FTC Findings Undercut Industry Claims that Identity Theft Is Declining

On one side, there’s the financial services industry, claiming that identity theft is “so, like, 2006.”  With good reason: folks are leery about opening new charge accounts and online banking when there’s a chance their financial identity might be lifted by some guy named Carl with an Internet connection and a bad case of no morals – oh, and a yen for stuff paid for by someone else.

On the other side is the FTC, putting the slow-down on this talk of waning identity theft.  The FTC’s latest compilation of consumer complaints shows identity theft at the top of the list.  Thirty-six percent of the 674,354 complaints received by the agency in 2006 had to do with someone pretending to be someone else for financial gain.

(You can see the FTC’s release on it’s Top 16 Complaints here.  And while you’re looking, take a look at what didn’t make the Top 16: debt collectors.  Just something to point out.)

This marks the seventh year in a row that consumer complaints about identity theft have made it onto the FTC’s Top list.

Some ways in which the financial services industry has tried to downplay the identity theft card – other than outright claiming that it’s not the big issue everyone else seems to claim it is – is by discounting the figures given by consumer groups. 

A study recently released by Javelin Research claimed that identity theft instances declined by 11.5 percent between 2005 and 2006, with 2006 losses declining to $49.5 billion. The Javelin study was funded by (surprise) Visa, Wells Fargo, and check-printing company CheckFree.

A study conducted by the industry-funded Identity Theft Assistance Center (ITAC) claimed that two in five identity theft victims knew the thief personally — usually a friend or family member. The Javelin study also made similar claims.

“It can’t really be identity theft, right, if the victim knew the perpetrator.”  That seems to be the tack taken by the financial services industry.  And when those cases are taken out of the equation, one probably could make an argument that identity theft is waning.  But that’s some pretty fuzzy math.

FTC official Claudia Bourne Farrell said that, "Since most surveyed — 74 percent — could not identify the person who stole their identity, and half the 26 percent who could identify the thief either didn’t personally know the thief or said it was someone other than a friend or relative, it would be misleading to suggest that the ‘culprit is likely a friend or relative.’"