What is Identity Theft and What to do About it – An easy guide

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Have you ever wondered what is identity theft? It’s a growing concern as many Canadians have had their information compromised, which may have led to financial loss. While this is obviously not ideal for anyone, if you understand how identity theft works, you can take steps to prevent yourself from becoming a victim.

What is identity theft?

Identity theft is when someone steals your personal information, such as your address, social insurance number, or driver’s licence, and then poses as you. The fraudster can easily open up accounts, such as credit cards or new cell phone plans under your name with the right information. This is obviously a huge concern since you could see financial losses while trying to clear your name.

What makes identity fraud complicated is that you may not even know that you’re a victim. Often, criminals will obtain your information from a data breach but not use it right away. Instead, they’ll sit on the information and use it later in hopes that you don’t notice.

What are the types of identity theft?

Many consumers may not be aware that there are different types of identity theft. While most fraudsters will use it for financial gain, some lesser-known schemes can benefit thieves in different ways. Here are the most common types of identity theft and fraud to be on the lookout for.

Financial identity theft

Without a doubt, financial identity theft is the most common type of fraud. Once criminals have access to your personal information, they’ll attempt to open bank accounts or credit cards under your name. While many financial institutions have fraud protection in place, if criminals have your vital information, they may still be able to open accounts under your name.

Debit and credit card fraud

Debit and credit card fraud happens when someone uses your card without your permission. Although credit cards have many security features, thieves can clone your card and skim your PIN to make purchases. On a positive note, most financial institutions have fraud protection for your debit and credit cards, so you won’t be liable for any fraudulent charges.

Synthetic identity theft

With synthetic identity theft, fraudsters will try to create a fake identity with some of your information. For example, the criminal may use your actual social insurance number with a different name to create a new identity. Thieves will even go as far as using the names of children as they likely don’t have an established online presence yet.

Tax identity theft

Like financial fraud, criminals will attempt tax identity theft with your stolen information. For example, during the COVID-19 pandemic, the government introduced the Canada Emergency Response Benefit (CERB). This benefit provided $500 a week for affected individuals. The criminals would log into your My CRA account, apply for the benefits, and then have the funds deposited into their bank accounts. They could even target your tax refund.

Child identity theft

Children make easy targets for identity theft since any fraud can go unnoticed for quite some time. Unfortunately, child identity theft often occurs because of a family member. They usually have all of the child’s personal information, and they can easily access any credit cards that they’ve opened since they’ll be delivered to the family home. 

Senior identity theft

Seniors are also potential targets of identity theft since some are not in the right state of mind and may unintentionally give away their information. In addition, seniors are more likely to fall victim to people pretending to be someone else. For example, thieves may pose as their family members or a love interest.

How does identity theft happen?

Now that you know what is identity theft, you need to focus on how identity theft happens. Some of the most popular techniques for identity theft include:

Mail theft

Mail theft is arguably the most traditional way of identity theft. Thieves will literally steal what’s in your mailbox in hopes that it contains sensitive information that they can use. In addition, thieves will sometimes try to redirect your mail via Canada Post if they’ve opened credit cards under your name.

Dumpster diving

Instead of checking your mail, criminals will sometimes go through dumpsters and recycling bins to look for credit card statements. Most financial institutions no longer print your entire account numbers on your statements these days. Still, thieves may also be after other things, such as your personal information.

Physical theft

If your wallet is ever lost or stolen, thieves could take advantage since your credit card, and ID will likely be inside your wallet. They could instantly make some quick tap payments or open a new cell phone plan under your name.


These days, phishing is the most common method fraudsters use to get you to give up your details. For example, you might get an email or text message saying you’re owed a refund or your account will expire. Of course, if you click the included link and input your personal information, you’d literally be giving away everything. Also, be sure not to open an attachment that you weren’t expecting.

Social engineering

Sometimes thieves don’t need to try very hard for identity fraud. Thanks to social media, finding your personal email address and personal information can be easy. For example, you might be posting security answers online, such as your first pet’s name or junior school.

Data breaches

Since identity theft is big business, groups will attempt to hack large companies to get customer data. That information is then sold on the dark web. It’s not just retailers that can be hacked; major financial institutions have also had data breaches in the past.

Credit/debit card skimming 

With the right equipment, your debit or credit card can be cloned. Although having a PIN does help, thieves will even install a pinhole camera on the machine that clones your cards so they can see your PIN.

Spyware, malware, and viruses

Another trick thieves use to get your information is spyware, malware, and viruses. If you’re not paying attention, you might click a link that downloads malicious software onto your computer or mobile device. That software can then log your keystrokes to compromise any password you type in.

Unsecured Wi-Fi

If you use unsecured public Wi-Fi, criminals could easily access your devices. In addition, if your home Wi-Fi is unsecured, thieves could join it to get your information if they’re close enough to your router.

