A Standard Case
A typical identity-theft case is just a matter of stealing money. The identity thief is somebody who does not have as much money as they would like to have. Instead of getting a job, the identity thief turns to fraud. Once they have your personal information, they start using accounts in your name. Sometimes, identity thieves will open brand-new accounts. They contact credit card companies and open new accounts in your name. They might also frequent stores that offer instant credit. For example, they may buy clothes at a major department store, or they may buy furniture from a rent-to-own establishment.
Do I have to pay for charges made by a thief?
In most cases, you will not be responsible for debts created by an identity thief. However, you have to report the crime in a timely fashion, and alert your creditors. You may not have to pay the charges, but you will spend a lot of time and energy cleaning up the mess.
Of course, the identity thief has no intention of paying the bills. The whole point of stealing somebody's identity is that the victim is left with the bill. Therefore, in a standard identity-theft case, the victim finds huge amounts of debt that he did not personally incur.
Here's a Nice Account
Sometimes, identity thieves will attack your existing accounts. If they know (or have reason to believe) that you have a lot of assets, they may try to make withdrawals in your name. Your bank account and brokerage account would be prime targets. A common tactic is to change your address on your bank and brokerage accounts. That way, statements are no longer mailed to your house for your review. Then, the thief can take out as much money as he likes. You will not notice the transactions because the mail no longer comes to your house. In recent years, financial institutions have caught on to this. Most have added safeguards so that it is more difficult to pull this off. They send a letter to the old address and the new address stating that there has been an address change. If you ever get such a letter and you haven't moved lately, you should keep a close eye on your accounts for other signs of identity theft.
That Explains It!
It can take a long time to detect an identity thief. In most cases, victims are not aware that their identity has been stolen until after the thief has racked up thousands of dollars and opened several accounts. In some cases, it goes on for years. You might go several years before you apply for a new auto loan or home loan, only to be turned down because of a poor credit history. If you are not aware that you have a poor credit history, you look into your credit reports and see a jumbled mix of accounts that are not yours. Then, you have to start the cleanup process.