FTC Finds 8.3 Million Identity Theft Victims in 2005

December 7, 2007

A newly released Federal Trade Commission survey indicates a decline in identity theft between 2003 and 2005, but there’s no call for cake or champagne, because the government’s consumer protection agency is quick to point out that the drop was not spectacular.

The government agency’s report, released Nov. 27, found that 8.3 million American adults, or 3.7 percent of all Americans over 18 years old, were victims of identity theft in 2005. That was down from the 10 million (4.6 percent of the adult population) reported by the FTC to have experienced identity theft in 2003.

Because the numbers are statistically close, the latest findings indicate there was no dramatic decline in identity theft, said Betsy Broder, the FTC’s assistant director in the division of privacy and identity protection, in USA Today.

The survey data indicate that 3.2 million of the victims experienced misuse of their existing credit card accounts; 3.3 million were victimized by misuse of non-credit card accounts; and 1.8 million  found that new accounts were opened or other frauds were committed using their personal identifying information.

Decline shown in data questioned

The FTC’s report drew skepticism from computer security expert Avivah Litan, an analyst at market researcher Gartner. “The numbers are unreliable,” she told USA Today.

Litan wrote a report, released this year, showing an increase in identity theft among American adults, to 15 million, in the 12-month period ended in August 2006. “The [FTC’s] methodology is flawed,” she said.

Broder defended the study, saying she was confident of the integrity of the methodology, which relied on random-digit-dialing sampling to generate 4,917 interviews between March 27 and June 11, 2006.

Stronger consumer protections needed

To the Consumers Union, nonprofit publisher of Consumer Reports, the FTC’s report is proof that stronger consumer protections are needed.

“Identity theft is a huge headache that continues to plague millions of Americans every year,” said Gail Hillebrand, Director of Consumers Union’s Financial Privacy Now campaign, in a statement. “It’s time to require businesses and government agencies to safeguard sensitive personal data and to give consumers the protection they need.”

Joanne McNabb, chief of the California Office of Privacy Protection, told the San Francisco Chronicle that the incidence of identity theft—roughly twice the incidence of ordinary street crimes— is alarmingly high.

Damages associated with ID theft vary

The FTC’s survey found that costs associated with identity theft vary widely. In at least half  the cases, thieves used the victims’ personal information to obtain goods or services worth $500 or less. In 10 percent of cases, thieves got at least $6,000 in goods or services.

In addition, victims’ out-of-pocket expenses ranged from none (in more than half  the incidents) to substantial. Ten percent of all victims reported out-of-pocket expenses of $1,200 or more.

The median time spent resolving identity theft problems was four hours, although 10 percent of victims spent at least 55 hours.

The time spent resolving problems, the goods and services obtained by thieves, and the ongoing problems for victims (such as being harassed by debt collectors, denied new credit or having utilities cut off) all increased when the thief opened new accounts, the survey found. The two most common types of new accounts thieves opened were telephone service or credit card accounts.

Can you handle more bad news from the report? Only 44 percent of victims were able to provide any information on how their personal information was stolen. Those victims included 16 percent who said that their information was stolen by someone they knew personally.

Don’t become an FTC statistic

“No one is immune to identity theft,” Lydia B. Parnes, Director of the FTC’s Bureau of Consumer Protection, stated in the release. “The important thing is that people learn how to deter identity thieves, detect suspicious activity on their financial records, and defend against the crime, should it happen.”

Protect yourself by knowing where your identity is exposed with IdentityTheft911.org’s Steps You Can Take to Reduce Risk.