Identity theft is real and serious. Millions of Americans have their identity stolen every year, and it's the fastest-growing crime in the U.S. according to the FBI. In fact, in a recent study, it was found that $16 billion was stolen from 15.4 million U.S. consumers in 2016 alone!
One crucial component of your legal identity is your Social Security number. With it, identity thieves can either start charging your credit cards with unauthorized purchases or worse, open new credit lines under your identity.
You may not even realize what's going on until the collection agencies start stalking you for accounts that you don't remember creating. This is why it's imperative to protect this nine-digit code at all costs!
How your Social Security number can be stolen
There are various ways your Social Security number could fall into the wrong hands. The most notorious one is the data breach, like the massive Equifax incident last year.
Be extra careful about jotting down your Social Security number or leaving it in paper forms, thieves sometimes rummage through trash looking for receipts, credit card bills and, of course, Social Security numbers they can use. Make sure you shred your documents and paperwork when you throw them away.
Also watch out for phishing scams, social engineering scams, and phone scams. In summary, guard your Social Security number like your life depended on it! Well, because it really does.
How criminals can use your Social Security number
1. Commit crimes under your name
Surprise, surprise. A criminal can use your Social Security number to - yep, you guessed it - commit more crimes. For example, if the thief gets caught and arrested for a crime, he or she can give your stolen Social Security number out to the police.
The consequences of this switcheroo are not hard to imagine. You can be stuck with a crime you didn't commit, tainting your criminal background checks and your chances for employment. Again, clearing your name might take years so it's definitely a bad spot to be in.
2. Open financial accounts under your name
Banks use your Social Security number as their main means of getting information about you. They use it to get your credit report and history and from there, decide if an account can be opened or a loan will be offered under your name.
If fraudsters manage to obtain your Social Security number and personal information, they can open credit card accounts and loans under your identity and never bother to pay them. When it's time to collect payments for these accounts, guess whose name is on the line? Yep, yours.
These unpaid bills can definitely show up on your credit report, affecting your score and your chances of getting a loan or another credit account down the road. The worst part is this - it can take years before fraudulent activities are stricken from your credit report, affecting your overall credit score in the meantime. It's a double whammy of sorts.
3. Medical identity theft
Another type of Social Security number fraud that has a long-term impact is medical care theft. Someone with your Social Security number can use your medical benefits and insurance to buy medicine, get treatment and even have surgery on your dime.
And if surprise medical bills aren't enough to rattle you, these fraudulent medical records can literally kill you. With all the inaccurate information brought in by scammers to your medical records, misdiagnoses and wrong treatments are likely.
4. File a fake tax refund
One rising scheme is tax identity theft. This is when an identity theft uses your stolen Social Security number to file and collect a fake tax refund under your name. This can then delay or even rob you of the tax refund that you are owed.
If your tax refund gets rejected as a duplicate then it's likely that a scammer has beaten you to the punch. One way to combat this is to file your taxes early so a would-be tax identity thief will have fewer opportunities to file a fake refund before you. But of course, this also means your Social Security number has been compromised and your problems go beyond fake tax refunds.
5. Steal your benefits
An identity thief can also use your Social Security number to steal your unemployment and even your retirement benefits, which can stop you from accessing these funds when you really need them.
How to check if your Social Security has been stolen
Identity thieves can fly under the radar and use your stolen Social Security number for years without detection.
Your credit report is one of the best ways to spot potential problems. It can tell you if someone is taking out a loan in your name, starting a second mortgage, or even just running your information.
Look for credit checks from businesses you don't remember visiting and accounts you never started. Also, look for inaccuracies in your personal information, such as the wrong address, birth date or marital status.
Getting your credit report is simple. You're entitled to a free credit report once a year from each of the three reporting agencies - Equifax, Experian and TransUnion. I recommend requesting a report from one company every four months. That should be enough monitoring for anybody.
If you suspect that your identity has been compromised, here's one essential step you must take to stop criminals from opening credit card accounts under your name - a credit freeze.
Your Social Security number is about to change due to hacks and breaches
With all these threats out there, maybe it's time for the Social Security number system to go. Click here for the government's plan to get rid of it.