Identity Theft: A Growing Consumer Crisis

Identity theft is clearly the fastest growing crime in America affecting almost 10 million Americans annually. This places a hugh risk on the backs of consumers.  The Fair and Accurate Credit Transactions Act (FACTA) is a consumer rights protection bill that became effective June 1st, 2005. All companies in the United States are affected by this legislation.  Consumers are affected as well and are as a result somewhat more protected; but still are often left vulnerable to identity thieves.

FACTA was established to lower the risk of identity theft and consumer fraud. It enforces the proper distruction of consumer information such as name, address, SSN, credit information, and data compiled from this information. What more should businesses and consumer know and do?

FACTA basically requires that all businesses - regardless of size and industry - properly protect and dispose of the personal information they collect about their customers and employees. The law declairs "Any person who maintains or otherwise possesses consumer information, or any compilation of consumer information, derived from consumer reports for a business purpose" in electronic or paper form must "take reasonable measures to protect against unauthorized access or use of the information in connection with its disposal." - or to "properly dispose of such information or compilation". The FTC is wasting no time in making the point that they are enforcing this bill. Businesses are required to implement effective policies related to all information security, or suffer the consequences.

In 2003 and 2004, the Identity Theft Resource Center surveyed victims of identity theft and reported the
findings in a paper called The Aftermath Study. The problem has certainly gotten worse since then, but these comprehensive results are a good estimate of the effects of identity theft on its victims and the types of identity theft crimes that are committed.

• 38-48% of victims find out about the identity theft within 3 months of it starting
• 9-18% of victims take 4 years or longer to discover that they are victims of identity theft
• Victims spend from 3 to 5,840 hours repairing damage done by identity theft. This difference is due to the severity of the crime.
• The average number of hours victims spend repairing the damage caused by identity theft is 330 hours.
• 26-32% of victims spend a period of 4 to 6 months dealing with their case and 11-23% report dealing with their case for 7 months to a year.
• 40% of business costs for individual cases of identity theft exceed $15,000.
• The Aberdeen Group has estimated that $221 billion a year is lost by businesses worldwide due to identity theft
• Victims lose an average of $1,820 to $14, 340 in wages dealing with their cases
• Victims spend an average of $851 to $1378 in expenses related to their case
• 47% of victims have trouble getting credit or a loan as a result of identity theft
• 19% of victims have higher credit rates and 16% have higher insurance rates because of identity theft
• 11% of victims say identity theft has a negative impact on their abilities to get jobs
• 70% of victims have trouble getting rid of (or never get rid of) negative information in their records
• 40% of victims experience stress in their family lives as a result of displaced anger and frustration over the identity theft
• 45% of victims feel denial or disbelief
• 85% of victims anger and rage
• 45% of victims feel defiled by the identity thief
• 42% of victims feel an inability to trust people because of the identity theft
• 60% of victims feel unprotected by the police
• More than one third of victims report that identity thieves committed cheque account fraud.
• 66% of victims' personal information is used to open a new credit account in their name
• 28% of victims' personal information is used to purchase cell phone service
• 12% of victims end up having warrants issued in their name for financial crimes committed by the identity thief
• 43% of victims believe they know the person who stole their identity
• 14-25% of victims believe the imposter is someone who is in a business that holds their personally identifying information
• The most common reported perpetrator in cases where a child's identity is stolen is the child's parent
• 16% of identity theft victims are also victims of domestic harassment/abuse by the same perpetrator which uses identity theft as another way to demonstrate his harassment and control
• Overall, police departments seem to be the most responsive to victims of identity theft, with 58% taking down a report on the victim's first request
• 1/3 of victims have to send dispute information repeatedly to credit reporting agencies
• Only 1/5 of victims find it easy to reach someone in a credit reporting agency after receiving their credit report
• 20% of victims will have the misinformation and errors removed from their credit report after their first request for the credit reporting agency to do so

From 2007 to 2008 there was a 50% increase in reported fraud and ID crimes. In 2008, the most common form of identity theft was credit card fraud. This type of crime accounted for 20% of all complaints reported. Current 2009 data is not available yet, but the prediction is another dramatic increase in identity theft statistics, spurred on the failing economy.

What do experts say consumers should do?

1. Monitor all the balances and transactions of your financial accounts. Unexplained withdrawals and/or charges could indicate an identity thief at work.
2. Watch your mail. Ensure you receive all your bank and credit statements monthly and make note of what part of the month they normally arrive. Failure to receive these could indicate an address change was made on your behalf from an identity thief.
3. Check to see if you are receiving credit cards that you did not apply for. If you didn’t apply for them, who did? Contact the credit card company immediately.
4. Look for credit denial for loans, mortgages, credit cards, etc., for no apparent reason.
5. Know if you are receiving notices or calls from creditors or debt collectors for goods and services you did not purchase nor receive.
6. Monitor your credit report regularly. Although some suggest monitoring your report at least annually, too much damage can be done in one year. Try to check your credit report at least two or three times a year. If you are already a victim of identity theft or have had your wallet/purse lost or stolen, monitor your credit report more frequently.
7. Utilize credit and identity theft monitoring services that also help with identitiy theft restoration.
8. Talk to qualified advisors and lawyers should your identify be compromised.

There are various inexpensive and valueable protection services benefiting businesses and consumers. One that I highly recommend and represent is called SecureNet can be viewed at Affordable and Trusted Benefits.

The FTC has a good consumer website dedicated to the issues surrounding identity theft at FTC Identity Theft Website. 

Businesses can view the FACTA Law at FACTA Law Legislation. 







Keep vigilent and be protected!