Identity fraud vs identity theft: Is there a difference?

Being online has become a normal part of our daily routines. We can shop, connect with people, learn, and even work over the internet. However, we can’t always protect that space from thieves as we would our physical homes. 

Cybercrimes have become rampant, and it’s important to take a more proactive approach to safeguard our online spaces. So much of our lives now exist online, and it only takes a single mistake, such as lax security measures, to lose our data to identity theft and fraud. 

The first step toward protection is education. For one, it’s important to understand that people often use identity theft and identity fraud interchangeably, but they differ in many ways. Knowing the difference can help you better protect yourself.

That said, we looked into reliable identity theft and fraud sources online to understand their differences and how to determine which is which. We also gathered the best tips for protecting your identity, including the top tip you wouldn’t want to miss. 

Don’t miss out on the key differences between identity theft and fraud. When you don’t know what you’re up against, you may not have the sufficient security you need.

Identifying the differences: Identity fraud vs. identity theft

Are fraud and theft the same thing? The short answer is no.

As previously established, identity theft and identity fraud are different. Many people use them interchangeably online, but it’s paramount to know the differences so that you know how to arm yourself against each crime. 

What is identity theft?

Identity theft pertains to stealing any personal, financial, or private information with the intention of using them to pose as another person. 

Identity thieves typically use stolen data to purchase luxurious goods, open new credit card lines, and even apply for bank accounts.

Unfortunately, identity thieves have also ventured into healthcare claims, taxes, and other government benefits. They essentially pretend to be another person and claim government benefits for themselves. 

For this reason, it can negatively impact a victim’s records, which can go as far as reflecting on criminal records. 

Identity thieves usually target the following information from unsuspecting victims:

  • Name
  • Contact information
  • Birth date
  • Social security number
  • Credit card numbers
  • Bank accounts
  • Passwords

The criminals can steal this information and use it later for malicious activities.

How do criminals steal your identity?

Identity thieves use various measures to steal or obtain identities online. For many, a stolen or lost wallet can provide them with everything they need to pose as someone else. 

A smartphone can also be a source of personal information, as well as hacked online transactions, hacked computers, and even seemingly safe public internet connections. 

Let’s emphasize their online tactics, however, especially since identity thieves have become more sophisticated than ever:

  • Malware: For unsuspecting users, all it takes is a simple trick to download software or an application on the internet. Criminals will typically invite you to download these items, and you don’t realize that they may contain malware that allows them total access to your devices. 
  • Phishing: It’s common in emails, where criminals trick victims into clicking seemingly legitimate links or inputting information on fake websites. 

What is identity fraud?

While identity theft pertains to stealing information, identity fraud describes using the information that the criminals have stolen. 

Identity fraud pertains to the actions following an identity theft—and thereby affects not just the individuals but businesses where criminals have carried out fraudulent transactions using stolen identities. 

How does identity fraud happen? Some of the most prevalent types of identity fraud include the following:

  • Using fake IDs
  • Using fake passwords
  • Using a false credit card or bank accounts
  • Applying for loan applications
  • Faking criminal records

Unfortunately for the victims, once identity fraud has occurred, the impacts on credit scores and other records can be devastating. Any loans, credit card debt, and other fraudulent transactions will reflect on your credit report, to remain true and your responsibility until you dispute them. 

What are the six major categories of identity fraud crimes?

We can classify identity fraud into six major categories. Let’s dive into each:

  1. Bank fraud: This pertains to using someone else’s personal information to open a new account or access an existing one.
  2. Credit card fraud: This means using a victim’s credit card to make purchases, more often than not being luxurious goods and other expensive items.
  3. Employment or tax-related fraud: This relies on Social Security numbers to either claim an income tax return or apply for a job.
  4. Loan fraud: This pertains to using stolen information to apply for loans or mortgages.
  5. Utilities fraud: This pertains to using stolen information to open utility accounts for electricity, water, internet, and phone.
  6. Government benefits fraud: This pertains to the use of one’s information to illegally claim government benefits.

What are the effects of identity theft vs. identity fraud?

Identity theft leaves your personal information vulnerable to numerous criminal activities that hackers and scammers may commit. 

For example, these criminals can sell your data on the dark web, drain your financial accounts, and compromise your cyber security.

Identity fraud is also one of the possible effects of identity theft. 

Thieves can use your stolen data to impersonate you, take out loans under your name, and even commit crimes using your identity. 

Your credit score may also plummet due to fraudulent transactions.

How to recover from identity theft and identity fraud 

We don’t want to sugarcoat it—recovering from identity theft and fraud isn’t easy. 

It’s a long process, but thankfully there are ways to help decrease your risk. Here’s what you can do:

1. Contact the three major credit reporting agencies

The three major Credit Reporting Agencies (CRA) are Equifax, Experian, and TransUnion. As soon as you discover thieves have stolen your information, alert these bureaus. 

You can request a fraud alert, which can help protect you further. Businesses will require you to confirm your identity before agreeing to transactions, especially credit. For identity thieves, this can be a dead end. 

2. Change your passwords across all platforms

Even without a case of identity theft weighing you down, practicing online precautions is important. 

For many, this entails changing passwords regularly. As a victim of identity theft, however, make sure to change passwords for all your accounts.

Make sure that you use the best password-changing practices, including the following:

  • Create a diverse combination of alphanumeric characters.
  • Never use identifying information when creating passwords, such as your name or birthday.
  • Don’t use the same password for all your accounts.

3. Contact the companies involved

This will require time and effort, but contact the companies behind your accounts. Explain thoroughly how you think criminals have stolen your identity and used it for fraudulent transactions.

You can also ask them to close or freeze your accounts, just to be sure that no transactions by the fraudster go through.

4. Request a credit freeze 

While you can rely on a fraud alert, a credit freeze’s impact can be stronger, as it can prevent your files from being shared with other creditors. 

Most businesses will refuse to transact with a person under a credit freeze and will only do so upon checking someone’s credit history first. 

Keep in mind that you won’t also be allowed to open new credit, however, but you can lift this temporarily depending on your need.

5. Report the crime to law enforcement authorities 

Under both state and federal law, identity theft is a felony. This means that you have the power to file charges against the identity thief in the state or area where the crime has been committed.

You can go to the police for a police report, which you can then use to correct your credit rating. You can also ask for an Identity Theft Affidavit from the Federal Trade Commission (FTC) via

How to prevent identity theft and fraud and boost your security

Identity theft and fraud can be terrifying, but they shouldn’t deter you from benefiting from the convenience and accessibility of the online world. They shouldn’t prevent you from enjoying the real world, either. Here’s what we can recommend to improve your security:

1. Remain vigilant at all times

It’s important to be more cautious with your personal information, so don’t be so eager to give your Social Security numbers away. 

It’s also important to keep your credit cards, driver’s license, and other identifying information safe and sound. For many, this could mean keeping their wallets safely tucked in their purse or jean pockets. 

2. Practice digital hygiene at all times

You must keep your online account secure, so create powerful password combinations. You can also be more vigilant about the things you click or download online. 

Don’t just readily trust links, attachments, and websites. Always proceed with caution, and ensure to research the companies behind messages and emails sent to you.


It may not seem like there’s a difference, but identity theft and identity fraud pertain to different concepts. Identity theft means the process of obtaining your information illegally, while identity fraud means how criminals have used this information for fraudulent activities. 

A little knowledge goes a long way, especially when you’re building measures to protect yourself online. Keep this full guide in mind—you’ll need more than just their definitions. 

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