9 consequences of identity theft and how to deal with them

In 2024, the Gen Threat Labs found that stolen user data resulting in identity theft is on the rise, particularly through social engineering and Trojan malware-related cyberattacks.

If you don’t take steps to protect yourself from identity theft now, you may find yourself regretting it later. The consequences of identity theft can last for months or years, causing issues that extend far beyond financial damage.

What is considered identity theft?

Identity theft describes any situation where someone uses your personal information without permission to commit fraud or other crimes. Key pieces of information that can leave you vulnerable to identity theft if stolen include your Social Security number, driver's license information, and credit card details.

Identity thieves can use this personal information — along with other elements of your identity, like your name or address — to open new credit accounts, make fraudulent purchases, or even file false tax returns in your name.

9 consequences of identity theft

Here’s an in-depth look at nine potential effects of identity theft and tips to help you resolve the issue as quickly as possible.

1. Credit score damage
2. Financial hardship
3. Health insurance coverage loss
4. Government benefits loss
5. Account takeovers
6. Criminal charges and legal fees
7. Spam calls and emails
8. Housing insecurity
9. Emotional turmoil

Identity thieves may be able to use stolen personal and financial information to open new credit accounts and make fraudulent payments in your name, potentially causing a range of financial issues.

For example, if identity thieves get their hands on your credit card information, you could fall victim to credit card fraud. With access to your financial details, they might be able to create a new line of credit and rack up debt. When they fail to make repayments, it’s your credit score that’ll be affected.

Since 35% of your credit score is based on payment history, it won’t take many delinquencies to see a serious impact. Just one payment that’s late by 30 days or longer could drop your credit score by 100 points or more.

A lower credit score could make it more difficult for you to access credit or loans and increase your cost of lending, causing issues long into the future.

If you suspect someone’s making fraudulent payments in your name, act quickly. The recovery process — during which you may need to present proof you didn’t make the payments, file a police report, and wait for creditors to investigate your claim — takes time.

If a criminal manages to steal your identity and access your financial accounts, they might be able to max out your credit limit, take out loans in your name, or even drain your bank, investment, and retirement funds.

You may be able to recoup this money through a bank refund or fraud reimbursement payment, but that doesn’t help you in the period that you’re left out of pocket, especially if you might struggle to pay rent or face other financial hardships.

Identity thieves could also hurt your finances indirectly by causing you to lose:

• Job opportunities: If an identity thief damages your credit score or commits a crime in your name, it can make you less desirable to employers. This can make it harder to gain employment and earn money, potentially starting a spiral that’s difficult to escape.
  
• Housing opportunities: Unpaid debt racked up by an identity thief will be reflected on your credit report until it’s corrected. This can cause housing issues, perhaps influencing your ability to pass a rental credit check or get a mortgage. A lower credit score might also impact the rent or interest rates you pay.
  
• Health insurance: Identity theft could lead to lost health insurance if the thief uses your personal information to obtain medical services or file fraudulent claims, exhausting your coverage or causing your insurer to question the validity of your claims. While your insurer sorts this out, you may have to pay for healthcare out of pocket.

Identity theft-driven financial difficulties can last for months to years and recovery can be arduous — you have to sort through your purchase history, prove which transactions were fraudulent, and wait for a resolution.

Beyond that, falling victim to identity theft can expose you to secondary threats like financial hardship loan scams, a type of predatory lending.

Identity theft can potentially lead to the loss of health coverage in a couple of ways. One scenario involves an identity thief using your health insurance information as part of a healthcare scam to get medical services for themselves. This can quickly deplete your benefits allowance, leading to hefty bills or premium increases.

Identity thieves running a Medicare scam might also attempt to change your insurance plan or beneficiary information, potentially leaving you without emergency room, check-up, or prescription coverage.

If an identity thief fraudulently uses your benefits, it could impact your current or future eligibility for government welfare programs like ​​Medicare, SNAP, unemployment, and Social Security.

Welfare fraud often revolves around identity theft, with criminals getting access to your benefits and misusing them in diverse ways, including:

• Using or selling your Electronic Benefits Transfer (EBT) card.
• Fraudulently claiming survivor’s benefits.
• Getting medical care using your Medicare card.
• Claiming unemployment or Social Security.

If any of these situations happen, you’ll have to work with the relevant department to regain your identity and restore your eligibility for government benefits.

During this process, you’ll likely need to provide extensive documentation to prove your identity and your active benefits may be temporarily suspended.

Identity theft can lead to account takeovers if the criminal manages to access personal information like your email, usernames, or passwords. With these login credentials, they might be able to get into your social media, email inbox, or financial accounts without raising alarm bells.

