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fraud 1

What is fraud?

Fraud is a word that is often thrown around attributed to varying definitions, depending on the context in which it is used. Fraud itself is defined as the act of deception for unfair or unlawful gain, but there are many different types of fraud. For our purposes, we will focus on types of fraud affiliated with identity crimes.

Definitions of Fraud Terms

Let’s take a look at a few types of fraud affiliated with identity crimes.

  • Fraud: the theft and misuse of a victim’s personal information and existing financial accounts. This includes stealing personally identifiable information (PII) and ATM/debit card information to make fraudulent transactions.
    • Payments Fraud: stealing payment card data, such as ATM/debit/credit cards illegally
    • Employment fraud: stealing personal information or acquiring monetary compensation by posing as a legitimate business looking for hire

Analysis of Fraud Terms


Fraud refers to the theft and misuse of an individual’s PII, as well as existing bank accounts and other monetary funds. For example, criminally obtaining your account information with the intention of stealing financial resources or obtaining your personal information through a data breach would be considered fraud. Among data breaches, scams and hacking are also ways that criminals can obtain your sensitive information. Often times, scams such as phishing or social engineering lead victims to provide their personal information to criminals directly via email or websites. According to Javelin, there were 13.1 million victims of fraud in 2015.

Payments Fraud

Payments fraud is simply obtaining a victim’s various types of payment card data with the intention of making fraudulent transactions with that information. Payments fraud can occur as a result of a breach, or as a result of a lost or stolen card.

Employment Fraud

Employment fraudsters use the stress of unemployment to their advantage, and these schemes are designed to provide financial-relief opportunities to those who are desperate for a job. However, employment fraud schemes are often used to acquire personal information through fake job applications or scam you out of your money through processing and service fees.

What is identity theft?

As you open your wallet to buy your morning cup of coffee, one of your credit cards happens to fall out. A few days go by without you noticing. Then you receive a bill in the mail for a credit card you never signed up for. You see that there is a $200 transaction from a store in a different state under your name. Unfortunately, you’ve just become the victim of identity theft.

Definitions of Theft Terms identity theft

Let’s take a look at a few types of theft affiliated with identity crimes.

  • Identity theft: the theft of an individual’s PII and subsequent impersonation of their identity to create new accounts using all, or portions of, their information. This includes using a stolen Social Security number to open a credit card in someone else’s name.

Analysis of Theft Terms

Identity Crimes

Any crime that fraudulently uses another individual’s PII for personal gain.

Identity theft

Under the Federal law, identity theft is defined as when a person “knowingly transfers or uses, without lawful authority, a means of identification of another person with the intent to commit, or to aid  or abet, any unlawful activity that constitutes a violation of Federal law, or that constitutes a felony under any applicable state or local law …” 18 U.S.C. § 1028(a) (7)

In layman’s terms:

  1. Fraud: the theft and misuse of a victim’s personal information and existing financial accounts. This includes stealing personally identifiable information (PII) and ATM/debit card information to make fraudulent transactions.
  2. Identity theft: the theft of an individual’s PII and subsequent use of their identity to create new accounts using all, or portions of, their information. This includes using a stolen Social Security number to open a credit card in someone else’s name.

Often times, identity thieves will create fake addresses for tax notifications, court summons, medical bills and other documents connected with the identity crimes they have committed to keep you in the dark for as long as they can. Let’s take a closer look at the types of identity theft that can occur.

Criminal identity theft

Criminals can use your full name, Social Security number, and date of birth to obtain driver’s licenses, birth certificates, and other official documents to avoid the detection of their truecredit card fraud identity and criminal records. Under your identity, criminals can rack up traffic violations or do jail time for felony offenses like drunk driving and drug possession charges. While you may not be aware that a criminal has committed these crimes under your name, you may be arrested for an outstanding warrant or you may be denied a job opportunity after a criminal background check is performed by the company. Sorting out criminal identity theft can be tricky. The time and effort it will take to expunge the records associated with your criminal identity theft depends on the severity of the crime you are being accused of. It’s best to seek legal counsel from your attorney if you think you are a victim of criminal identity theft. Identity Theft Resource Center is a great resource for identity theft victims and can walk you through how to clear your name.

Medical identity theft

This type of identity theft is pretty straight forward — a criminal will use your identity to seek medical treatment or drugs. On top of the substantial financial damage that this could cause, it could also cause incorrect medical history to be added to your medical files. As a result, you may be incorrectly diagnosed and given improper treatment by your doctors. There are a few ways you can spot medical identity theft:

  • Declination of an insurance claim
  • Collection notices for medical treatment you did not receive
  • Calls from debt collectors involving medical bills that are not yours

If you think you’ve been affected by medical identity theft, the Federal Trade Commission (FTC) can lead you through the steps to take to clear your records. Click here for more information.

