Gartner Says Identity Theft Is Up Nearly 80 Percent
7 Million U.S. Adults Were Identity Theft Victims in the Past 12 Months
STAMFORD, CONN., July 21, 2003 — Seven million U.S. adults, or 3.4 percent of U.S. consumers, were victims of identity theft during the 12 months ending June 2003, according to a new survey by Gartner Inc. (NYSE: IT and ITB). This represents a 79 percent increase over the 1.9 percent rate reported in a Gartner consumer survey concluded in February 2002. Because this crime is often misclassified, the thieves have better than a one in 700 chance of being caught by the federal authorities.
In May 2003, Gartner surveyed by mail 2, 445 U.S. households to gauge the impact identity theft is having on U.S. consumers.
"Identity theft is not necessarily a high-tech crime, and can just as easily damage the credit reputations of low-tech adults who don't spend any time on the Internet," said Avivah Litan, vice president and research director for Gartner.
"More than half of all identity theft - where the method of theft is documented - is committed by criminals that have established relationships with their victims, such as family members, roommates, neighbors, or co-workers," said Litan, citing numbers published by the Federal Trade Commission.
With identity theft, a thief takes over a consumer's entire identity by stealing critical private information, such as the Social Security number, driver's license number, address, credit card number or bank account number. The thief can then use the stolen information to obtain illegal loans or credit lines to buy goods and services under the stolen name. Identity thieves typically change the consumer's mailing address to hide their activities.
"Many banks, credit card issuers, cell phone service providers and other enterprises that extend financial credit to consumers don't recognize most identity theft fraud for what it is," Litan said. "Instead they mistakenly write it off as credit losses, causing a serious disconnect between the magnitude of identity theft that innocent consumers experience and the industry's proper recognition of the crime. This causes a disincentive to fix the problem with the urgency it requires."
Without external pressure from legislators and industry associations, financial service providers (FSPs) may not have the sufficient incentive to stem the flow of identity theft crimes. Gartner analysts said banks and other FSPs must be pressured by consumers and lobbyists to proactively back efforts such as the U.S. Fair Credit Reporting Act, which would cover security and accuracy of personal financial information and access to credit and financial services, and BITS' Work on Identity Theft, which would make it easier for victims to report a crime to financial institutions.
"Most importantly, however, banks and FSPs must implement solutions that effectively screen for application fraud, so they don't wrongfully extend credit to identify thieves," said Litan. "Without industry prevention efforts, consumers whose identities have been stolen will continue to bear the brunt of social and indirect economic costs."
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