There's a new epidemic sweepingthe nation, and it has nothing to dowith health care. The epidemic isidentity theft. From 1998 to 2003, morethan 27 million Americans were victims ofidentity theft, according to the FederalTrade Commission (FTC; www.ftc.gov). Almost10 million of those thefts occurredduring the last 12 months of that period. Inother words, this epidemic is growing. Andwhile the average cost to victims is $500,stolen identities have been used to secureas much as $65,000 in loans in some cases.
New York Times
According to a report,identity theft "involves the most intimateand, perhaps, the most intrusive offrauds—the wholesale lifting of someone'sfinancial persona to secure bankloans, credit cards, and mortgages in thatperson's name." In fact, the FTC reportsthat in 2003, one third of these cases werecredit card related, 21% involved phoneor utility fraud, 17% involved bank fraud,11% were employment related, 8%involved government documents andbenefits, and 6% were loan related.
Even more disconcerting is that terroristlinks have begun to surface. The article points to a recent US JusticeDepartment investigation of cyber crimesthat found possible connections betweenidentity theft and terrorism financing.And if you think you're immune to theepidemic, think twice. Thieves have managedto steal the identity of 3-month-oldinfants. The deceased have been easyidentity theft targets for several years.Even companies have been victimized;thieves use a business' employer identification number and negotiate loans orpurchase office equipment.
Easy, Tricky, and Sad
Why identity theft? Analysts point tothe rapid growth of digital finance,decades of expanding consumer credit,and the often inadequate regulationsthat govern the credit industry. Independentstudies and FTC investigationsreveal that about half of all identitytheft operations originate on the inside.
"Insiders are often targeted or corruptedby organized crime groups toprovide information," Joanna Crane,manager of the FTC's identity theft program,told the . "You might seegroups plant someone at a temp or janitorialagency so they can steal files whenthey are contracted out."
Hindering the clean-up:
Prosecutorsare hesitant to tackle identity theft casesbecause they are usually difficult to prosecute.In addition, local police departmentsoften don't issue reports for residents ifthe identity theft occurred elsewhere.However, credit issuers and reportingagencies usually require a police reportbefore they take action.
Cloud's Silver Lining
Luckily, some relief may be in sight.President Bush signed a law that expandsconsumer credit protection while makingit easier for consumers to resolve identitytheft problems and protect their accounts.The law, which took effect in December2004, also makes it easier for consumers toobtain police reports. In addition, bothMasterCard and Visa report that they areguarding customer account numbersmore carefully nowadays.
For example, MasterCard recentlybegan using computer systems that analyzeindividual card members' spendinghabits to more readily identify anyabnormalities. Both credit card giantsnote that they monitor Web sites thatbroker stolen credit card numbers andother personal information. Of course,consumers can take action of their own.The Consumer Data Industry Association(www.cdiaonline.org), the trade groupthat represents credit reporting agencies,recommends that consumers putfraud alerts on their credit histories. Theassociation hopes this will keep pryingeyes at a safe distance.
In the long run, most identity theft victimsdo not have to pay the debtsincurred by other individuals in theirname. But the sleepless nights and thetime and stress involved in clearing yourfinancial records can be very painful. And,unfortunately, the article notes that identitytheft is an epidemic that is not expectedto be corraled anytime soon. That'sbecause the only limitation to identitytheft is the creativity of the thief. And inthe end, there's really no limit to individualcreativity.