If you've ever had your identity stolen and it proved to be nothing more than a hassle, consider yourself lucky. The financial trauma inflicted on some victims is enough to drive them to apply for government benefits, borrow money from family and friends or even sell their own possessions.
That's one of the conclusions reached by a new study published by the Identity Theft Resource Center, a San Diego-based non-profit that works with ID theft victims. The group's report paints a picture of economically vulnerable people sometimes pushed over the edge after they've learned someone has opened new accounts or committed crimes using their name.
"We have long stated that identity theft has a disproportionate effect on low income victims because they simply do not have the resources, financial and otherwise, to make it to the other side of this long ordeal," the study's authors wrote.
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Study focused on low wage earners
The 300 study participants all contacted the resource center during the 2015 calendar year. More than half the victims had household incomes of less than $50,000; one-third earned less than $25,000 annually.
Although this was not a random sample study, center CEO Eva Velasquez says, it illustrates what often happens to victims who don't have a financial safety net.
"We feel like the results are more reflective of the experience of victims in the low- to moderate-income bracket," Velasquez says.
Here's a sample of what some of the victims told the center:
“Honestly, this situation has ruined my stellar reputation and ALL my financial resources are completely gone. After working for 25 years and saving money for retirement, I find myself struggling to make ends meet. I have never felt so powerless and like I had lost control of my life. Horrible devastating experience and banks, etc. make me feel like I'm to blame for this crime/financial mess.”
“It is a constant worry that someone may still use my information. I put a freeze on my accounts at the credit reporting agencies and any time I do anything requiring my score I have to unfreeze my information for release.”
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Range of economic impacts
To be clear, ID thieves do not just target low earners. For example, households earning more than $75,000 annually were more likely to have their credit cards misused than any other income group, according to 2014 data from the Bureau of Justice Statistics.
The impact the ID theft caused among the study's participants ranged from the merely inconvenient to life-altering. For example, more than one-quarter had to take time off of work to deal with the fallout from the crime, while 17.7% had to request government assistance in the form of welfare or food stamps.
Here are some more economic impacts:
- 3% closed existing financial accounts.
- 7% used an existing credit card to pay for expenses they would not otherwise have had to use the card for.
- 1% took out a payday loan.
- 5% took out a bank loan.
To the extent low-income victims had to ask their church, the government or friends and family for help, the impact of identity theft appears to be more widespread, Velasquez says.
"We can draw the conclusion that (identity theft) did effect everyone last year, not just the victims," she says.
Impact of criminal identity theft
Bad financial outcomes aren't just limited to victims of financial identity theft. The study found victims of criminal ID theft -- in which the thief uses the victim's name and identifying documentation to law enforcement following the commission of a crime – felt "significant effects," Velasquez says.
This type of ID theft might, for example, lead to conviction under the victim's name following a thief's prosecution.
As a result, 44% of victims in these cases lost an employment opportunity, while 31% lost their residence or housing 31%, the study found.
"We were surprised to the degree that they were suffering and had to go through these issues," Velasquez says.
How to protect yourself
It's not clear from the study how these people had their financial data stolen. But we do know there are habits consumers form that make the bad guys' job easier.
A Bankrate survey this month found many Americans:
- Toss sensitive documents in the trash instead of shredding them.
- Fail to check their credit reports.
- Bank on unsecured WiFi.
- Use the same password across multiple accounts.
- Fail to monitor bank and credit card accounts for signs of fraud.