How does employment identity theft occur? Definition and ways to prevent it

What is employment identity theft? 

Employment identity theft is a type of identity theft in which a bad actor uses your Social Security number (SSN) and other personal information to apply for a job under your name. This situation can cause confusion in your employment history and complications during background checks.

Employment identity theft can also lead to tax issues. If your SSN is used fraudulently, you may face issues with the IRS, such as mismatched income records or delays in receiving your legitimate refund if a fraudulent return has been filed. The identity thieves could get tax refunds meant for you, and you could be audited due to the discrepancy.

How does employment identity theft occur?

Employment identity theft happens when someone uses stolen personal information to get a job while pretending to be someone else.

Criminals need to steal personal information before they can commit employment identity fraud. Some common ways they obtain this information include:

• Data breaches. If a company’s database is leaked, criminals can access employees’ or customers’ personal information, which they can then use to commit fraud.
• Document theft. If your Social Security card, birth certificate, driver’s license, or passport gets lost or stolen, identity thieves could use them to impersonate you.
• Phishing. Phishing refers to various social engineering techniques designed to trick you into sharing your personal information. In a phishing attack, scammers contact you via email, SMS texts, or phone and pose as someone credible. 

After an identity thief gets your information, they can use it to apply for jobs. Once they’re hired, they will receive paychecks, which can result in tax filing and legal issues, including tax complications and, in some cases, criminal identity theft, where actions of a person using your identity could be wrongfully attributed to you. 

What happens when you fall victim to employment identity theft? 

If someone steals your identity to find employment at another company, your current employer generally shouldn’t take any action against you. Since you did nothing wrong, you won’t be penalized. However, you might face:

• Work history discrepancy. When an identity thief uses your name and Social Security number (SSN) to get a job, their employment records may be incorrectly tied to your SSN. If a future employer runs a background check, they might see jobs listed that don’t match the experience on your resume. This can raise red flags about résumé fraud or dishonesty, making it harder for you to secure new employment — even though the inconsistency isn’t your fault.
• Tax issues. Because the IRS treats income earned under your SSN as yours, you may face confusion during tax season, such as mismatched income records or unexpected tax bills. In some cases, if a separate, fraudulent return is filed, it could delay or complicate your refund.
• Reputational damage. If the impersonator was fired, performed poorly, or engaged in misconduct, those employment records may be wrongly associated with you. Employers, background check services, or professional networks could mistakenly link you to behavior that was never yours, damaging your reputation.
• Credit issues. Suppose a bad actor has access to enough of your personal data to credibly impersonate you on a job application. In that case, they may also be able to open new accounts, take out loans, or apply for apartments in your name, which can negatively impact your credit score. 

How to tell if you’re a victim of employment identity theft

The signs of employment fraud can be extremely subtle, so staying on your guard is important:

• Review your credit reports. Request your credit reports from the major credit bureaus (Equifax, Experian, and TransUnion). While credit reports don’t list employment history, they may show credit inquiries from unfamiliar employers or background screening companies, which could be a sign someone is applying for jobs using your identity.
• Contact the Social Security Administration. Request a copy of your Earnings Statement from the Social Security Administration (SSA). If it includes wages from employers you’ve never worked for, it could indicate someone is using your SSN for employment.
• Use an identity theft protection service. These services can monitor your credit, data breaches, and the dark web for signs of misuse of your personal information. Some may also detect unusual employment-related activity or alert you to new accounts or job applications in your name.
• Evaluate your tax forms. If you receive a tax form, such as a W-2, from an unknown employer, someone has likely used your SSN to get a job.

It’s difficult to know if someone is using your SSN, but you must act quickly to minimize the damage if you believe you’ve fallen victim to employment identity theft.

What to do if you’re a victim of employment identity theft

If your identity gets stolen for work purposes, act quickly. Follow these steps:

1. File an identity theft report with the Federal Trade Commission. 
2. File a police report with local law enforcement so that they can investigate the theft.
3. Contact the three major credit bureaus and request to set up a fraud alert or credit freeze.
4. Contact the IRS and provide information about the identity theft. You can also request an Identity Protection Pin for greater security in the future.
5. Notify your employer. They can investigate internally to see if the company’s databases were compromised. 
6. If you use an identity theft protection service, see if it offers identity theft insurance and consider filing a claim.
7. Carefully monitor your bank and credit card statements. If the criminal has your SSN, they may also have other sensitive information, such as your banking passwords or credit card numbers.

The sooner you act, the less damage the identity thief can do. If you’d like to learn more, you can take a look at our guide on what to do if your identity is stolen.

How can you prevent employment identity theft?

When it comes to employment identity theft, the best protection is prevention. Use these security best practices to help protect yourself from employment identity theft:

• Don’t share your personal information. It might seem simple, but you should be very careful when sharing personal information. Limit the amount of sensitive data you store on work or public computers because they are not really private.
• Secure your online accounts. Set strong, unique passwords for your important accounts, such as your online banking, credit cards, loan servicers, and work computer. You should also enable two-factor authentication (2FA).
• Stay safe on public Wi-Fi. Public Wi-Fi is a playground for hackers. If you ever need to send personal information or log in to sensitive accounts, like online banking, via an open Wi-Fi network, make sure you use a VPN.
• Check your credit reports. You can get free credit reports from major credit bureaus once a year. Review them carefully because unusual credit activity can be a sign that someone has stolen your identity.
• Consider using an identity theft protection service. Identity theft protection services like NordProtect aren’t just for identity theft recovery — they can help prevent identity theft as well. NordProtect proactively guards your identity with credit tracking, 24/7 dark web monitoring, and actionable security alerts.

How can employers prevent employment identity theft?

While individuals should do everything they can to safeguard their personal data, employers also play a critical role in preventing employment identity theft. Employers should take the following steps to protect their employees’ data:

• Store data securely. Digital data should be protected with cybersecurity protocols like encryption, firewalls, and action control systems.
• Conduct background checks on job applicants. Before you hire a new employee, conduct a thorough background check, especially if they will be handling sensitive information. This step can also help you identify and avoid hiring an employment identity thief.
• Provide employment identity theft training. Educate your employees about employment identity theft and share some best practices for keeping employee, client, and company data safe.

For the highest levels of security, look into NordProtect, a comprehensive identity theft protection service. When it comes to safeguarding your most sensitive data, NordProtect is an identity protection service you can count on.