A step-by-step guide to identity theft

By Allstate Identity Protection

Identity theft usually begins when your personal data is exposed through hacking, phishing, data breaches, or other means. Next, a criminal makes use of your exposed information to do something illegal, such as opening an account in your name. Some forms of identity theft can take years to detect and hundreds of hours to untangle — but with Allstate Identity Protection, you’ll never have to manage the recovery process alone.

“It’s been a nightmare. My husband and I would have survived better had our house burned to the ground…or if we would have been robbed at gunpoint.”

This is what Minnesota-based Diane told “Today” when asked about the impact identity theft has had on her life. She went on to detail the pain this has caused her, from both a financial and emotional standpoint, and revealed that she believes her entire marriage crumbled as a result of the fraud perpetrated against her and her family.

Diane isn’t alone. Identity theft happens to millions of Americans annually, and that number has been increasing around 16 percent each year. Despite the overwhelming odds that our personal data may have already been stolen, many of us don’t know the first thing about identity theft. 

Let’s change that by taking a closer look at what’s involved in the process.

Step 1: The acquisition of personal data

The first step of identity theft is when thieves steal your personal data. This can occur through a variety of means, including hacking, fraud and trickery, phishing scams, redirecting or intercepting mail, physical theft — like when a criminal digs through your trash for identifying information — and data breaches.   

Data breaches are among the most popular ways identity thieves collect personal data. This was made clear over the summer when hackers stole the private information of nearly 80 percent of working Americans. Although thieves made out with our Social Security numbers, addresses, and nearly everything else, it’s important to remember this doesn’t constitute identity theft. Thieves have merely stolen our personal data; they haven’t made use of it. Identity theft is what happens next.

Step 2: The use of the stolen identity

The next step of identity theft occurs when thieves begin using the personal data they’ve collected. Often this will result in a series of trials, wherein thieves test the validity of the stolen information. If the data proves accurate, scammers will either attempt to steal more information from the same source or take immediate action on the data at their disposal.

Some of the most common ways thieves use this personal data include:

  • Opening new accounts
  • Taking over existing accounts
  • Using the victim’s debit/credit cards to make purchases
  • Selling the identity on the black market
  • Acquiring additional identity-related documents, like health insurance cards and passports
  • Filing fraudulent tax returns
  • Committing insurance fraud
  • Renting and stealing rental cars

Step 3: The discovery and correction of identity theft

Some forms of identity theft can be caught right away, like the misuse of credit or debit cards. Unfortunately, many types of fraud can go undiscovered for years, like when identity thieves target children. Additionally, crooks can use a victim’s insurance information to receive medical care. Many times, victims don’t realize this until they seek health care treatment and are denied for past due balances.  

These delays are incredibly bad news for victims because the longer it takes to catch identity theft, the more accounts criminals can compromise. 


The correction process can be a lengthy one. On average, it takes around 100 to 200 hours and six months to complete. Depending on how long your identity theft remained undetected, it could take thousands of hours and not be fully resolved for years. While this figure can be a bit overwhelming, the good news is you don’t have to go through this alone. 

If you’re an Allstate Identity Protection member, we’ll be by your side through the whole process. We can also help you get proactive about preventing identity theft in the first place. To gain more control over your data today, try our ten tips for protecting your digital footprint.