Identity theft usually begins when your personal data is exposed through hacking, phishing, data breaches, or other means. From there, a criminal may use your exposed information to do something illegal, such as opening an account in your name or filing a fraudulent claim. Some forms of identity theft can take months or even years to detect and resolve—but with Allstate Identity Protection, you won’t have to manage the recovery process alone.
Millions of Americans continue to be affected by identity theft every year. Recent findings from groups like Javelin Strategy & Research, the Federal Trade Commission (FTC), and the Identity Theft Resource Center all point to the same trend: identity fraud and scams remain widespread and continue to rise.
Here at Allstate Identity Protection, we’re seeing the same trend, and it’s our mission to help you stay one step ahead. Stories from our members show that identity theft cases come in all shapes and sizes. We’ve seen fraudsters use stolen personal information to open new financial accounts or even obtain government benefits in someone else’s name.
Still, the process of identity theft and recovery usually follows the same three-step blueprint. Here’s what you need to know about how identity theft often unfolds, so you can spot the signs as quickly as possible.
Step 1: The acquisition of personal data
The first step of identity theft is when thieves steal your personal data. This can happen through a variety of means, including hacking, fraud and trickery, phishing scams, mail theft, and data breaches.
Data breaches are among the most common ways identity thieves collect personal data. According to the Identity Theft Resource Center, the number of reported data compromises has remained high in recent years, with 2023 and 2024 both recording historically high volumes.
If you’ve experienced a data breach, it’s important to know that even if your personal information—including your Social Security number, address, or other details—has been exposed, it doesn’t constitute identity theft.
Thieves have merely stolen your 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.
This often involves a period of testing: scammers try small transactions, login attempts, or account actions to see whether the data is valid. Once they confirm it works, they may move on to more serious activity.
Some of the most common ways identity thieves use personal data include:
Opening new accounts
Taking over existing accounts
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. For example, victims are likely to notice an unfamiliar account on their credit report.
But unfortunately, other types of fraud can go undiscovered for years. When identity thieves target children, it can fly under the radar because kids don’t typically check their credit reports.
The correction process can be a lengthy one. The longer it takes to catch identity theft, the harder it might be to untangle. However, the good news is you don’t have to go through it alone.
If you’re an Allstate Identity Protection member, we’ll be by your side throughout the whole process. Our specialists are on call 24/7 to help you through any issue you’re experiencing. Plus, our free educational resources—like this article—are designed to help people better protect themselves from fraud, whether they're covered by our identity protection plans or not.
The difference between a scam and identity theft
Scams and identity theft are closely related, and it’s common for one to lead to the other. But they aren’t the same thing.
A scam happens when a criminal tricks you into giving away money or personal information, such as clicking on a fake link, sharing sensitive details with someone pretending to be a trusted source, paying a fraudulent invoice or “urgent” fee, or sending money to someone impersonating a family member, government agency, or company. In a scam, you actively hand over information or money because the criminal deceived you.
Identity theft, on the other hand, happens when someone uses your personal information—with or without your knowledge—to commit fraud. This can include opening new accounts in your name, taking over existing accounts, filing fraudulent tax returns, or using your identity to obtain medical care, benefits, or loans. In identity theft, the criminal misuses your information after it has been stolen, exposed, or obtained through a scam.
Scams are now one of the most common ways criminals obtain personal information that fuels identity theft. For example, a scam may trick someone into sharing a Social Security number—and weeks or months later, the criminal uses that information to open accounts or commit other forms of fraud.
You’re not alone in protecting your identity
Identity theft can feel overwhelming, but understanding how it happens is the first step toward preventing it. By staying alert to how criminals steal and misuse personal information, you'll have a leg up.
And remember, if fraud ever touches your life, you don’t have to face it alone. Allstate Identity Protection is here to help you detect threats early, and take action quickly.
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