Fraud And Identity Theft Rise

In its recent report to Congress, the Federal Trade Commission reported that there were 380,103 cases of consumer fraud and identity theft reported in 2002—an increase of 73 percent from 220,089 in 2001. Dollar losses to consumers associated with fraud and identity theft in 2002 totaled $343 million, up from an estimated $160 million in 2001.

Identity theft involves the theft of a consumer's social security number, address and credit card number. Those data are then used to open new charge accounts, order merchandise or borrow money. Identity thefts accounted for 43 percent of complaints to the Federal Trade Commission in 2002, up from 39 percent 2001and 22 percent in 2000. In comparison, only 13 percent of the complaints were about Internet auctions and Internet services and computers. Consumers can file fraud complaints with the FTC online at www.ftc.gov. For tips on how to avoid becoming a victim, go to www.consumer.gov/idtheft.

The Federal Reserve Bank of Boston has also created a brochure and video to help consumers avoid becoming victims of identity theft. The "Identity Theft" brochure describes the damage identity thieves can do, some common sense steps that consumers can take to protect themselves, and telltale signs that theft has occurred. The brochure is available for download at www.bos.frb.org/consumer/identity.

Congress will likely address identity theft in several ways this year. At least two bills in the Senate have been introduced. On January 30, 2003 the Senate Judiciary Committee approved the Identity Theft Penalty Enhancement Act (S.153) to increase penalties and make it easier to prosecute identity theft. On January 28, 2003 Sen. Dianne Feinstein (D-CA) introduced another bill intended to prevent identity theft before it happens. The bill would require credit card issuers to notify customers when an address change or other activity on an account suggests possible fraud; establish monetary penalties for companies that issue a card to someone other than the account holder if there is a fraud alert on the account; require credit bureaus to provide consumers with one free credit report each year; prohibit credit card machines at the point of sale from printing the full card number or date of expiration on receipts. The Senate Banking and House Financial Services Committees will likely hold hearings later this year.