Facts About Identity Theft

I received a mailer recently from Equifax. The mailer was selling Equifax’s credit monitoring tool called Credit Watch Gold. It had a couple of “Identifact(s)” listed which contained a few statements that made me go “Hmmmm?”:

* identity theft is now surpassing drug trafficking as the nations’s #1 crime * there are over 10 million victims of identity theft annually * the average victim of identity theft spends 28 hours and $5,686 to resolve the case
The mailer cites the U.S. Department of Justice Statistics and the Federal Trade Commission for this information.

While these “facts” are presented as indisputable truth, a little internet research and a little common sense show that they are anything but. LESSON: NOT EVERYTHING PRESENTED AS A FACT IS ACTUALLY TRUTH.

Identity theft is now surpassing drug trafficking as the nations number one crime? Really? Knowing how widespread drug use is in this country, I find that hard to believe. And what about drunk driving? You’re telling me that there are more instances of identity theft than all the drunk driving that occurs in this country, even including all the drunk driving that never comes to the attention of police? I couldn’t believe it.

I did some research and found nothing to support this statement in terms of number of crimes committed. What I did find was some ephemeral evidence suggesting that for the first time, in 2004, the proceeds from “cybercrime” exceeded the proceeds from drug trafficking. I have no idea if this is true or not, but I do know that “cybercrime” is not equivalent to identity theft. Cybercrime involves a whole host of crimes in addition to identity theft, like corporate espionage, child porn, stock manipulation, and song piracy to name a few.

I don’t think it can be called accurate in any sense of the word to say that identity theft is the nation’s number one crime.

There are over 10 million victims of identity theft annually? If by “victim” Equifax means consumers, which I think would be the common use of the word and certainly what they are implying, then I’m not buying it. I know identity theft is pervasive, but 10 million is a lot of people. There are just over 300 million persons in this country, so exclude all kids and incompetent adults and you’re down to maybe 225 million. Then, subtract from that all the adults who don’t have any established credit history and those who don’t have credit worth stealing and I think you’d be down to somewhere between 100 and 150 million. So one out of every 10 to 15 people in this country is a victim of identity theft, every year? I just can’t buy that.

But maybe I’m wrong. Surprisingly, there is some support out there for this figure. In January 2006, Javelin Strategy and Research co-released its 2006 Identity Fraud Survey Report with the Better Business Bureau. This study found that the number of identity theft victims in the United States was actually decreasing, from 10.1 million in 2003 to 9.3 million in 2005 to 8.9 million in 2006. Well, I might be wrong, but I’m still not buying it. I think they must be including defrauded creditors into this figure as well. But even if this study’s finding is accepted as true, Equifax’s statement is still wrong.

The average victim of identity theft spends 28 hours and $5,686 to resolve the case? Actually, I can’t really quibble with the time but $5,686????? NO WAY. No way, no way, no way. The clear implication of this statement is that the average consumer victim of identity theft spends $5,686 of their own money in order to stop all the collections and to get their own credit report back. Can I say it again? No way.

Now don’t get me wrong. I KNOW there are some consumers who spend way more money that that. But as far as the AVERAGE goes, those figures have to be way too high. Remember, consumers rarely lose significant sums of money out-of-pocket as a result of the fraud (most of these losses are borne by the creditors).

Based on the figures I was able to find, it appears that Equifax was confused. The Javelin study I referred to above found that the mean amount per fraud victim (the creditors) rose from $5,249 in 2003 to $6,383 in 2006. Another study found in 2003 that the average loss to businesses from identity theft was $4,800 while the average loss to consumers was $500. That still sounds high to me, but, anyway, it seems pretty clear that the average consumer victim did not spend $5,686 “to resolve the case” as Equifax would have us believe.

Frankly, I can’t believe Equifax would make such an obviously false assertion. I should point out that along with credit monitoring, the mailer also indicates that “up to $20,000 identity fraud expense coverage” is included with your membership in Equifax Credit Watch Gold. The false assertion about how much the average identity theft victim spends was obviously made with the intent to sell Equifax Credit Watch Gold. It might very well be a violation of Indiana Code 27-4-1-4, which prohibits the making of an untrue statement in a pamphlet by someone in the business of insurance.

Bottom line:
1. Equifax Credit Watch Gold is probably unnecessary for most consumers, but for some who can afford the $13 a month, the peace of mind might not be a bad deal.
2. Identity theft is a serious problem in the United States.
3. Don’t trust everything you read.
4. If you believe you may be a victim of identity theft, click here to find out what to do.