Top 3 Identity Theft Scams and Insurance to Help You Recover

Top 3 Identity Theft Scams and Insurance to Help You Recover

Top 3 Identity Theft Scams and Insurance to Help You Recover

Like being struck by lightning, it’s easy to assume identity theft won’t happen to you.

Unlike being struck by lightning, identity theft affects more than 15 million people every year, and it’s as easy as someone obtaining your name, birth date and Social Security number.

Historically, thieves would steal something physical like a wallet to get your personal information. But as our lives and documents become increasingly digital, this is changing.

“We consider digital risks to be eclipsing physical risks, growing in both degree and complexity,” says Matt Cullina, CEO of CyberScout, a company that provides identity protection and data risk management services.

If you’d like to avoid becoming the financial equivalent of burnt toast, getting identity theft insurance may be a smart move.

Identity theft scams and how to avoid them

According to data from CyberScout’s Resolution Center, the most prevalent ID theft scams are:


Hackers infiltrate computers or networks, lock them down and demand ransom in return for your data.

How to avoid it: Delete unverified emails without opening and never click links in them. Install software updates immediately when they’re available. Use your computer’s standard encryption to hide sensitive files from hackers and establish daily backups so data are preserved.


Someone who claims to represent the IRS calls about an unpaid tax bill. The person may threaten drastic action unless you agree to make a payment over the phone. Such callers will likely request your Social Security number, which they can then use to steal your identity and claim your tax refund. Or the threat may come via a phishing email.

How to avoid it: The IRS won’t demand a tax payment or request debit and credit card numbers over the phone. Always wait for an official letter from the IRS notifying you of an issue, or call the IRS directly to inquire about any taxes you may owe.


Criminals use this tactic, also known as the “grandparent scam,” to prey on elderly people. In this scam, someone calls or emails pretending to be a family member — often a grandchild — in a dangerous situation. The person asks you to send money immediately to “buy” his or her safety.

How to avoid it: If you’re not sure whether the request is legitimate, tell the person you’ll call right back; the caller might just hang up. Attempt to contact the family member directly, verify the person’s whereabouts with another family member, or contact his or her school.

What is identity theft insurance?

Identify theft happens when someone uses your personal information to impersonate you, often for financial gain.

Identity theft insurance repays the money you spend to restore your identity, but it doesn’t typically reimburse money lost in the theft.

An identity theft insurance policy may reimburse you for expenses like:

  • Copies of your credit report
  • Notary fees
  • Long-distance phone calls
  • Bank fees
  • Lost wages from work as you restore your identity
  • Child care costs
  • Legal fees

Identity theft insurance is different from identity monitoring services, which only look for signs of identity theft, according to the Federal Trade Commission. It’s also different from identity recovery services, which help repair the damage if your identity is stolen. These services are also called resolution or restoration.