Inside jobs

Sometimes employees will sell your personal information to thieves. For example, an employee at a financial institution or communications company may have access to all your essential details.

How to protect yourself against identity theft?

Knowing what is identity theft and the different types of identity fraud is the first step. With that knowledge, you can take steps to protect yourself. Keep in mind that criminals are always coming up with new ways to get your information, so stay on top of things by doing the following:

Destroy your paper trail 

Any documents that contain important information, such as bank statements or expired credit cards need to be properly destroyed. As in you should be using a shredder since it’ll be very difficult for thieves to piece things back together. 

Don’t overshare

At no time should you share personal details such as your social insurance number, address, passwords, bank account numbers, and credit card numbers. If a website or someone you know asks for details that they don’t need to know, it might be a sign of potential fraud.

Beware of phishing attacks

Phishing is when criminals pose as someone else in hopes that you willingly give up your information. For example, you might get a text message or email from a financial institution saying that you need to log in to get a refund. If you’re unsure of the legitimacy, just call the company directly to confirm.

Empty your wallet and purse

Generally speaking, you only need to carry your driver’s licence, health card, and one to two forms of payment in your wallet and/or purse. Keep your social insurance number card, passport, birth certificate, and additional credit cards at home. By doing this, you’ll have limited exposure if your wallet is lost or stolen.

Check your credit score and report regularly

Checking your credit score for free at least once a month via Borrowell is a good idea. If you see an unexplained dip in your credit score, or new credit cards, it could be a sign of fraud. Alternatively, you could also order your free credit report once a year to see exactly what credit accounts you have open, and if there have been any inquiries. 

Use strong passwords

It’s never a good idea to use the same password. Every password you use should contain upper and lower case letters, numbers, and symbols. With these unique passwords, there’s no worry that all your information will be compromised if one site is hacked. Remembering all these passwords will be easy if you use a password manager.

Be careful with your debit and credit cards

Any terminal that accepts credit and debit cards can be compromised. This includes ATMs and quick pay at gas stations. Always check to see if the terminals may have been compromised. For example, pull at the terminal where you insert your card to see if anything comes loose. When using your card, cover the keypad when entering your PIN as it gives you one extra layer of security.

Ignore suspicious phone calls

Scammers will use just about any trick possible. For example, you might receive a call saying you won a contest or how you recently signed up to invest in cryptocurrency. The person calling will then try and get you to give up your personal information. Always be suspicious if someone calls you saying you won something or is offering something that sounds too good to be true.

Secure your devices

Having up-to-date anti-virus software is paramount as it’ll protect you while you’re online. In addition, only using secure Wi-Fi at home and when you’re out can add another layer of protection. Another tip is to turn on additional security features on your devices and accounts, such as biometric login and two-factor authentication.

Use a different email address

If you’re signing up for a non-essential service, such as online shopping, you should use a different email address than your primary address. This way, your most important email address isn’t floating around the internet as much.

What to do if you think you’re a victim of identity theft?

If you ever suspect that you’re a victim of identity theft, you need to investigate things right away. However, don’t assume that all is good if nothing has happened to your accounts right away, as thieves may use your information later. Here are some things to do if you’re worried that you’ve become a victim of identity theft.

Scan your devices

The first thing you might want to do is scan your devices for any viruses. If there’s any spyware on your computer, you need to get rid of it to prevent any future compromises. In addition, you may want to consider restoring your mobile device to its factory settings in case that’s where your information is being leaked from.

Replace your stolen ID

If your wallet has been stolen, you should consider your information and credit cards gone. There’s always a possibility that a good samaritan will return it, but don’t bank on it. Instead, start the process of having all of your lost credit cards replaced. You’ll also need to replace your stolen ID as soon as possible.

File a police report

While there’s very little the police can do if you’re a victim of identity theft, you should still file a formal police report. This is necessary as you may need it later for proof. For example, if you are a victim of fraud and a criminal tries to open up accounts under your name later, you can show that you’re a victim with your police report.

Change all your passwords

Since there’s no way to know what information thieves have, you need to change all of your passwords right away. Start with your email and financial institutions. Then move on to your service providers, loyalty programs, and any online stores you’ve used. 

Pay for credit monitoring services

Both Equifax and TransUnion offer fraud alert services. These paid credit monitoring services will alert you immediately if there’s a credit check or new account applied to your name. Since you’d get instant notifications, you could try to shut things down right away. Paying for both Equifax and TransUnion is necessary since they’re separate credit reporting agencies that get different information.

Dispute fraudulent accounts

If you’ve learned that accounts have been opened under your name, you need to contact the financial institutions to let them know that you’ve been a victim of fraud (provide the police report). In addition, you’ll need to clear things up with Equifax and TransUnion since they’re the major credit bureaus, so file disputes with them too.

What is Identity Theft and What to do About it - An easy guide

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

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