Identity Theft Declining?

According to Javelin strategy and research, identity theft declined somewhat in the United States in 2007.  Yet this crime still amounted to a $45 billion loss.  I give seminars on identity theft and any information that would suggest that the crime itself is declining, even slightly, is great news, even though the FTC says ID theft complaints continue to rise.

Many people might think of identity theft as being solely a technological problem.  However social engineering also plays a large role in identity theft.  This is not to say that there have not been large data theft issues out of the control of the consumer with retailers and government entities.  In terms of theft of data from individuals directly, social engineering is key.  The largest example of this is probably Internet phishing.  People will voluntarily send their information to thieves because they have been tricked into sending the information.  Every week I get an e-mail allegedly from some financial institution asking me for account information.  It is extremely difficult for most people to see outside their own immediate experience and notice someone trying to take advantage of them.  Nowadays the threat is not just local as people from other countries are involved in perpetrating Internet scams.

People will write their pin numbers on their ATM cards and when the cards are lost and stolen thieves can easily use them.  Today, not using a shredder at home can provide the user with access to a person’s data.  Who knows what happens to that garbage after it leaves the curb?

Entire industries have sprung up to combat identity theft or at least its symptoms.  There are services that help a person deal with the authorities, consumer reporting agencies and financial institutions.  There are other vendors that tried to make it more difficult for an identity thief to steal information by placing a block on a person’s credit history with the consumer reporting agencies.  Finally, insurance companies have begun offering coverage for the costs associated with identity theft.

So why is identity theft declining given greater threats and more exposure?  Perhaps people are just being more careful.  There is definitely greater public awareness of the problem.  Certainly credit unions are spending more time and money protecting member information and helping to educate their members.  Identity theft could decline even more if people stopped responding to e-mail phishing or telephone phishing and took even more care of their personal data.


2 thoughts on “Identity Theft Declining?

  1. Javelin may report that ID theft is declining, but according to FTC data reported by Direct magazine (, ID theft topped the FTC’s list of consumer complaints, and the # of fraud complaints grew by 140K in 2007 vs. 2006. According to the FTC, fraud losses totaled “more than $1.2 billion.”

    Granted, $45 billion is more than $1.2 billion, but I don’t think the FTC meant THAT much more.

    There’s a lot of confusion regarding this topic out there, and a lot of the sources of data only fuel the confusion.

  2. The differences are actually quite explainable. The FTC measures complaints rising by 20%, Javelin shows crime incidents dropping by 5%, with average per-victim losses going up by 25%. Logic says that you’re more likely to file a complaint when your losses rise, and *assuming* the ratio of increase is a straight line, 20+5%=25% right on the button.

    Regarding the FTC’s $2.1B figure, as with everything else in their excellent Consumer Sentinel study it reflects out of pocket costs, and only for those who complained. Javelin’s report shows out of pocket costs in the $5B range, which of course is much bigger than the FTC figure because the FTC report only reflects those that filed a criminal complaint, whereas the Javelin study is a representation of everyone in the US that was a victim of ID fraud.

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