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Consumer losses from ID theft falling?
Published: 2007-11-28

The U.S. Federal Trade Commission released a report on Tuesday that showed a significant drop in the losses due to identity theft, but also noted that changes in the survey questions could have caused the decreased.

The survey, the 2006 Identity Theft Survey Report (PDF), estimated that losses from stolen and fraudulent credit accounts reached $15.6 million, only a third of the $47.6 billion cited in a 2003 survey. However, the report does not rule out the possibility that statistical errors and a change in methodology could have caused the significant drop. The 2006 survey typically asked more specific questions in regards to losses compared to the 2003 survey, the report stated.

"Although we believe that these methodological changes improve the reliability of the estimated values, they tend to cause lower estimates as compared to the 2003 survey," analyst firm Synovate, the author of the report, stated in the document. "Thus, the differences in the estimates between 2003 and 2006 may, at least in part, be due to the changes in methodology as opposed to changes in consumers' actual experiences."

The survey found that identity thieves gained more goods and services -- and thus, consumers lost more -- through opening new, fraudulent accounts in the victim's name, rather than fraudulently using existing accounts. On average, identity thieves stole $1,350 in goods and services through new accounts, compared with $350 using existing accounts. For the worst-hit 10 percent of victims, the average loss was $15,000 for new accounts versus $4,000 for existing accounts. On average, there were no out-of-pocket expenses for victims.

The FTC stressed that even with the lower estimates, identity theft remains a significant problem.

"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," Lydia B. Parnes, director of the FTC's Bureau of Consumer Protection, stated in a press release.

Concerns over identity theft and credit-card fraud has risen in recent years because of the public outing of high-profile cases, such as retailer TJX Companies' loss of information on more than 94 million credit- and debit-card accounts. Stores have become increasingly worried about the liability of storing credit-card data. Recent arrests of suspected identity thieves has underscored the increasing sophistication of the groups dealing in such information. A survey of those arrested for identity theft found that the majority have never before been accused of a crime.

The 2006 Identity Theft Survey Report is based on 4,917 interviews conducted in between March and June of 2006.

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Posted by: Robert Lemos
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