The theft of your Identity can have an impact on your financial security, your medical history, and your basic sense of security. It also leaves you vulnerable to new attacks in the future.

Identity thieves still steal most information using old fashioned methods like dumpster diving, stealing a wallet or purse, collecting information when robbing a home, or stealing mail from your physical mail box. But identity theft increasingly occurs online with more than 100 million personal data records compromised between 2004 and 2006 through computers.

The good news is that the number of financial identity fraud cases has decreased in the U.S. according to research, conducted by Javelin Strategy & Research, from about 10 million cases in 2003 to 8.4 million in 2007.

But the cost to society of identity theft remains huge. In 2006, the total cost was $49 billion dollars, with victims paying about $4.5 billion themselves. Companies and banks pay the rest which drives up business costs and so is indirectly paid by all consumers. There is a time cost as well. Victims spend an average of 600 hours trying to restore their identity and eliminating fraudulent information from credit reports and other sources.

The emotional impact, too, can be significant. When someone discovers that his or her identity has been stolen, feelings of rage, frustration, and helplessness – even emotional withdrawal – are common. Most will not know who stole their identity, creating distrust in those around them and feelings of betrayal. There may be a sense of embarrassment because people feel they must have done something "stupid", or they may have felt humiliated by the way they discovered the fraud – being turned down for a loan, having a credit card payment bounce, etc.

Identity theft is even harder on young people who are likely to have fewer coping skills and who lack the confidence, knowledge, and experience needed to set the record straight. If they don't get help from parents or another adult to correct the records and provide emotional support, they may simply find the cleanup too daunting and give up.

Even when you have gone through all the steps to restore your identity and financial standing your risk of further identity theft is higher because much of your identity does not change. You can change your credit card account, close your bank account, or fix a manipulated credit history. But your name and birth date, birth place, mother’s maiden name, address, employer, phone number, and other personal information doesn’t change. These are likely to remain in criminal databases and be reused many times as crooks apply for car loans, create fake identity cards, steal your medical record or play confidence tricks—all using your good name.

What you can do to protect your identity from theft

• Protect your personal property. Buy and use a shredder, be cautious with possessions (like your wallet), and protect physical records. These remain critical safety measures.

• Install good security software including antivirus, antispyware and firewalls. Set the software to automatically update whenever needed. Use strong passwords to keep criminals from collecting your financial information from your computer. (Find out how.)

• Everyone above the age of 14 needs to actively monitor their credit history. Parents and educators: monitoring credit history is a key life skill to teach all youth. (Find out how to Protect your credit and demand better consumer protection.)

What you can do to if your identity has been stolen

If you or someone close to you has been a victim of Identity theft, go to the U.S. Federal Trade Commission Identity Theft site to find out what steps to take and how to report it. In addition, consider:

• Reporting the crime to your local law enforcement. This may be a necessary first step to freezing your accounts to prevent further attacks.

• Informing family members and friends that their risk could be heightened if the information was stolen from a computer or mobile phone where your address book may have been compromised.

• Notifying your health insurance company as medical fraud using stolen information is on the rise.

• If you believe you know the Web site from which your information was stolen, contact the company (if it is reputable) or contact the Better Business Bureau and file a complaint.

• If someone you know has had their identity stolen, remember to be emotionally supportive over the entire time it takes to clear up the mess. Feelings of abuse may come in waves as each step in the process triggers new frustrations (often aggravated by the lack of helpfulness of government agencies and companies).

Other great resources

• Read Chapter 14 ("Get Savvy About Financial Scams and Fraud") in Look Both Ways: Help protect your family on the Internet.

• California Office of Privacy Protection provides excellent step–by-step advice for dealing with financial fraud.

• Identity Theft: What to Do if It Happens to You lists what to do and gives detailed advice as to the best ways to tackle the action items.

• Identity theft – Overcoming the Emotional Impact . This site provides an excellent resource for identifying and tackling the feelings and frustrations that accompany identity theft.