theft. After cyber thieves have gathered personal information, they often then apply for dozens of credit cards, department store accounts, or even a bank account. For such businesses to open an account, they must run a credit check. If a check shows that you have a very good credit rating, businesses will grant a much higher credit limit. Cybercriminals then take a cash advance and run. However, if credit is frozen, businesses can’t run a credit check and they won’t open an account. That’s why this is one of the absolute best ways to avoid being the victim of identity theft.
To place a credit freeze, contact each of the three major credit bureaus (Equifax, Experian, and TransUnion) individually. Contact all three agencies either online or by phone. They will go through the identification process and then have you establish a verbal PIN or passcode that can be used later to unfreeze the account, which can be done over the phone or online.
It’s usually free to freeze and unfreeze credit. A freeze remains in place until you choose to remove it; the credit bureaus are governed by federal law, which provides a consistent, legally defined process.
Freezing the credit of children and elderly family members is also a good idea. Children can still use credit cards to build their credit rating, but no one can open a new account in their name with their Social Security number. Since the elderly typically are not likely to buy a new house or other major item, it’s wise to freeze their credit as well.
When you need to open a new account, ask the institution which credit agency they use. Contact it and unfreeze your credit. They will identify you, ask for the verbal PIN, and then unfreeze the account immediately. The credit can be unfrozen for a limited period, after which it will automatically refreeze.
Credit lock
A credit lock also restricts access to your credit report, but it’s generally easier to lock or unlock as needed, often using a mobile app or webpage. Locks are offered by credit bureaus and are sometimes part of a subscription with a monthly fee, depending on the provider and the level of service.
The main advantage of a credit lock is convenience—you can lock and unlock it instantly. Unlike credit freezes, credit locks are not governed by federal law, so the protections and processes vary more broadly by credit bureau and service provider.
Is a credit freeze or a credit lock better?
The choice between the two depends on specific needs. A credit freeze is generally considered more secure because of legal protections and less susceptibility to being bypassed or unlocked without your knowledge. If you require frequent access to the credit report or you need to allow others to see it, for instance, when shopping for a loan, a credit lock might be more convenient.
Remember, though these steps can significantly reduce risk, no method is foolproof. It’s essential to stay vigilant and proactive to truly safeguard personal information.
Monitor accounts regularly
It is a good practice to regularly check bank and credit card statements for any unauthorized transactions. This helps detect any fraudulent activities earlier.
There are several companies, including the three major credit reporting agencies, that offer credit monitoring programs. Most prefer annual subscriptions. In addition to monitoring your credit report, they will keep an eye on things like your Social Security number, driver’s license number, and other personally identifiable data. They also do Dark Web monitoring and send alerts if they see any activity using your information. Some banks offer this type of service without charge.
Conclusion
Protecting against identity theft is crucial due to its severe and long-lasting consequences. It involves unauthorized access to personal information, such as Social Security numbers, bank account details, and credit card numbers, which can be used for fraudulent activities. Victims of identity theft often face financial losses, damage to credit scores, and the arduous task of restoring their reputation and financial standing. This can all take years.
Additionally, the emotional and psychological stress caused by identity theft can be significant. While financial damage is real and often substantial, the emotional, psychological, and life-disrupting consequences of identity theft can linger for years and sometimes never fully resolve. The cost is not just in dollars—it’s in peace of mind, time, relationships, and long-term trust in the systems meant to protect us.
The pervasive nature of digital transactions and online data storage increases the risk of identity theft, making it more important than ever to employ robust security measures, monitor financial accounts, and be vigilant about defending personal information. By doing so, individuals significantly reduce the likelihood of becoming victims of potentially devastating identity theft.
Or, for detailed step-by-step instructions on how to protect yourself, purchase my book, Cybersecurity: Everything You, Your Family and Every Small Business Owner Needs to Know