As tax season approaches, cybersecurity experts advise consumers to be vigilant against a rising trend called employment identity theft, where the Federal Trade Commission (FTC) reported an 18% increase, reaching 31,207 in 2023 compared to the previous year.
What is Identity Theft?
Identity theft occurs when someone unlawfully uses your personal information to impersonate you or commit fraud, which includes various actions such as accessing your bank accounts, opening new credit cards, obtaining services in your name, diverting your tax refunds, using your medical insurance for treatments, or providing your details to law enforcement during arrests.
With frequent data breaches, your personal information could already be compromised. It is wise to take precautions to stop malicious individuals from exploiting your data and causing financial harm.
How is Employment Identity Stolen?
Ian Bednowitz, Lifelock's General Manager for Identity and Privacy Theft, stated that employment identity theft surged during the pandemic and has not declined since. He emphasized that this could lead to significant financial harm for individuals.
Employment Identity Theft occurs when someone uses your Social Security number and other personal details to apply for a job using your identity. Equifax explains that this often happens when the "fraudulent applicant" has been barred from employment in some manner, whether they might have a criminal record, fail a background check, or be in the country unlawfully, so they need someone else's identity to earn income.
If this fraud targets you, you might face tax obligations for income you never earned, unreported wages linked to your Social Security number could lead to an IRS review, and your Social Security benefits might be affected negatively due to falsely attributed income.
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Three Signs You Are a Victim of Employment Identity Theft
Bednowitz mentioned three clear signs that indicate you are a victim of employment identity theft:
- You will get a W-2 or 1099 form from an employer for whom you have never worked.
- You cannot file your tax return because someone has already used it to file one.
- Your credit report will show unfamiliar accounts, loans, or background checks related to employment.
How Does Identity Theft Happen?
Data breaches: Confidential data may be used for fraud when identity thieves access a company's database.
Insider Access: Some employees with access to sensitive personal information may misuse it by creating fake identities for employment purposes, contributing to identity theft.
Phishing: Identity thieves may pose as employers or HR representatives and request sensitive data by using deceptive emails, calls, or other methods to trick you into sharing personal information.
Document theft: If your important documents are lost or stolen, someone could use them to create fake identities and get a job.
Fraudulent applications: Thieves might apply for jobs using their identity, making up details to make it seem real.
Once a thief gets a job using someone else's identity, they can get paid or receive benefits meant for that person. This messes up their financial and work records and causes legal and tax problems.
How to Avoid Such Identity Theft?
Bednowitz recommended a few steps to help consumers protect themselves:
- Refrain from using public Wi-Fi when dealing with sensitive information.
- Use a VPN to secure your network and data if you use public Wi-Fi.
- Watch out for phishing scams in emails or text messages.
If you suspect you have fallen victim to employment identity theft, report it to the authorities first and contact the IRS, Social Security Administration, and FTC for assistance in rectifying false information.
