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Identity Theft Study Leaves Questions Unanswered

By Martin H. Bosworth
ConsumerAffairs.com

April 4, 2006

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A Justice Department report on identity theft issued earlier this week leaves several significant questions unanswered. The repport found that 3.6 million Americans were affected by identity theft in 2004, a significant drop from a similar report issued conducted by the Federal Trade Commission (FTC).

The report also stated that the most frequent victims of identity theft were the young and well-to-do, with the average age of victims trending highest in the 18-24 range, and average income of $75,000 a year.

Notably, the DOJ survey does not mention theft of Social Security numbers as a form of identity theft or fraud, instead using the catch-all category of "personal information."

The report also does not provide justification or rationales for its findings. Why are young people more prone than older people to identity theft? How do identity thieves know to target the wealthy shoppers?

Answers Given

The Justice Department report is based on statistics from by the National Crime Victimization Survey (NCVS), conducted between July and December 2004. It polled 42,000 households for information on violent crime.

According to Katrina Baum, an analyst with the Bureau of Justice Statistics (BJS), the 2004 survey was the first time respondents had been polled regarding identity theft.

The FTC had issued a report stating that identity theft claimed over 10 million victims in 2003 and over 9 million in 2004.

DOJ spokespersons stated that the differing results were due to different time periods for the survey, differing methodologies for collecting data, and individual counting methods.

The DOJ report found that the most common form of identity theft was credit card fraud, but that it was also the easiest to solve. The average time taken to resolve a case of identity theft ranged between one day (39.2 percent of respondents) and one to two months (14.2 percent).

The mean total for individual losses from all types of identity theft came out at $1,290. Total estimated losses were chalked up to $3.2 billion for 2004. However, the mean total losses from identity theft caused by misuse of personal information topped out at $2,360 per individual.

The total loss estimate "may or may not" count losses from businesses, according to the report's press statement.

Questions Never Asked

The report broke down identity theft into three categories: Unauthorized use of credit cards, unauthorized use of checking or other accounts, and misuse of "personal information."

The absence of a category for Social Security Number (SSN)-based identity theft is especially puzzling, given that SSN-only theft is not only one of the most dangerous forms of identity theft, but also one of the hardest to detect.

SSN-only identity theft does not trigger typical fraud or theft alerts on a credit report, and often is used to give undocumented workers fresh identities they can use to get work in the United States.

Victims of SSN-only identity theft often never know their identity is being misused until they start getting notices from bill collectors or the government.

Social Security Numbers are also nearly impossible to change, unless there is an immediate personal danger to the individual, or there has already been demonstrable proof of harm from identity theft.

It makes sense that identity thieves would go after young shoppers with disposable income, as they may be the most likely to use credit cards in spending sprees and chalk up big bills that can be followed.

But do fraudsters steal their information off the Web when they shop at Amazon.com? Or do they prefer to dive through dumpsters and garbage bags looking for shredded credit card applications, as a recent Javelin Research study found?

Different agencies and organizations have come up with wildly differing statistics for identity theft losses, number of people affected, and so on. Valerie McNiven, advisor on cybercrime for the U.S. Treasury, claimed that worldwide losses from identity theft outweighed the global drug trade in 2004.

Another Javelin Research report found that in addition to the FTC's claim of 9 million victims of identity theft in 2004, the vast majority of complaints dealt with "traditional" forms of theft, such as stealing wallets or checkbooks, as opposed to Internet-based fraud.

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