Identity Fraud: Analysis of Compelling Statistics
August 2003“…the greatest threat to consumers today is the growing menace of identity theft. Identity theft is far more insidious and harmful to our national welfare than many realize. It attacks the trust and confidence that nurture our open economy, even as it destroys individual lives.”
John W. Snow
United States Treasury Secretary
June 30, 2003
Identity Theft: Is It Out of Control?
Consumers may wish to begin answering this question by considering the widely-published data collected by the Federal Trade Commission through the Identity Theft Data Clearinghouse.1 During 2002 the number of ID theft complaints skyrocketed to 161,819 (+87.7%) from 86,198 (+177.0%) in 2001 and 31,117 in 2000.
A portion of the increase may be attributed to improved data collection procedures and to broadening consumer awareness regarding the FTC's role in the identity theft problem. Nevertheless, the trend is staggering. But, do federally-published complaint levels represent an accurate depiction of the crime's actual magnitude? The answer is a resounding “No.” Quite simply, only a tiny portion of the actual ID theft incidence is being reported to the central repository.
In July 2003, Identity Theft 911 internally distributed proprietary projections of the actual incidence of identity theft (including Internet fraud and account takeover). These projections indicated an incidence level dramatically higher than published estimates - approximately 3.6 million cases in 2002. However, even our own projections did not take into consideration the number of victims not reporting crimes to the credit reporting agencies or those individuals unaware that they had already been victimized. The ID Theft projections implied that less than 7% of the victims were reporting to the FTC and that the crime of identity theft was geometrically worse than previously feared.
By August 2003, the results of two independent studies2 3 were released. Each confirmed that the actual incidence of identity theft in the United States, during 2002, approached 7 million. One study estimated that the increase from 2001 to 2002 was +81%,4 closely supporting the FTC one-year increase of 87.7%.
From the American consumer's perspective, the precise magnitude of the crime is not as important as its relative significance. Warnings have been emanating from our national leaders since last year.
“One of the most harmful abuses of personal information is identity theft. Victims usually find out about such frauds when collection agencies pursue them for payment on these illegally created accounts, or they are denied credit because of unpaid debts accrued by identity thieves.”
George W. Bush President of the United States February 4, 2002
Perhaps the most chilling quantification of this problem was made by Assistant Secretary of the Treasury, Wayne A. Abernathy, in May of this year - one out of every eight families has been victimized. He amplified the comment by saying that Americans are more worried about identity theft than they are of losing their job - that analogy in the midst of a recession!
Wayne A. Abernathy Assistant Secretary of the Treasury May 8, 2003
Treasury Secretary's Snow's comment, which prefaces this article, which was articulated in June of this year, was followed up by Secret Service Director Basham's ominous assessment of the situation the following month.
Is the problem of identity theft out of control in this country? The answer is, “Yes”. Any statistical comparison, relative or absolute, clearly supports this conclusion. The empirical evidence is supported by repeated warnings being echoed from Capitol Hill - it is financial terrorism, a rampant plaque, and it's completely out of control.
Who Are the Likely Victims of Identity Theft?
Ostensibly, everyone is a potential victim - including children and the deceased. Recent survey results indicate that there are few demographic limitations associated with the crime of identity theft. The Federal Trade Commission does provide a profile based on victims' age.
Chart by Identity Theft 911
This data should be interpreted with caution. First, consider the nation's overall age demographics i.e. the population segment 30-39 is greater than the 60-and-over group, etc. Furthermore, logical targets are those people that are the most financially active and those that utilize more credit-based products. That said, there is no question that Internet activity tends to increase exposure.
Major Categories of Identity Theft
The FTC database provides an excellent source of data for classifying the various forms of identity theft. However, it is important to note that Internet fraud is classified separately.
Chart by Identity Theft 911
1The Clearinghouse was launched in November 1999 as mandated by the Identity Theft and Assumption Deterrence Act (as amended October 30, 1998). It serves as the sole national repository of consumer complaints regarding identity theft. The Clearinghouse also provides specific investigative material for law enforcement agencies as well as ways the private sector can reduce the incidence of identity theft.
2Litan, Avivah. “Underreporting of Identity Theft Rewards the Thieves.” Gartner. July 7, 2003.
3,4Westin, Dr. Alan, Professor Emeritus of Public Law and Government at Columbia University. Privacy & American Business Survey. July 30, 2003. “Survey Finds 33.4 Million Americans Victims of ID Theft; Consumer Out-of-Pocket Expenses Total $1.5 Billion a Year.”
