Identity Theft

Introduction

Identity theft is one of the fastest growing crimes of the new millennium. It occurs when, for fraudulent purposes, someone uses bits and pieces of information about an individual—usually a Social Security number—to represent him- or herself as that person. (Frank, 9-16) There are numerous varieties of identity theft. Examples of application fraud, also called “true name fraud,” include obtaining credit cards and loans in someone else's name and then not paying the bills, opening utility accounts, renting an apartment, getting a cellular phone, and purchasing a car or home. Another variety, account takeover, occurs when the thief obtains the account number of the victim's existing credit card or bank account by wallet theft, or perhaps by fishing transaction slips out of the trash. The perpetrator usually makes many purchases in a short period of time, often by mail order or over the Internet. Account takeover is often detected and halted early when the victim notices the fraudulent charges on his or her monthly account statement and reports them to the creditor.

Types

One of the most serious types of identity fraud is criminal identity theft. This occurs when the perpetrator is arrested for crimes and provides the victim's name to law enforcement, thus giving that person a criminal record. Criminal identity theft and application fraud are often not detected by the victim for many months or even years. Under federal law, victims are not liable for the bills accumulated by the thieves. But they do have the anxiety and frustration of spending months—sometimes years—restoring their credit history.

Crime Statistics

There are no sources of accurate statistics on identity theft. However, based on credit industry figures, the Privacy Rights Clearinghouse (PRC) estimates there were 500,000 to 700,000 thousand victims in 2000. A 1998 report by the U.S. General Accounting Office (GAO) tracked identity theft statistics from 1992 to 1997, based on figures provided by the Trans Union credit reporting agency (CRA). A graph in the report shows a dramatic sixteen-fold increase in the volume of telephone calls to Trans Union's fraud department during that six-year period (U.S. General Accounting Office 1998: 40). Other CRAs, such as Equifax and Experian, also maintain records on identity theft.

Reasons for the Growth of Identity Theft

There are three reasons why identity theft is rampant. First, it is easy for criminals to obtain the information needed, in particular, Social Security numbers (SSNs). Second, not all credit issuers use stringent application verification procedures, making it easy to obtain credit. Finally, because of law enforcement resource shortages and light sentences, the crime is low risk for the perpetrators.

Use of SSNs by the private sector has not to date been prohibited by law. As a result, SSNs are used as identification and account numbers by many entities, including insurance companies, universities, cable television companies, the military, banks, and brokerage firms. In about a dozen states, the SSN is used as the driver's license number.

Identity thieves obtain Social Security numbers by stealing mail, seeking documents that contain account numbers and Social Security ...