Identity Theft and Financial Fraud

Growing Trends in Identity Theft

Today, criminals continue to find opportunities to exploit their victims through the lack of security measures for protecting personal identifying information. Personal data is widely scattered with much of it outside an individual’s control. Nationwide databases, IT security issues, and continuous requests for Social Security numbers only add to the vulnerability of personal information. Consumers now fear that the question isn’t "Will I become a victim?" but when.

According to a 2010 Bureau of Justice Statistics report, in 2007, "7.9 million households, or about 6.6 percent of all households in the United States, discovered that at least one member had been a victim of one or more types of identity theft."

The number of households with at least one member who experienced one or more types of identity theft increased 23 percent from 2005 to 2007.
From 2005 to 2007, the number of households that experienced credit card theft increased by 31 percent and the number that experienced multiple types during the same episode increased by 37 percent.
During the 6-month period in 2008 for which identity theft victimization data was collected as part of the regular National Crime Victimization Survey, 3.3 percent of households discovered that at least one member had been a victim of one or more types of identity theft (BJS [PDF 170 kb], 2010).

While the Internet has helped to disseminate information about identity theft and how individuals may avoid victimization, it has also made it easier for criminals to obtain sensitive information about other persons’ identities. Legislation has struggled to keep pace with the expanding avenues that criminals are exploiting, such as cyberspace.

Two prime areas of growth are employment-related and medical identity theft. Fraudulent employment is a problem that arises, in part, from systematic weaknesses in authenticating and verifying identity on the part of many businesses. Because a Social Security number (SSN) is required to obtain employment, a booming business has sprung up in selling SSNs to individuals without legal status as well as others. The growth in this crime is reflected in the Social Security Administration’s Earnings Suspense File, which shows a large increase in the misuse of SSNs for employment purposes.

Medical identity theft was rarely mentioned several years ago. Today, it has become a much more serious problem. According to the Federal Trade Commission, individuals may discover that they are victims of medical identity theft when they—

Get a bill for medical services they didn’t receive;
Are contacted by a debt collector about medical debt they don’t owe;
Order a copy of their credit report and see medical collection notices they don’t recognize;
Try to make a legitimate insurance claim and their health plan says that they have reached their limit on benefits; or
Are denied insurance because medical records show a condition they don’t have.

While the financial aspects of medical identity theft may be readily resolved, the more complex issues of mixed medical records are not so easily remedied. Some current laws (HIPAA) and health provider administrative protocols may prohibit victims from gaining access to their own records and minimize their ability to correct erroneous information. Today’s economic climate, combined with the lack of access to healthcare among many Americans, has made medical identity theft much more desirable to the identity thief who needs these services. For more about avoiding this crime, visit the FTC’s medical identity theft page.

Benefit fraud, criminal identity theft, and intergenerational identity theft are areas of growing concern. Benefit fraud, such as collecting someone else’s unemployment and welfare benefits, may be committed due to inadequate authentication and verification efforts on the part of businesses. Unfortunately, victims only discover this crime at the time they themselves need those services.

Criminal identity theft is relatively easy to commit by simply providing someone else’s name and birth date. Thieves are aware that all incriminating evidence will point back to the victim—not at the perpetrator. According to the Identity Theft Resource Center, criminal identity theft occurs when an imposter provides another person’s name and personal information (such as a drivers’ license, date of birth, or Social Security number) to law enforcement during an investigation or upon arrest. The identity thief may also have possession of counterfeit documents that use another person’s data. Or he or she may simply claim to be another individual without showing any photo identification.

In many cases, the imposter is cited for a traffic violation or a misdemeanor. He or she signs the citation and promises to appear in court. If the imposter does not appear in court, the magistrate may issue a bench warrant, but the warrant of arrest will be under the victim’s name. In other cases, the imposter will appear in court for the traffic or misdemeanor violation and plead guilty without the victim being aware of this event, thereby establishing a criminal record for those actions in the victim’s name. In cases in which the imposter is arrested for a felony or another serious public offense, such as a DUI, the information will be recorded in the countywide database and is usually transferred to the State’s criminal records database. From there, it is forwarded to the national crime index database, at the National Crime Information Center (NCIC).

Criminal identity theft is usually not discovered until the victim—

Fails a criminal background check;
Cannot renew his or her driver’s license;
Receives notice of outstanding citations or warrants; or
Is arrested.

(For more about criminal identity theft, see ITRC’s fact sheet on the subject.)

Family identity theft, sometimes called intergenerational identity theft, may be the easiest of these crimes to commit, because the perpetrator has ready access to the victim’s personal information. Identity theft among family members is frequently regarded as a personal family matter, not a crime. However, this crime leaves victims feeling as though they had been victimized twice—first by the family member, and then by the system, which will not help them unless a police report is filed. Discord among family members is common in these types of cases.

In fact, a 2006 FTC study indicated that 16 percent of victims knew the identity of the thief, who turned out to be a family member, roommate, neighbor, coworker or employer, or some other acquaintance (Synovate 2007). Identity theft among family members often occurs when one of the parents misuses the PII of their child or a grown child misuses the PII of an elderly parent. Using the Social Security number of a child gives a thief a long window of opportunity before the crime is likely to be discovered. (Read more about children and identity theft.)

Another area of concern is the nature and complexity of organized crime (both in the United States and abroad), which has embraced identity theft for its low-risk profitability and the relatively minimal penalties imposed if convicted. Professional criminals also find identity theft easy to commit. These crime rings may be international in scope, cover numerous judicial jurisdictions, and can be hard to prosecute. The use of technology and the ready availability of equipment to make new identification cards or print realistic driver’s licenses, as well as other high-tech resources, are enabling this crime to grow rapidly.