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Fraud and identity theft: What to know and how to protect yourself.

The terms fraud and identity theft are often used interchangeably, even though they are separate issues. It’s important to familiarize yourself with both crimes and how they work. Either way, there is potential impact on your finances — so you can help by protecting yourself and your personal information. Let’s start by discussing how we define both fraud and identity theft.

What is fraud?

Fraud refers to the act of stealing and misusing personal information and existing accounts of a victim, like stealing ATM or debit card information to make fraudulent transactions.1

Here are two common types of fraud:

  • Payments fraud occurs when a criminal obtains someone else’s payment data, such as a credit or debit card, or other payment tool (like an electronic funds transfer) with the intent to make fraudulent transactions. Payments fraud can occur as a result of events including, but not limited to, hacking, a breach, or a lost or stolen card.
  • Employment fraud is designed to take advantage of those who are desperate for a job. Employment fraud schemes are often used to acquire payment account information to scam a victim out of their money through fraudulent processing and service fees. They usually involve fake job listings that are posted to popular career-search websites. In many cases, companies listed in the job postings are real — but the jobs themselves aren’t. Sometimes the scammers will even conduct fake interviews with multiple people, all in an effort to gain a victim’s trust. To protect themselves, job seekers should confirm listings on the company’s site or with their HR department before applying.

What is identity theft?

Identity theft (or ID theft) refers to using stolen information to open and use financial accounts under the victim’s name.1 ID theft has become so widespread that the Federal Trade Commission received nearly 1.4 million complaints in 2020, about twice as many as in 2019.

Here’s an example of how ID theft works:

You open your wallet to buy your morning cup of coffee and don’t notice when your Social Security card falls out. A few weeks later you receive a bill in the mail for a credit card in your name that you never signed up for, showing a $200 transaction from a store in a different state. A scammer has stolen your personally identifiable information to open a new account in your name.

There are many types of ID theft that are associated with identity crimes.

  • Financial identity theft is when someone uses your personal or financial information to assume your identity without your permission for their own personal monetary gain. They may use your information to obtain credit cards, loans, and goods and services while claiming to be you.
  • Child identity theft is when someone takes a child’s personal information and uses it to get services or benefits, or to commit fraud. Since children have little reason to use their Social Security number or check their credit reports, a thief can assume a child’s identity and obtain credit in the child’s name. The fraud may go undetected for many years, often until the child is of age to start obtaining credit of their own.
  • Tax identity theft is when someone uses another person’s Social Security number to file tax returns and claim fraudulent tax refunds. The information may also be used to fill out W-2s or claim government benefits.

Identity thieves may also create fake addresses for tax notifications, court summons, medical bills and other documents connected with the identity crimes they’ve committed, keeping their victims in the dark for as long as they can.

Other types of identity theft to be aware of include medical identity theft, social media identity theft, mortgage identity theft, mail identity theft, student loan identity theft and senior citizen identity theft.

What’s the difference between fraud and identity theft?

Although the two terms share similarities, they are different in how they could impact you. Fraud involves the act of stealing and misusing personal information and existing accounts of a victim. Identity theft, on the other hand, involves taking that stolen information to open and use new accounts under the victim’s name.

Here’s an example:

Let’s say you’re a victim of a data breach where information was stolen by hackers compromising a retailer’s sensitive data. Someone 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 ID theft.

Tips to protect your identity

In today’s connected world, being aware of these types of crimes and recognizing the warning signs are important steps toward protecting your finances. In addition to being vigilant, there are some concrete things you can do to help keep your personal information safe.

  • Protect your Social Security number
  • Shred all documents that contain personal information before tossing in the trash
  • Check your credit report regularly
  • Review credit card and bank account statements for unauthorized transactions
  • Protect your (and your children’s) personal information by storing it in a safe place
  • Keep your electronic devices more secure by using a PIN or other passcode to unlock them
  • Don’t click unfamiliar links in texts or emails
  • Avoid shopping or banking on public Wi-Fi networks
  • Opt for paperless billing so you won’t receive sensitive information in an unsecured mailbox

Visit the Federal Trade Commission’s consumer website, and identity theft reporting website for more information and tips. Commerce Bank has tools to help keep your information safe.

Commerce Bank offers ID theft services to help protect your identity, help you recover from identity theft, and provide additional security and peace of mind. Both services connect you with resolution specialists who can contact creditors and act on your behalf throughout the restoration process.

  • Commerce ID Recover provides restoration support and services that can help in the event of ID theft or suspected fraud.
  • Commerce ID Monitor includes those same restoration services in addition to proactive credit and dark web monitoring, plus mobile attack control to protect your device from malware.

At Commerce Bank, we recognize that protecting your financial accounts is more important than ever. If you’re ever worried that your Commerce Bank accounts have been compromised, or if you’re curious about how Commerce helps keep account holder information safe, contact us any time.

1. “Fraud and Identity Theft,”, posted Jan. 15, 2020,

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