Seems every day in the news is a new story of identity theft. And more often these days, we’re hearing of massive rings that compromise networks and steal millions of consumers’ information, either in part or a complete theft including their social security numbers and credit card numbers.
The same convenience we all appreciate on a daily basis when it comes to online banking and bill pay is exactly what these criminals use to steal the information that will allow them to wreak havoc. Worse, they’re often faceless criminals logging in from thousands of miles away.
We were wondering, though, as it seems there are far more instances of identity theft today than there was just a few years ago, just how quickly this crime is growing. We took a stroll down memory lane to see just how quickly identity theft is permeating our daily lives and how identity theft as a whole has evolved. Here’s what we found.
In 1999, the FTC Clearinghouse had been put into place by the federal government for the purpose of assisting consumers whose identities had been stolen. At that time, it reported an average of 445 calls a week from consumers. Often, these consumers didn’t know for months that they’d been victimized. Even ten years ago, identity theft in the United States was quickly becoming problematic for consumers, lenders and law enforcement. The General Accounting Office provided its findings of an in depth study in February 2002 and presented it to the Senate Judiciary Subcommittee on Technology, Terrorism and Government Information. Along with the months long delay in reporting these crimes, many consumers opted to not report them at all.
As mentioned, in 1999, the agency was receiving 445 calls a week. Just two years later, the number of calls had increased to more than 2,000 a week and by late 2002, the calls were averaging around 3,000. The CRA, another government agency, provided estimates for a range of 7 years of fraud alerts that were focused on identity theft. Those numbers indicated a 36% increase in just twenty four months – from about 65,600 in early 1999 to 89,000 in December 2000. Between 1996 and 2000, losses due to identity theft rose from $79.9 million to $114.3 million, indicative of a 43% hike.
In order to provide contrast, we take a look at the more recent numbers. According to the “2012 Identity Fraud Report: Social Media and Mobile Forming the New Fraud Frontier”, prepared and released by Javelin Strategy & Research, the numbers reveal close to 1.4 million more adults were victimized by identity fraud in 2011 than in 2010. The report also says better awareness, early reporting and educating consumers have prevented this number from going any higher. Further, even though the number of fraud incidents increased, the total amount in dollars lost remained steady.
Interestingly enough, one of the key factors cited in the increase of incidents was the data breaches that have been in the news in recent months. The survey found 15 percent of Americans, or about 36 million people, were notified of a data breach in 2011. From there, consumers receiving a data breach notification were 9.5 times more likely to become a victim of identify fraud. But here’s where it gets interesting.
The survey says these data breaches are coveted by criminals because a credit card number, debit card number and social security number are the ones most likely to be exposed.
Other Financial Statistics
Other statistics found in the latest survey include a 400% increase in those victims who found out about their identity theft more than six months after it happened. They were also the ones who incurred costs four times higher than the average. Further, for those whose identities are stolen and fraudulent accounts are opened as a result of that spend, on average, 165 hours righting the wrongs. Another 58 hours is spent repairing the damage to their legitimate accounts. Further, 43% of all identity theft comes from the old fashioned method of stealing wallets, credit cards or other “physical documents”. Finally, an identity is stolen in this country every three seconds.
And here’s an interesting fact – before federal laws were put into place, specifically prior to 1998, banks and credit card companies were considered the victims in these types of crimes because they were the ones who ate the monetary losses. New laws, though, recognized finally that consumers whose identities were stolen and reputations were damaged were also victims.
Recommendations a decade ago for lawmakers included putting longer jail sentences into place for those caught stealing identities. Of course, that was before our lives were completely unfolding online. These days, it’s not the local pickpocket who’s jeopardizing our credit ratings; it’s international crime rings in countries many have never even heard of. Back then, if you were convicted of bank fraud, you faced an average 30 year sentence in jail. However, if you stole someone’s identity and were prosecuted, you faced about 15 years.
Defining Identity Fraud
There was another bit of information we found during our research. Did you know that prior to 1999, MasterCard and Visa have an interesting – and narrow – definition of identity fraud? Simply stated, identity fraud was limited to account takeovers and fraudulent applications. Once those definitions changed, the broader definitions included “virtually all categories of payment card fraud”. That meant the Visa/MasterCard total U.S. fraud losses rose 45%, from about $760 million in 1996 to about $1.1 billion in 2000.
The General Accounting Office, with its report more than a decade ago, concluded with:
Identity theft can cause substantial harm to the lives of individual citizens – potentially severe emotional or other non-monetary harm, as well as economic harm. Even though financial institutions may not hold victims liable for fraudulent debts, victims nonetheless often feel ‘personally violated’ and have reported spending significant amounts of time trying to resolve the problems caused by identity theft – problems such as bounced checks, loan denials, credit card application rejections, and debt collection harassment.
Clearly, some things simply don’t change. Thieves might change their methods, but their prizes are always the same: to take the fruits of the labors of those who’ve worked hard for them.
Do these numbers come as a surprise to you? What are your thoughts?
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