Identity Theft Myths Freelancers Believe (Fact-Checked)

You’ll see this claim in a lot of small-business security content: “60% of small businesses close within six months of a cyberattack.” It’s been repeated in vendor pitches, LinkedIn posts, and no shortage of freelancer security guides. 

There’s just one problem, the organization most often credited with it, the National Cybersecurity Alliance, issued a formal statement saying it cannot verify where the number came from, has removed it from its own materials, and no longer recommends anyone use it.

That’s a useful place to start an article about myths, because it cuts both ways. Some freelancer identity theft myths make people underestimate real risk (“I’m too small to matter”). Others do the opposite, inflating fear with numbers that don’t hold up, which erodes trust the moment someone checks the source. Both are worth correcting. Here are the beliefs about identity theft that freelancers most commonly get wrong, and what’s actually true instead.

The Myths at a Glance

Myth	Reality
I’m too small a target for anyone to bother	Freelancers are targeted specifically because of low security infrastructure, not despite being small
An EIN fully protects me instead of my SSN	An EIN reduces exposure, it doesn’t eliminate it
My payment platform always covers me if something goes wrong	Coverage has real requirements and real exclusions
Forming an LLC protects my personal identity	An LLC shields personal liability for business debts, it does nothing to prevent identity theft
Strong passwords are enough to keep me safe	Passwords address one exposure tier; SSNs and EINs are exposed through entirely different channels
Any scam attempt means my identity has already been stolen	An attempt isn’t theft until your actual information changes hands
Identity theft is a personal problem, not a business one	It can spread to client trust, business credit, and your professional reputation

Myth: “I’m Too Small a Target for Anyone to Bother”

Reality: This is close to backwards. Freelancers are attractive targets precisely because they’re small, no dedicated IT department, no mandatory security training, no centralized system flagging suspicious activity. A cybercriminal running scams at scale doesn’t need any single target to be valuable; they need targets that are easy, and a solo freelancer juggling clients, invoices, and their own security is often exactly that.

This is also where the debunked “60% closure” statistic matters practically, not just as a footnote. When freelancer-facing content leans on a number that can’t be verified to make the case that you’re at risk, it teaches people to distrust the entire warning the moment they notice the number doesn’t check out, including the parts that are actually true. 

Verizon’s 2025 Data Breach Investigations Report puts small-business bankruptcy following an attack closer to 19% (Verizon), and the Identity Theft Resource Centre’s 2025 Business Impact Report found that 81% of small businesses reported suffering a security breach, a data breach, or both during the previous year. That number doesn’t tell you how many businesses closed afterwards, but it does show that small businesses face substantial exposure without needing an inflated statistic. (ITRC)

Myth: “An EIN Fully Protects Me Instead of My SSN”

Reality: An EIN genuinely reduces your exposure, fewer clients and platforms end up with your actual Social Security number on file, but it doesn’t create a shield around you. An EIN can itself be misused in business identity theft, including fraudulent tax filings or Forms W-2 (IRS), and if a client or platform already has your SSN from before you started using an EIN, switching now doesn’t retroactively remove that exposure. 

Getting an EIN is a genuinely good step. Treating it as a complete fix is where the myth causes harm, it can lead people to relax other protections because they believe the EIN alone has them covered.

Myth: “My Payment Platform Always Covers Me If Something Goes Wrong”

Reality: Seller protection on platforms like PayPal and Stripe can extend to services and digital transactions, but it comes with specific requirements and exclusions. PayPal, for example, has separate requirements for intangible goods and services, including evidence that the item was delivered or the service was completed. Stripe likewise allows businesses to submit evidence such as customer communications, service dates, service documentation, and records showing digital goods or services were delivered. [Identity Theft vs. Fraud Explained for Freelancers]

Myth: “Forming an LLC Protects My Personal Identity”

Reality: This one comes from conflating two genuinely different kinds of protection. An LLC (or S-Corp) creates a legal separation between your personal assets and your business’s debts and liabilities, An LLC generally separates the business’s liabilities from the owner’s personal assets, subject to applicable law and exceptions. 

That’s a real and valuable protection. It has nothing to do with identity theft. Forming an LLC doesn’t stop someone from using your SSN to file a fraudulent tax return, doesn’t prevent a fake client from phishing your login credentials, and doesn’t secure your payment platform account. The business-structure conversation and the identity-security conversation are related in that both matter for freelancers, but they solve completely different problems.