Once in, they can change your password to lock you out of your account and potentially commit fraud or other cybercrimes in your name.

This can have diverse consequences, depending on what accounts they get access to. If a criminal gets control of your Facebook account through a Facebook scam, for example, they could spread misinformation, post harmful content, or engage in other malicious activities.

They might also make a post claiming to collect funds for a community project while secretly pocketing donations, causing your friends and family to lose out.

Identity theft can cause unexpected financial impacts in the form of fees that you may incur to cover legal support if someone commits crimes in your name.

For example, if somebody uses your identity for tax fraud — either getting a job and not reporting wages or falsifying information to collect a larger tax refund — the IRS might come after you. To prove your innocence and navigate the complex tax system, you may need to hire a tax attorney which will likely cost you upwards of $200 per hour.

Even worse, you could face lawsuits if the identity thief doesn’t pay off debts they built up or uses your name after being arrested for a non-fraud-related crime, such as assault or driving under the influence.

As a LifeLock member, you’ll get the support of a U.S.-based Personal Restoration Specialist to help you reclaim your identity. You’ll also qualify for up to $1 million* in legal aid coverage if you need a lawyer or other expert to help you fight the consequences of identity theft.

You might notice an uptick in spam calls and emails if personal information like your phone number or email address is stolen in a data breach, farmed through a malicious form, or sold on the dark web.

This can leave you more exposed to being targeted by scams. Spammers who steal or buy your information may use it to contact you, often promoting fraudulent products or services.

Removing your contact information from the dark web is incredibly difficult unless the dark web website where it’s published is taken down. Even then, your information may be posted elsewhere, and there’s not much you can do to recover it from criminals who already have access.

Identity theft can lead to housing insecurity in the form of foreclosure or eviction if criminals use your identity to obtain a fraudulent mortgage or steal your home title.

It can also put you at risk of homelessness by damaging your credit score, making it more difficult for you to qualify for a mortgage or rental agreement.

Depending on the situation you find yourself in, you may need to overcome hurdles like navigating squatters’ rights, proving that you own your property, and disputing credit report inaccuracies.

Perhaps a less obvious effect of identity theft is the emotional toll that can accompany it. Being forced to clean up the messy trail of ID theft can cause stress that disrupts your sleeping and eating, and may leave you vulnerable to depression, anger, and isolation.

Emotions may become even more turbulent if the impact of identity theft bleeds into other areas of your life. For example, if you’re applying for a job and someone else’s criminal record pops up in your background check, it may affect your employment and feelings of self-worth.

How to help protect yourself from identity theft

The key steps you can take to help protect against identity theft and its consequences are protecting your personal information, taking extra security measures online and in person, and monitoring your accounts for signs of misuse.

In practice, that involves following these tips:

• Share personal information cautiously: Before you share sensitive data like your Social Security number, bank account details, or credit card information, verify the identity of the person you’re speaking to and that they need the information.
• Use strong passwords: Create strong and unique passwords for each of your online accounts and update them regularly.
• Enable two-factor authentication: Add an extra layer of security to your most sensitive online accounts by enabling two-factor authentication (2FA), meaning login attempts will require a secondary form of verification.  
• Monitor your financial accounts: Regularly review your bank and credit card statements for any unauthorized charges so you can catch fraudulent activity more quickly.
• Check your credit report: Request a free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) to monitor for fraudulent or unauthorized activity.
• Be wary of phishing scams: Avoid clicking suspicious links or downloading attachments from unknown or untrusted sources.
• Prioritize privacy on social media: Limit the amount of personal information you share on social media platforms, keeping critical personal information like your phone number and address offline where possible.
• Use secure Wi-Fi networks: Avoid using public networks for sensitive online activities to help protect against Wi-Fi sniffers, who might try to access your device and steal sensitive data.
• Shred sensitive documents: Properly dispose of documents containing personal information, such as bank statements, medical records, and tax returns, to help reduce your risk of falling victim to identity theft from dumpster diving.
• Freeze your credit: Placing a credit freeze restricts access to your credit report, effectively preventing identity thieves from opening new lines of credit in your name.

Get help catching identity theft earlier

With the potential to cause financial, emotional, and social consequences that extend way beyond the hassle of recovery, identity theft is a threat that requires proactive defenses. LifeLock can help you detect the early signs, with features including credit report monitoring, dark web monitoring, and alerts for fraudulent use of your personal information.

It also offers features that can help you deal with the effects of identity theft, including support from a U.S.-Based Personal Restoration Specialist and up to $1 million in coverage for lawyers and experts. Become a LifeLock member today to help boost your protection against identity theft.