FTC says incidence of ID theft jumped in 2002

WASHINGTON -- The Federal Trade Commission today said that reported cases of identity theft increased nearly 88% last year. But some experts say the numbers may only be disclosing a fraction of the overall problem.

The FTC last year received 161,800 identity theft complaints, up from 86,200 in 2001, according to its annual report on consumer fraud.

ID theft accounted for 43% of all fraud complaints the FTC received last year, the agency said in a statement. The number of fraud complaints overall increased by nearly 73%, from 220,000 to 380,000. The cost for all fraud reached $343 million.

FTC officials said the increase may be due in part to agency efforts to encourage victims to file complaints, as well as increased participation from public and private agencies that report fraud. Those agencies include the Social Security Administration's Office of Inspector General and many Better Business Bureaus in the U.S.

But one private survey released earlier this month by Maitland, Fla.-based Star Systems, a Concord EFS Inc. subsidiary, found that one in 20 adults, or about 11.8 million people in the U.S., have been victims of identity theft. Those results came from an independent, third-party telephone survey of 2,000 people in the U.S. that about 5.5% of those responding had been victims of identity theft.

By extrapolating that figure with 2000 census data of the U.S. adult population, Star Systems arrived at its estimate of 11.8 million people.

"That's a pretty huge number. It's something that could be considered epidemic proportions," said Barbara Span, a vice president at Star, which operates an electronic payments network with some 6,200 participating financial institutions. "What is very telling is that 19.2% of the respondents said they personally know somebody who has been victimized. That's one in five adults."

Jerry Brady, chief technology officer at Waltham, Mass.-based Guardent Inc., said he believes the threat is much greater, adding that thieves may have thousands of stolen identity information in reserve, ready to use. There is increased awareness and reporting, but "reporting happens after ... the actual crime," he said.

Companies need to assess systems and put in robust and real detection systems, get monitoring in quickly, and assume the worst and do a post-mortem, said Brady. He said many systems, particularly retail, remain vulnerable.

Credit card fraud was the leading method for identity theft, the FTC reported, with new accounts accounting for 24% of the complaints, and old accounts accounting for 12% of the crimes.

The rise in identity theft is also prompting lawmakers in Congress, as well as in the states, to seek tougher criminal penalties.

Copyright © 2003 IDG Communications, Inc.

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