The costs of ID theft
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Javelin defines it similarly. "We use the term identity fraud. It's probably synonymous with identity theft. And it is anytime there's a transaction in another person's name without their knowledge. So it's not a data breach in and of itself. It can be account takeover or a one-time credit card transaction, and it can be a new account for the purpose of fraud. We limit our focus to cases where it's a fraudulent transaction."

However, fraudsters can benefit from stealing identifying information in a few different ways.

With financial identity theft, fraudulent activity generally goes in one of two directions -- new account fraud or existing account takeover. For instance, a criminal can use a person's identifying data such as a Social Security number to open a new account at a bank, for instance, or to set up utilities or rent an apartment. Or an imposter can take over an existing account by engaging in credit card fraud or check fraud.

Criminal identity theft involves using another person's records to commit crimes.

A third category of identity theft, and often the stickiest to resolve, is identity cloning. In this variation, a criminal is actually living as you, getting married, having kids, going to school -- in addition to possibly committing crimes and performing financial transactions every day.

In his role as chief operating officer at Kroll's Fraud Solutions, Brian Lapidus saw identity cloning in action.

"A gentleman employed here at Kroll a few years ago got a letter from the IRS telling him that he owed taxes," he says. "And without thinking about it, it was a letter from the IRS after all, he paid it. The second time it happened he said something is not right."

As it turned out, someone in another state had gotten a job in his name and wasn't having taxes taken out of his paycheck.

"So Craig here was paying for Craig in Florida's taxes," says Lapidus. "And to compound the problem, Craig in Florida had also gotten married and the government was less than thrilled about the fact that Craig was married in two states."

Who does it and how?
"The average identity thief is what I would call a criminal opportunist," says Donald Rebovich, Ph.D., associate professor at Utica College and acting executive director of the Center for Identity Management and Information Protection, or CIMIP.