BBB Reports Identity Theft Findings

The 2005 Identity Fraud Survey Report - released by the Better Business Bureau and Javelin Strategy & Research as an update of the Federal Trade Commission's 2003 Identity Theft Survey Report and Javelin's 2003 Identity Theft Report - shows that despite growing fears about identity theft and online fraud, of the victims that know the identity and method used by the criminal, these crimes are more frequently committed offline than online.

According to the report Internet-related fraud problems are actually less severe, less costly and not as widespread as previously thought.

Further, the study concludes that those who access accounts online can provide earlier detection of crime than those who rely only upon mailed monthly paper statements. By managing their financial activities online, consumers can reduce access to personal information on paper bills and statements that may be used to commit identity theft and fraud.

"Our numbers show that fears about online identity fraud may be out of proportion to the relative risk, causing consumers to ignore the most glaring issues," says James Van Dyke, Javelin's founder and principal analyst. "Indeed, most instances of identity fraud occur through traditional channels and are paper-based, not Internet-based."

Five key points made in the report are the following:

1. The most frequently reported source of information used to commit fraud was a lost or stolen wallet or checkbook. Computer crimes accounted for just 11.6 percent of all known-cause identity fraud in 2004; and half of these digitally-driven crimes stem from spyware, software the computer user unknowingly installs to make ads pop-up when the consumer is online. Consumers can protect their financial data by using updated spyware, virus and firewall protection software and not responding to bogus "phishing" emails that request personal data.

2. Among cases where the perpetrator's identity is known, half of all identity fraud is committed by a friend, family member, relative, neighbor or in-home employee - someone known by the victim.

3. A wide variety of metrics confirm that identity fraud problems are NOT worsening, with the total number of victims in decline.

The annual dollar volume of identity fraud is highly similar to 2003 figures (adjusted for inflation) at $52.6 billion

The number of identity fraud victims dropped from 10.1 million to 9.3 million in 2004 versus 2003

The median value of identity fraud crimes remained unchanged at $750; however most identity fraud victims incurred no out-of-pocket costs.

The average time to resolve an identity fraud crime dropped by 15%- from 33 hours in 2003 to 28 hours in 2004.

4. The majority of identity fraud crimes are self-detected. This reinforces the benefits of activity monitoring through electronic review of transactions, statements, and credit reports allowing consumers to check their account activities quickly and efficiently - without waiting for a paper bill or statement.