Identity theft is a crime that violates a person on every level. As personal as it feels, the reality is that those who often perpetuate these crimes do not know you. They usually live in other states or even other countries around the world. As personal as it feels to those who are victims, the criminals who commit the crimes view it only as a means of making dollars and cents at someone else's expense. Protecting yourself from these nameless, faceless criminals needs to be a high priority. Otherwise, you could face some or all of the identity theft impacts discussed below.

Financial Impacts

Identity theft can have severe financial consequences. If someone uses your credit cards or takes out loans in your name without repayment, it's damaging. However, the financial implications extend far beyond that. You become liable not only for your debts but also for other costs arising from the theft. You'll need time and money to resolve the theft and rebuild your reputation. Financially, you might face tax consequences, fraud claims, and the expenses of hiring attorneys to defend yourself, clear any wrongful criminal records, and restore your credit. You might even have to repay unemployment benefits or medical bills falsely attributed to you. Facing identity theft can feel like an endless onslaught of financial challenges.

Emotional and Psychological Impacts

Emotionally, the effects of identity theft linger well beyond the initial incident. Financial recovery can take years or even decades, and the longer the recovery process, the more prolonged the emotional and psychological distress. Few experiences are as psychologically devastating as losing your reputation through no fault of your own, which is the case with identity theft.

Legal Consequences

Legally, recovering from identity theft can take years. Besides potential criminal records, you may face many financial liabilities due to fraud committed in your name. You might encounter issues with banks, credit card companies, insurance companies, and lenders. Additionally, you might be accountable for any tax discrepancies, even if the identity thief is to blame. Hiring an attorney to clear your name and restore your financial health becomes a top priority.

Employment Consequences

Your professional reputation and continued employment may rely upon security clearances and specific credit scores that an identity theft attack can place at risk. It adds insult to injury as you will need your job to repay the debt your identity thief has accumulated in your name. If you lose clearances and employment, your ability to climb out of this debt is in jeopardy. Moreover, if someone has assumed your identity professionally and committed fraud or acted maliciously, you may have to work to restore your professional reputation and recover your identity.

Impact on Tax Returns

Identity theft can significantly impact your tax return. Identity thieves might claim your refunds and cash checks meant for you and even cause the IRS to scrutinize your records more closely. You might have to undergo an audit to verify your income, identity, and other essential details. Alarmingly, the scale of this issue is vast; the IRS identified nearly 1.1 million potentially fraudulent tax returns in 2023 alone.

Recovering from Identity Theft

The recovery period for identity theft varies significantly according to how quickly the identity theft was recognized and how swiftly you took action to correct the problem. When noticed quickly and shut down immediately, it can be resolved in a few days or weeks. However, the longer the theft continues unchecked, the graver the consequences and the longer the recovery. It may even take years to recover fully – and a lot of effort, time, attention, and money.

Takeaways

Identity theft is a crime that is difficult to recover from, and the longer it continues, the more complex the threads become to unravel. Taking active steps to protect yourself from identity theft is the best bet. If it does occur, your next best bet is to respond quickly and decisively to address and resolve the problem.