Child identity theft

A child’s Social Security number is more valuable to an identity theft criminal than an adult’s because children have no reason to use their Social Security number or check their credit reports. Therefore, a thief can assume a child’s identity and live undetected for many years. Criminals will use the child’s identity to open credit card accounts and even purchase property.

Unfortunately, there is no way to see signs of this happening unless you receive a bill or a credit card offer in the mail addressed to your child. Child identity theft is typically committed by a family member or friend who knows the family. In some cases, a stranger will steal a child’s identity if they are specifically targeting identity theft 2that child. Children do not usually discover that they have been a victim of identity theft until they attempt to apply for school loans or try to buy an apartment or house. By that time, there could be so much damage done to their credit report that it could take what may seem like a lifetime to repair.

The best way to determine whether or not your child has been a victim of identity theft is to contact the three credit bureaus and request a credit report search by your child’s Social Security number. If you receive any credit reports, immediately put a freeze on the account and work with the three credit bureaus to repair your child’s credit.

Financial identity theft

Criminals can use your personal information to obtain credit cards, loans, and goods and services while claiming to be you. This type of theft is based on personal or monetary gain using your personal information. Keep in mind that a person cannot access your financial assets without your Social Security number, so it’s important to remember to always protect your Social Security number.

Synthetic identity theft

Instead of assuming your identity with your information, criminals can also use your Social Security number to create a fake identity. This type of identity theft is the hardest to detect because the synthetic identity is not associated with any file number on record at the credit bureaus. The fake identity and its activity will not show up on the thief’s or your credit reports because the identity is not actually connected with a real person. Thieves can create a new credit file, or even worse, a sub-file that may end up on your credit report later on.

Aren’t fraud and identity theft the same thing? Stick figure with question mark depicting confusion over white background

No, fraud and identity theft are not the same. Although the two are often used interchangeably, they are, in fact, separate issues. Fraud encompasses the act of stealing and misusing personal information and existing accounts of a victim. Identity theft, on the other hand, is taking the stolen information to open and abuse new accounts under the victim’s name. For example, let’s say you are a victim of a data breach whose information was stolen by hackers compromising a retailer’s sensitive data. Making unauthorized purchases on your card would be considered fraud. However, if that hacker took the information and used it to apply for jobs or open credit cards in your name, it would be considered identity theft. Simply put, identity theft cannot happen without fraud, but fraud can happen without leading to identity theft.

Applying the Terms

Tampa, FL: March 2014

A woman from Tampa, FL was charged with bank fraud, access device fraud, mail fraud, and aggravated identity theft after authorities uncovered she had been defrauding banks and individuals up to 58 times in a two-year period. The woman would approach individuals at ATMs and claim that she was not able to deposit a check into her bank account. She would ask the target to deposit it in their accounts and then withdraw it for Tampa, FLher. However, the checks were usually drawn from closed accounts because most of the checks and checkbooks had been stolen. In addition, she also defrauded the IRS in false tax claims, accumulating over $800,000.

Tampa, FL: March 2014

A man from Tampa, FL was sentenced jail time for identity theft of veterans. He was an employee at the VA Medical Center and accessed/printed the personal information (names, Social Security numbers and medical information) of over 100 veterans who were patients at the medical center. He sold the information for drugs, knowing that the information would be used for false tax returns.

Minneapolis, MN: May 2014


A woman from Minneapolis, MN was sentenced 24 months in prison for electronically filing false tax returns for the 2008 and 2009 years. The woman used victims’ personal information (names and Social Security numbers) to receive fraudulent tax refunds. She opened credit cards in the victims’ names to deposit the refunds. Altogether, the woman filed 33 false tax returns and used 18 victims’ information. She accumulated $108,620 in fraudulent returns.

*Source (provided by the IRS): To see more identity crimes in 2014, click here.

Preventative Measures

How can I avoid identity fraud and theft?stop fraud

Follow these tips to help decrease your risk of identity fraud and identity theft:

  • Protect your Social Security number. A Social Security number is the Holy Grail of data for identity thieves. Don’t be afraid to inquire as to why you are being asked to reveal your Social Security number and how your information will be protected once it is documented.
  • Use a shredder. Shred all documents with sensitive information before throwing them away. Thieves can go through your garbage to find these documents and steal your information.
  • Check your credit report. Your credit report activity can often reveal early signs of identity theft. Talk with the credit bureaus about suspicious activity on your credit reports.
  • Protect your children’s personal information. Ensure that your child’s official documents and other forms that include his or her personal information are stored in a secure place.