Myth: “Strong Passwords Are Enough to Keep Me Safe”

Reality: Passwords protect one specific category of exposure, within the IdentityBastion Exposure Framework, we treat your accounts and credentials. They do nothing to protect Tier 1 exposure, your actual SSN or EIN, which typically gets exposed through entirely different channels: a fake client onboarding request, a 1099 filed under your number, a breach at a company that stored your SSN on file. 

A freelancer with excellent password hygiene and an EIN they still hand out carelessly during onboarding has strong Tier 2 protection and weak Tier 1 protection. Both matter, and one doesn’t substitute for the other.

Myth: “Any Scam Attempt Means My Identity Has Already Been Stolen”

Reality: This is the overcorrection version of the same confusion, and it’s just as unhelpful as underestimating risk, because it leads to unnecessary panic over situations that haven’t actually escalated. A fake client asking invasive questions during onboarding is a fraud attempt.A suspicious message is not proof that your identity has been stolen. 

Providing sensitive information creates a potential identity-theft exposure; actual identity theft involves someone using your personal or financial information without your permission. Treating every suspicious message or every scam attempt as confirmed identity theft means spending time and stress on a full recovery process that isn’t actually warranted yet, while potentially missing the genuine signal when it does show up. [Freelancer Identity Theft Warning Signs]

Myth: “Identity Theft Is a Personal Problem, Not a Business One”

Reality: For a salaried employee, this might be closer to true, their employer usually isn’t directly affected by fraud on their personal credit card. For a freelancer, the line between personal and professional identity is much thinner. 

Business identity theft, someone using your actual business name, invoices, or logo to defraud your own clients, damages professional trust that took years to build, and can affect business finances, tax records, accounts, and potentially business credit if you operate under an EIN. 

What starts as a “personal” identity issue can just as easily become a professional one, and freelancers who think of the two as separate risks tend to under-protect the business side specifically, since it doesn’t feel as immediately personal as a drained bank account does.

Corrective Action	What It Addresses	What It Doesn’t Address
Getting an EIN where appropriate	Reduces unnecessary SSN exposure in business transactions	Doesn’t prevent the EIN itself from being misused, or undo prior SSN exposure
Reading seller protection terms before relying on them	Sets accurate expectations for payment disputes	Doesn’t create coverage where none exists
Treating LLC formation and identity security as separate projects	Ensures neither gets neglected because you assume the other covers it	Doesn’t reduce the actual work of doing both
Layering password hygiene with SSN/EIN-specific precautions	Covers both Tier 1 and Tier 2 exposure	Doesn’t eliminate risk entirely, no single layer does
Verifying before reacting to a scam attempt	Prevents unnecessary panic over unconfirmed exposure	Doesn’t excuse ignoring a confirmed one

FAQs: Identity Theft Myths Freelancers Believe

Is It True That 60% of Small Businesses Close After a Cyberattack?

That specific figure has been publicly disavowed by the organization most often credited with it, the National Cyber Security Alliance, which says it cannot verify the source. More current, verifiable research puts small-business impact rates lower but still significant, worth citing accurately rather than repeating a number that doesn’t hold up.

Does a Single Suspicious Message Mean My Identity Has Been Stolen?

Not on its own. A scam attempt only becomes identity theft once your actual identifying information, SSN, EIN, or similar, has actually changed hands, not simply because someone tried to obtain it.

Bottom Line: Freelancers Identity Theft Myths

The biggest identity theft myths freelancers believe all have one thing in common: they assume one protection is enough. An EIN can reduce SSN exposure. Strong passwords can secure your accounts. An LLC can separate business liabilities. But none of these protections can stop every form of identity theft.

The smarter approach is layered identity theft protection. Know what you’re protecting, understand what each security measure actually does, and recognize the difference between a scam attempt, exposure, and confirmed identity theft.

You don’t need to fear every suspicious message, or assume you’re too small to be targeted. You need to know your risks, verify the facts, and build protection that covers more than one weak point.

What to Do Next

Beliefs are only half the picture, the other half is what freelancers actually do (or skip doing) day to day, even when they know better in theory. Our guide to the specific protection mistakes freelancers make covers exactly that gap.