How is identity theft defined in the context of personal finance?

Identity theft is defined in the context of personal finance as a situation where an individual uses someone else's personal information, such as their name, Social Security number, or financial account details, to commit fraud or engage in financial activities without the other person's consent. This often leads to unauthorized transactions, loans taken out in the name of the victim, or other financial abuses that can severely impact the victim's credit and financial stability.

The essence of identity theft lies in the unauthorized use of personal information for financial gain, which can result in significant repercussions for the victim, such as damaged credit scores and financial hardship. Understanding this definition is crucial for recognizing the importance of safeguarding personal information and monitoring financial accounts.