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9.9 Million Hit by ID Theft in '02, FTC Says

The crime affects 5% of adult Americans and costs $50billion annually, data show.

September 04, 2003|Kathy M. Kristof | Times Staff Writer

The federal government, in its first comprehensive look at identity theft, found that the crime has reached epidemic proportions -- touching nearly 5% of adult Americans each year and costing banks, businesses and consumers upward of $50 billion annually.

About 9.9 million individuals were victimized in 2002 and more than 27 million have been hit by identity theft in the last five years, according to a Federal Trade Commission study released Wednesday. The findings are based on a telephone survey of more than 4,000 individuals.

"For several years, we have been seeing anecdotal evidence that identity theft is a significant problem that is on the rise. Now we know," said Howard Beales, director of the FTC's bureau of consumer protection.

"This information can serve to galvanize federal, state and local law enforcers, the business community and consumers to combat this menace," he said.

The most common type of identity theft involves a thief impersonating someone to use an existing credit card or checking account. But the more troubling variety of identity fraud, in which new credit is issued to the criminal in the victim's name, ensnared 3.3 million individuals last year. This latter theft is more costly for both businesses and consumers to fix, Beales said, because it often goes undetected for a long time.

The FTC has recommended steps to combat identity theft, including creating a standardized fraud alert; barring credit reporting companies from releasing information that the consumer had previously identified as fraudulent; boosting penalties for thieves; and forcing debt collectors and lenders to share information with the victim. Many of these recommendations are included in pending legislation that would revamp the federal Fair Credit Reporting Act.

However, consumer advocates said the recommended steps do not go far enough.

In its present form, the bill does nothing to stop identity theft from happening, critics said. It only helps victims after the fact, they complained, and it would preempt many stronger state laws, including those in California that allow consumers to opt out of information sharing between corporate affiliates.

"Now even the Federal Trade Commission has documented that identity theft is an epidemic, but their solutions haven't changed from what they were two months ago," said Ed Mierzwinski, consumer program director with the U.S. Public Interest Research Group in Washington.

"None of the experts believe the reforms they are calling for are adequate."

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