Identity theft complaints drop more than 21 percent in 2013, part 1 of 2

But ID theft still is FTC's No. 1 complaint

By Robert E. Holtfreter, Ph.D., CFE, CICA

Jeffrey Emil Groover said he was very, very sorry for stealing the identities of several South Floridians — including a former owner of the New York Mets. He even offered helpful suggestions on how to stop people like him when he testified to a U.S. Senate committee while serving a federal prison term in 2004. But apparently Groover just couldn't stop himself. After his release, he again used other people's identities to steal money by claiming the victims had signed over checks to him for pest extermination services. Can't keep a bad man down. (See South Florida ID thief who testified to U.S. Senate strikes again by Paula McMahon, Sun Sentinel, May 30, 2013.)

Groover was a solo operator, but there's strength in numbers. The members of the "Felony Lane Gang," according to the U.S. Immigration and Customs Enforcement (ICE), would steal ("smash and grab") checkbooks and driver's licenses from cars throughout the U.S. Then, they would drive through the "felony lanes" of banks (the lanes furthest from video cameras and tellers) and cash checks using the stolen personally identifiable information (PII). They stole more than $1 million from 250 victims in five years.

On March 18, U.S. District Court in Philadelphia, Pa., sentenced the gang's leader, Travis J. Russ, of Fort Lauderdale, Florida, to 188 months in prison. (See the March 19, 2014, ICE release.)

Whether it's a single fraudster, or an organized gang, these identity theft fraud cases are representative of thousands of identity theft cases that victims, law enforcement agencies and other organizations report to the Federal Trade Commission (FTC) and are listed in its annual Consumer Sentinel Network (CSN) Data Book, which it began in 1997.

According to the CSN, it received more than 79,089 fewer identity theft complaints in 2013 from 2012 (369,132 to 290,056) — a significant decrease. However, identity theft complaints still rank as the FTC's No. 1 complaint. Though it appears that identity theft has somewhat abated, it still continues to be a major problem for consumers and businesses.

During a panel discussion on identity theft at the "ID360: The Global Forum on Identity," held April 9 and 10 at the University of Texas at Austin, moderator A.T. Smith, deputy director of the U.S. Secret Service, said that of the most common ID crimes they see, "37 percent is credit card fraud, 23 percent is bank fraud, 13 perfect is check fraud, 8 percent is false identification fraud, 7 percent is computer crime and the remaining 12 percent is miscellaneous crimes." (See the "ACFE Insights" blog entry, New Resources to Fight ID Crimes, by Mandy Moody, CFE. Also, see UT's The Center for Identity, the sponsor of the forum.)


While these cases and the forum point to identity theft as a major problem, the number of complaints decreased in 2013. Does this really show a decline in actual identity theft?

As I've said in previous years, the CSN figures actually are understated. Most identity theft victims still don't report their experiences to the FTC or any law enforcement agency. Also, many law enforcement agencies don't share their complaint data with the FTC. Therefore, the identity theft data reported in the CSN is significantly understated for any given year. In fact, the FTC estimates that identity theft claims more than 10 million victims annually.

However, assuming there's a consistent flow of consumers who report identity theft complaints each year and assuming that the law enforcement agencies that report identity theft do it consistently each year, we can conclude that the CSN identity theft complaint data reported in any given year is representative of the real levels of identity theft. The CSN identity theft data can be considered useful for determining trends not only for aggregate data but also for identity theft fraud subtypes. This enables law enforcement agencies to target their efforts to help control specific types of identity theft fraud.

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