ID Theft Is No. 1 Fraud Complaint

Complaints about identity theft nearly doubled in 2002 as the fast-growing crime topped the government's list of consumer frauds for a third consecutive year.

The Federal Trade Commission reports that 43 percent of roughly 380,000 complaints involved the hijacking of someone's identity information, such as credit card or Social Security number, to steal money or commit fraud.

The figures come from a government database of complaints collected from the FTC, the FBI and scores of law enforcement and consumer groups. Gripes about fraud in Internet auctions ranked No. 2 and accounted for 13 percent of complaints.

Outlining the most-frequent complaints to CBS News Early Show co-anchor Julie Chen Wednesday, the FTC's Howard Beales said reports from consumers have increased with greater awareness of the problem prompted by recent high-profile identity-theft cases.

"I think identity theft is a particularly pernicious crime," he said.

The FTC has set up a special toll-free number to report identity theft: 1-877-ID-THEFT, which Beales said helps fight the crime.

"Those complaints really help us to understand where identity theft is occurring and to try to look for 'clusters' of identity theft that can let us identify the perpetrators," he said. But the FTC can't prosecute criminal offenses; it has to work with law enforcement agencies for that.

Up to 700,000 people in the United States may be victimized by identity bandits each year, the Justice Department says. It costs the average victim more than $1,000 in expenses to cope with the damage to their accounts and reputations, the FTC has said.

"The most common way is through credit cards," said Beales, who heads the FTC's consumer protection bureau. "About 42 percent of identity theft victims have had a credit card fraud problem. More commonly, a new account that's opened in your name, but sometimes charges on your existing account.

"Or they open a cell phone account in your name or borrow money in your name and a few people even get arrested in somebody' else's name," he said.

"This is a crime that is almost solely on the shoulders of the victim to resolve," said Beth Givens, director of the Privacy Rights Clearinghouse, a San Diego-based consumer group. "They're beleaguered, they're tired, they're angry and it takes them a good deal of time to recover."

Recovery has taken about five years for Alexandra May, 40, an office equipment saleswoman from Cupertino, Calif.

May said that in 1997 a woman who looked nothing like her obtained a duplicate of her driver's license from a local department of motor vehicles office. With the license, the woman drained $4,000 from May's bank account and tarnished her records with an accident and the theft of a rental car.

"I went to rent a car a few months later and was almost arrested," May said. She said she expects this month to be issued a new license that finally severs her record from the ID thief's actions.

Privacy advocates advise consumers to protect themselves from identity theft by checking their credit reports twice a year, shredding personal documents before throwing them away and cleansing wallets of old receipts and printed Social Security numbers.

"Be careful with your personal information, be careful who you give your credit card to," said Beales. "It's just as vulnerable in a restaurant as it is on the Internet."

Bills can be a problem, too, he said.

"If the bill doesn't come in the mail, don't think that's good news," he told Chen. "It might be that somebody has taken over your account and changed your address."

The number of identity theft complaints rose from about 86,000 in 2001 to about 162,000 last year, the FTC said. Of last year's incidents, 42 percent involved credit card fraud. Other major categories involved fraudulent bank and cell phone accounts.

The District of Columbia had the highest rate of identity theft in 2002 with 123 victims for every 100,000 people. California and Arizona followed with 91 and 88 victims per 100,000 people, respectively.

About half of all other types of fraud complaints last year had some connection to the Internet, the FTC said. They involved online transactions, Web site advertising or promotions sent as e-mail spam.

The number of complaints about identity theft shot up in 2001 after the FTC began promoting a dedicated Web site and toll-free phone number for victims.

In November, federal authorities broke up what they called the biggest identity theft case in U.S. history and charged three men with stealing credit information for 30,000 people. Prosecutors said the scheme began with passwords and records stolen from a software company.

Last spring, Attorney General John Ashcroft ordered federal prosecutors nationwide to speed up investigations and trials of people accused of stealing identities.

Sen. Dianne Feinstein, D-Calif., a longtime advocate for identity theft laws, will introduce several bills in the next few weeks seeking greater protections for Social Security numbers and stiffer penalties for identity thieves, spokesman Howard Gantman said.