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Top 3 Types of Digital Identity Fraud

Learn about the most common types of digital identity fraud and what you can do to stay safe online.
Mackenzie Pautler
December 19, 2023

You’re surprised when a loan or credit card you applied for is denied. Your child, who is under 18 years old, receives information about their tax return from the Internal Revenue Service (IRS). You get an insurance claim for a hospital visit that you didn’t make.

All these events are signs that you (or your child) may be the victim of digital identity fraud. The latest data shows that the Federal Trade Commission (FTC) received 5.7 million reports of fraud in 2021 alone, many of which originated online.

When it comes to digital identity fraud, cybercriminals illegally obtain your personal information through online channels — such as phishing schemes or unauthorized access — and proceed to use that data to steal your identity. Once a cybercriminal has been successful in doing so, they can do significant damage, and quickly.

While companies have stepped up their efforts to protect digital identities in the past few years, information is more accessible and at-risk than ever before. By understanding the different types of fraud and how they occur, you can better protect yourself and spot signs before falling victim:

1. Financial identity theft

The primary incentive for criminals to commit identity theft is the opportunity for financial gain. Once they’ve stolen your identity, criminals will use your personal information to set up new credit card accounts or apply for loans. By creating accounts in your name, criminals can do much more financial damage than say, someone simply stealing your credit card. Additionally, it takes longer for victims to notice new accounts than to find out that their existing cards have been maxed out.

2. Medical identity theft

With rising medical costs, some criminals steal identities to obtain free medical care. While people often take extra precautions with their financial information, healthcare information such as insurance and provider information can be even more easily stolen digitally and used for fraud.

3. Child identity theft

When a criminal uses the personal information of a minor to set up financial accounts or get a job, the fraud falls under the “child identity theft” umbrella. Because most people don’t regularly check their child’s credit score, this type of fraud is often caught only years later, sometimes only when the child becomes an adult and files a tax return.

How to Protect Yourself from Digital Identity Theft

By taking proactive steps both online and offline, you can reduce your risk as well as quickly discover if you’ve been a victim of digital identity theft. Here are ways to stay safer online:

Use strong and unique passwords.

Many criminals gain access to personal information online by hacking passwords. Use passwords that are at least eight characters, including both upper and lower case letters, numbers and special characters.

Do not use public wireless.

When you connect over public wireless, criminals can intercept your data. While the advice used to be to not send financial or personal data over public wireless, criminals now often use seemingly harmless data for fraud. If you need to get online, use a virtual private network to connect securely.

Pay attention to late notices and bill collector calls.

If you receive notifications for accounts or from medical providers that are not yours, follow up immediately. This is often the first sign of fraud, and you can limit the damage by acting quickly.

Verify all links and files.

Many cybercriminals impersonate brands to get you to click on malicious links. They often send emails pretending to be from well-known brands, even using their logos. Carefully check the actual email address to determine if it’s legitimate or a fraud. If you’re not sure, contact the company directly, but don’t use the contact information provided in the email — go to the company’s website on your own to get that information. And never give out personal information when a company requests it through email from a company, as this is typically not the standard practice.

Freeze your children’s credit.

If you have children under the age of 18, consider freezing their credit until they become adults. While criminals cannot open accounts under their name with their credit frozen, you should still monitor for employment fraud.

Report digital identity theft.

Start the process by reporting the crime to the FTC at or by phone at 1-877-438-4338. The FTC also advises to contact credit reporting agencies to freeze your credit or place a fraud alert. In addition, contact all financial institutions, retailers, or healthcare providers where the fraud was committed.

Digital identity theft has the potential to cause significant stress and financial issues. By taking precautions online and keeping an eye out for signs, you can reduce your risk of becoming a victim.

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