Identity theft is a term used to refer to fraud that involves stealing money or getting other benefits by pretending to be someone else. The term is relatively new and is actually a misnomer, since it is not inherently possible to steal an identity, only to use it. The person whose identity is used can suffer various consequences when they are held responsible for the perpetrator's actions. Every year, thousands of people are victims of identity theft. While recent developments in telecommunications and computer processing make it easier for companies and consumers to reach each other, they can also scatter your personal information more widely, making life easier for criminals.
Identity theft is the unauthorized collection and use of your personal information, usually for criminal purposes. Once stolen, your name, date of birth, address, credit card, Social Insurance Number(SIN) and other personal identification numbers can be used to open credit card and bank accounts, apply for loans and credit or purchase goods and services, re-direct mail, establish cellular phone service, rent vehicles, equipment or accommodation, and even secure employment. Identity thieves may also present or create documents such as birth certificates or immigration documents to obtain benefits such as health care, education, social assistance and public pensions. Identity theft may be used to facilitate crimes including illegal immigration, terrorism, espionage or even blackmail.
Unlike your fingerprints, which are unique to you and cannot be given to someone else for their use, your personal data especially your Social Security number, your bank account or credit card number, your telephone calling card number, and other valuable identifying data can be used, if they fall into the wrong hands, to personally profit at your expense.
While legally the victim does not owe anything, it can often be difficult to prove this and it can take months and even years to get everything straightened out, costing a huge amount of time and resources. In the meantime, the victim can be left with no access to credit as credit card companies, banks, utilities (phone, cell phone, TV) and other financial institutions can cut off credit accounts until their good name is restored. Many people have actually been arrested and jailed (some multiple times) because an identity thief committed crimes in their name.
In Canada, many people have reported that unauthorized persons have taken funds out of their bank or financial accounts, or, in the worst cases, taken over their identities altogether, running up vast debts and committing crimes while using the victim’s names. In many cases, a victim's losses may include not only out-of-pocket financial losses, but substantial additional financial costs associated with trying to restore his reputation in the community and correcting erroneous information for which the criminal is responsible.
In one case of identity theft, the criminal (a convicted felon) incurred more than $100,000 of credit card debt, obtained a home loan and bought homes, motorcycles and handguns in the victim's name before filing for bankruptcy, also in the victim's name. The victim and his wife spent over four years and more than $15,000 of their own money to restore their credit and reputation.
According to The Identity Theft Resource Centre there are four categories of identity theft.
Financial Identity Theft – using another’s identity to obtain goods and services. A classic example of Financial Identity Theft occurs when a criminal obtains a loan from a financial institution by impersonating someone else. The criminal pretends to be the victim by presenting an accurate name, address, birth date, or other information that the lender requires as a means of establishing identity. Even if this information is checked against the data at a national credit-rating service, the lender will encounter no concerns, as all of the victim's information matches the records. The lender has no easy way to discover that the person is pretending to be the victim, especially if an original, government-issued ID can't be verified (as is the case in online, mail, telephone, and fax-based transactions). This kind of crime is considered non-self-revealing, although authorities may be able to track down the criminal if the funds for the loan were mailed to them. The criminal keeps the money from the loan, the financial institution is never repaid, and the victim is wrongly blamed for defaulting on a loan they never authorized.
In most cases the financial identity theft will be reported to the National Consumer Credit Reporting Agency or Credit Bureaus as a collection or bad loan under the impersonated person's record. This person may discover the incident by being denied a loan, by seeing the accounts or complaints when they view their own credit history, or by being contacted by creditors or collection agencies. The person's credit score, which affects one's ability to acquire new loans or credit lines, will be adversely affected until they are able to successfully dispute the complaints and have them removed from their record.
Other forms of examples of bank fraud associated with identity theft include "account takeovers," passing bad cheques, and "busting out" a checking or credit account with bad cheques, counterfeit money orders, or empty ATM envelope deposits. If withdrawals or cheques are made against the impersonated person's real accounts, that person may need to convince the bank that the withdrawal was fraudulent or file a court case in order to retrieve lost funds. If cheques are written against fraudulently opened checking accounts, then the person receiving the cheques will suffer the financial loss. They might, however, try to retrieve money from the impersonated person by using a collection agency which would appear in the person's credit history until they can show that it was fraud.