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High tech less of threat in ID theft

A survey reveals lost wallets, acquaintances and stolen mail are prime sources for personal data.

By DAVE GUSSOW
Published January 27, 2005

Identity theft, which had been cast in recent years as a burgeoning crime of the high-tech age, remains a major threat but appears to be leveling off, according to a study released Wednesday.

More than 9-million people were victims of identity theft in 2004, according to the study. That figure represents a drop or plateau in the number of victims in 2003, when the Federal Trade Commission studied the issue.

The survey, released Wednesday by the Better Business Bureau and Javelin Strategy & Research of San Francisco, also showed that lost wallets, stolen mail and garbage searches continue to be the prime source for personal data used in the thefts, not the online transactions many people fear.

"Willie Sutton is still very much alive in terms of the fact that most people's identity is stolen in traditional ways," said Ken Hunter, president and chief executive of the Better Business Bureau.

The 9.3-million people victimized last year compared with 10.1-million victims in 2003, as reported in the FTC survey.

But it's a statistically insignificant difference because of the survey methodology and margin of error in the new study, according to James Van Dyke, founder and principal analyst at Javelin.

Identity theft had been growing at a breakneck pace since the late 1990s. Using stolen personal data from victims, thieves raid bank accounts, use existing credit card accounts to buy merchandise or set up accounts, even parallel lives, to scam merchants and individuals.

But the new study of 4,000 consumers shows that ID theft, while a major problem, is not continuing its explosive growth. Some key findings:

Relatives, friends and acquaintances of the victims are responsible for half of identity thefts.

Yet oftentimes, people are unwilling to press charges against family members, says Hunter, who is a former chief postal inspector who dealt with fraud issues. Some cases might be too small to press charges, but not all.

"If you've got a relative that's engaged in some kind of egregious crime, I think law enforcement needs to deal with that," Hunter said.

Lost wallets and checkbooks are the most common way people lose personal information, along with stolen documents and "Dumpster diving" for information in garbage.

Online fraud accounted for 11.6 percent of ID theft cases. About half of that was caused by spyware, which is software planted on personal computers, often without the owner's knowledge, that can transmit data to thieves.

The annual loss from ID theft was estimated at $52.6-billion, about the same as the FTC study found. One area of improvement: It's taking less time for people to resolve the problems.

The burden for combatting identity theft remains with the consumer. One of the main recommendations made in the report is for people to do more of their financial transactions online, which might not be surprising since the sponsors of the study are CheckFree, Visa and Wells Fargo & Co., all of whom would like to see more online activity.

The study concluded that using online services to do business allows for more frequent checks of accounts and faster detection of problems than waiting for paper statements in the mail. As a result, online detection reduces the losses suffered by victims, the study says.

Yet one of the main reasons people give for not doing banking and other financial transactions online is security fears. But those fears are not justified based on the findings, Van Dyke says.

Dave Gussow can be reached at gussow@sptimes.com or 727 771-4328.

[Last modified January 27, 2005, 00:40:21]