The goal of both financial fraud and identity theft is to steal from a victim. In financial fraud, bad actors are after money and trick victims in order to get it. In identity theft (also known as identity fraud), criminals steal personal information from another person without their knowledge, in order to access or open accounts under their name. There are countless ways criminals can pull off both scenarios, so knowing what to watch for is key.
Financial fraud, identity theft, identity fraud — though these terms are sometimes used interchangeably, they actually mean different things.
To better protect yourself from each of these threats, find out what makes each different from the other.
What is financial fraud?
When a criminal tricks someone into giving them money or other assets for goods or services that are phony, nonexistent, or never provided, this is financial fraud, according to the U.S. Department of Justice.
Financial fraudsters knowingly omit or conceal facts in order to make financial gain at someone else’s expense. For example, in an online shopping scam, a fraudster may advertise fake goods or services through an online site or on social media. The victim pays them, but then never receives the item or service.
Unfortunately, this type of fraud can be difficult to contend with after the fact.
If you willingly gave up your information, most companies do not reimburse you for financial loss since it is considered a voluntary transaction.
What is identity theft?
With identity theft, the criminal’s goal is to steal your personal (and often sensitive) information, such as your log-in credentials or Social Security number, in order to access your accounts or open new ones under your name.
In many cases, identity theft leads to financial loss as well. A fraudster could use your stolen information to drain your bank account or access your government benefits.
They could also apply for loans or open credit cards under your name, negatively impacting your credit score.
How to protect yourself from financial fraud and identity theft
Whether identity theft or financial fraud, the criminal’s goal is to steal from you.
Protecting your personal information and identifying these scams in advance are your best defenses against becoming a victim.
To help protect yourself from financial fraud...
Be wary of deals that seem too good to be true. Oftentimes, a hot deal or bargain online store is a scam intended to capture your card details.
Only shop at reputable institutions, online and in person. Refer to our guide on how to tell if a website is safe, secure, and legitimate.on how to tell if a website is safe, secure, and legitimate.
Use caution when making transactions over social media, and only send money for goods that you can verify are real.
Use your credit card when purchasing items online or over the phone since credit cards offer a level of fraud protection that cash, debit cards, and payment apps don’t.
Be wary of short-term and long-term rental scams, an increasingly common financial fraud ploy.
Keep an eye out for peer-to-peer payment scams, aimed at stealing your money, like if someone unexpectedly contacts you and insists you send payment via Zelle, CashApp, or Venmo.
To help protect yourself from identity theft...
Never give personal information to someone who calls, texts, or emails you out of the blue, even if they claim to be with a reputable organization like a doctor’s office or the government — an unsolicited request for personally identifiable information (PII) is a red flag of a phishing scam.
Minimize your digital footprint — meaning limit the number of online accounts you have open to only those you need and use. This can minimize your chance of being hacked, or of your information being stolen through a data breach.
Practice good online security like activating two-factor authentication (2FA) on accounts that store sensitive information and using complex passwords with a mix of characters and cases, changing them regularly.
Helping you fight identity theft
If your identity has been stolen and you're an Allstate Identity Protection member, we're here to help you every step of the way.
When you need help restoring your identity, our restoration specialists are available to assist you. Just give us a call using the number on your account dashboard.
On the other hand, we cannot reimburse you for losses if you voluntarily handed over your money or information (even if you were tricked into doing so). That's one reason why it's so important to follow our tips to protect yourself before fraud occurs.
The good news? If you have been the victim of financial fraud, we can help guide you on what to do next, like how to protect your accounts from even more harm. Plus, you can check out our Content Hub anytime, which is regularly updated with articles on the latest scam types so you're always in the know and well-informed.