On Sept. 26, 2014, in Anchorage, Alaska, Maximo Amparo-Vazquez, a citizen of the Dominican Republic, was sentenced to 84 months in prison and ordered to pay $559,755 in restitution to the U.S. Internal Revenue Service. He had pleaded guilty to conspiring to defraud the government of $19 million. According to court documents, Amparo-Vazquez conspired with others to use stolen identities to file income tax returns to obtain fraudulent income tax refunds. The conspirators obtained personally identifiable information (PII) of more than 2,600 taxpayers, including names and Social Security numbers. (See the
Income tax refund fraud has taken the U.S. by storm in the past two years, accounting for losses of $6.5 billion in 2014 and projected to escalate to $21 billion in 2016, according to
Tax-refund fraud to hit $21 billion, and there's little the IRS can do, by Matt Hunter of CNBC. [Also see the author's articles, "Identity theft tax refund fraud: A growing epidemic," parts 1 and 2 in the
March/April 2014 and
May/June 2014 issues of Fraud Magazine.]
Every year, law enforcement agencies and individual victims report thousands of identity theft fraud cases such as this to the U.S. Federal Trade Commission (FTC), which then lists them in its annual Consumer Sentinel Network (CSN) Data Book — a fixture since 1997.
According to the CSN, it received 42,547 more identity theft complaints in 2014 from 2013 (290,099 to 332,646) — a significant increase — which makes it the FTC's No. 1 complaint category again. Thus identity theft has soared and still continues to be a major problem for consumers and businesses.
CSN FIGURES ARE UNDERSTATED
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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