Identity Theft vs. Identity Fraud - What's the Difference?

You could argue that, based on the term itself, “identity theft” occurs when someone steals your identity. And “identity fraud” occurs when that person uses your identity to commit fraud or illegally deceive someone. But the two terms — identity theft and identity fraud — have become interchangeable.

In fact, the U.S. Department of Justice says both terms “refer to all types of crime in which someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception, typically for economic gain.”

What is identity theft?

The more you know about identity theft, the better able you’ll be to help protect yourself against it.

It may be helpful to realize identity theft is nothing new. The first recorded instance could have dated back to biblical times. And in stories from Wild West days, outlaws sometimes murdered people so they could take on the identities of their victims, helping them avoid the law.

Technology now enables criminals to commit identity theft on a broad scale — hacking into business and government computer systems, for instance, to steal the personal information of millions of people at once. The hackers can then use the stolen personal information, such as full names, birthdates, and Social Security numbers, to commit their crimes.

There are many other ways criminals can steal your personal information, including:

• Phishing: Fraudsters email intended victims, hoping to trick the recipient into taking action that might give the criminals access to significant amounts of personal information.
• Malware: Using the lure of “something for nothing,” fraudsters attempt to trick their would-be victims into downloading free software from the Internet. What the victims might not realize is that the free software can include malicious software, or malware, that can give the criminals access to the victims’ computers or entire networks.
• Low-tech tactics: Even without the somewhat sophisticated skills required for a technology-based attack, criminals can still commit identity theft. Mail theft and dumpster diving are two simple ways identity thieves can put their hands on documents containing personal information that can be used to steal others’ identities.

What is identity fraud?

As noted above, identity theft and fraud usually refer to the same crime. Still, one could make the case that the fraud is the actual use of the stolen information for illicit gain.

What kinds of crimes can be committed once thieves are able to have others’ personal information? All sorts of them as it turns out.

While the list of identity fraud crimes is a long one, the Federal Trade Commission breaks them down into six major categories:

• Credit card fraud: Using someone else’s credit card or credit card number to make fraudulent purchases
• Employment or tax-related fraud: Using someone else’s Social Security number and other personal information to gain employment or file an income tax return
• Phone or utilities fraud: Using another person’s personal information to open a cell phone or utility account
• Bank fraud: Using someone else’s personal information to take over an existing financial account or to open a new account in someone else’s name
• Loan or lease fraud: Using someone else’s personal information to obtain a loan or lease
• Government documents or benefits fraud: Using someone else’s personal information to obtain government benefits

Another type of identity fraud is criminal identity fraud, which occurs when someone cited or arrested for a crime presents himself as someone else by using that person’s name and identifying information.

Overall, it’s a significant crime in terms of sheer numbers. Nearly 60 million Americans have been affected by identity theft, according to a 2018 online survey by The Harris Poll. That same survey indicates nearly 15 million consumers experienced identity theft in 2017.

What’s the difference between identity theft and identity fraud?

When all is said and done, there’s really little difference in how experts use the terms identity theft and identity fraud. No matter what you call it, the crime is a serious one, punishable under one federal statute by up to 15 years’ imprisonment, a fine, and forfeiture of any personal property used to commit the crime.

If you find that you’re a victim, the Department of Justice recommends taking these steps:

1. Call the companies where the fraud occurred.
2. Place a fraud alert on your credit reports and review your credit reports for errors.
3. Report your identity theft to the FTC.
4. Consider reporting the crime to your local police department.

There are steps you can take to help protect yourself from identity theft. These include being careful how you safeguard your personal information, including your Social Security number. No one can prevent all identity theft, but it still makes good sense to limit sharing the personal information criminals could use to steal your identity.