Final answer:
Identity theft involves the fraudulent use of someone's personal information, leading to financial loss and credit damage for the victim. Common methods include phishing and data breaches, and victims must be proactive in monitoring and protecting their personal information.
Step-by-step explanation:
Identity theft is a serious crime where someone wrongfully obtains and uses another person's personal data in some way that involves fraud or deception, typically for economic gain. This personal information includes but is not limited to an individual's name, date of birth, Social Security Number, and bank account details. Thieves may use this information to open new lines of credit, drain savings accounts, or even commit crimes under the victim's name.
Identity theft can occur through various means such as phishing attacks, malware, data breaches of businesses or institutions like banks and hospitals, or even physical theft of personal items like wallets or mail.
The consequences of identity theft can be devastating. Victims may face financial losses, damage to their credit scores, and a lengthy recovery process. The psychological impact involves a loss of trust in financial and governmental institutions and the stress of dealing with the aftermath.
It is essential for victims to act swiftly by reporting the theft, monitoring their credit, and taking steps to secure their personal information. Preventative measures include sharing only the minimum necessary personal information, understanding why it's collected, and keeping a vigilant eye on financial statements.