what is benefits identity theft?Savvy consumers likely understand the severity of the most common kinds of identity theft, like credit account abuse and even tax identity theft. However, simply because these are the most discussed and recognized types of identity theft, doesn’t mean that other types aren’t just as severe. Employment identity theft and government benefits identity theft are perhaps two of the least talked about forms of identity theft, yet both can have devastating effects on your employability and even put you into legal trouble if you’re accused of benefits fraud. Unfortunately, the numbers for these forms of identity theft are somewhat spotty, but the Treasury Inspector General for Tax Administration (TIGTA) estimates that the numbers for employment identity theft, specifically, are probably higher than estimated by the IRS. As part of our identity theft series, we’re going over these two more obscure types of identity theft and detailing how you can combat them.

Employment identity theft

What is employment identity theft?

Employment identity theft occurs when someone uses your social security number on a work application. This type of identity theft is very difficult to spot quickly because it usually doesn’t cause any immediate financial consequences for victims. In many cases, the thief uses your social security number and their own information to earn wages from their employer, and you’re left none the wiser. Still, even though this type of identity theft doesn’t have a direct and immediate financial impact on victims, it’s far from harmless. Like with all identity theft, having your name intertwined with that of another person can prevent you from obtaining credit, benefits and other things, depending on how your social security number is used. You might also land in hot water if you’re suspected of committing fraud – like in the instance you’re collecting disability while someone is using your social security number to work. This will put suspicion on your disability claims and expose you to all sorts of scrutiny, as it might appear like you’re claiming a benefit you don’t need.

How does it happen?

While it’s becoming common knowledge that social security numbers are shared, bought and sold underground, what might not be as well known is that these numbers can be exchanged for different purposes. Some individuals may choose to offer stolen social security numbers to illegal immigrants, felons and others who have difficulty assimilating into society and finding gainful employment. These aren’t always under-the-table arrangements either, with some perpetrators being legally employed while having no idea that the social security number they were provided was stolen.

How can you detect or prevent employment identity theft?

Like with tax identity theft, many people find out from the IRS that someone is potentially using their social security number to earn wages. This isn’t necessarily because those who commit employment identity theft also commit tax identity theft, but rather it’s because the IRS is in the unique position of being able to detect this kind of fraud since it tracks an individual’s earnings through social security numbers. In the instance you’re filing your return and are unaware of any fraud committed against you, the IRS might notice wage discrepancies and notify you with documentation. Alternatively, you might receive W-2s from employers you don’t recognize.

As far as preventing employment identity theft, it’s usually tricky because there are very few ways for potential victims to know when it’s happening. The FTC does suggest trying to use the Department of Homeland Security’s MyE-Verify tool to identify the names of any employers who accessed your government records for employment verification. In theory, this means you should be able to detect if someone else used your social security number in job applications and what employers considered hiring them. You can also “lock” your records for a year, which makes it more difficult for a fraudster to use your information to apply for work. It’s worth noting, though, that not every employer uses E-Verify, so its effectiveness is somewhat limited. Still, it’s a very powerful tool and an alternative to waiting until tax season to learn about any potential fraud – assuming the IRS catches it.

Benefits identity theft

What is benefits identity theft?

Benefits identity theft refers to the use of a victim’s social security benefits by an identity thief. This can sometimes happen when a thief intercepts social security payments, but increasingly thieves have been applying for benefits with the name and social security numbers of their victims. Although this is a type of identity theft distinct from employment identity theft, the two aren’t necessarily mutually exclusive, as someone using a social security number for one purpose could easily use it for the other. It’s important to note that while benefits fraud is seen as only impacting the elderly, anyone is at risk because it’s easy to pull off. In fact, since younger individuals are seen as less likely to review their benefits information, in some thieves’ minds, they might be better targets.

How does it happen?

Much like employment identity theft, many types of benefits identity theft stem from stolen social security numbers. Thieves may also sometimes apply to receive payments through the Social Security Administration’s my Social Security online portal before the official owner of the social security number registers an account.

How can you detect or prevent benefits identity theft?

The best way to detect and prevent this type of identity theft is to register your name and social security number through the my Social Security online portal before anyone else attempts to. Failing to do so could get you locked out of receiving notifications for your own social security account activity. Although registering isn’t guaranteed to prevent thieves from trying to take benefits in your name, having an account should allow you to see all transfers and deposits from your social security benefits.

What should you do if you become a victim of either?

Being a victim of identity theft can be disheartening, but taking the following steps can mitigate the consequences:

1. Contact the appropriate parties. This step ought to be obvious. Whenever you learn of identity theft, you should contact any of the parties that reported the incident or those managing the affected accounts – usually both are the same. In the case of employment identity theft, this generally would be the IRS, and for benefits identity theft, it’s typically the Social Security Administration.

2. Make a record of the incident. In addition to contacting the relevant parties, you should record the incident by reporting it to the FTC, your local police department or the Internet Crime Complaint Center (IC3). The FTC both accepts identity theft reports and assists you in developing a strategy to mitigate the fallout of identity theft.

3. Monitor all of your accounts. If your social security number was used for either employment or benefits fraud, it could become compromised in other ways. That’s why you should monitor your financial accounts, file your taxes earlier, freeze your credit and if possible, monitor other accounts where your social security number is on file (e.g., any retirement account you may have). Additionally, you can make sure to monitor your credit reports as much as possible and pay close attention to every bill and statement appearing in your name. While this might seem like a lot to deal with, it’s not nearly as frustrating as dealing with a complete takeover of your identity.

It pays to be proactive when it comes to staying safe from identity theft, so be on the lookout for our next post from our identity theft 101 series to learn about another form of identity theft.