Despite Alerts, Identity Theft Cases Rise About 3.5 million American households discovered they were victims of identity theft during a six-month period in 2004, says the Justice Department.
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Despite Alerts, Identity Theft Cases Rise

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Despite Alerts, Identity Theft Cases Rise

Despite Alerts, Identity Theft Cases Rise

Despite Alerts, Identity Theft Cases Rise

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About 3.5 million American households discovered they were victims of identity theft during a six-month period in 2004, says the Justice Department.

JOHN YDSTIE, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Larry Abramson. Actually, I'm John Ydstie, but in the current climate, it might not be so hard for me to rip of Larry's identity. In fact, the real Larry Abramson, my NPR colleague, is here in the studio with me to talk about identity theft, which doesn't seem to be going away. Larry, this problem has gotten lots of attention in the past year. Are we getting a handle on it?

LARRY ABRAMSON reporting:

Well, first thanks for giving me my identity back, John.

YDSTIE: Just for the moment.

ABRAMSON: Yeah, just temporarily. No, the problem is not going away and in fact, a government report that's come out just today says that 3.5 million American households were victimized by identify theft in some form during a six-month period. These statistics are actually from 2004, but those are the most recent numbers that we have.

So that means that basically about three percent of American households were victims of this crime. It makes it a very widespread crime. It affects people all across socioeconomic levels. It affects white people and black people equally. It even affects young people. People from the ages of 18 to 24 were very heavily victimized. You wouldn't necessarily think that...

YDSTIE: No.

ABRAMSON: ...because they don't have a lot of credit. But in fact often you can be victimized by identify theft before you have a credit rating. And it's clearly a persistent problem that law enforcement and consumers really aren't getting a handle on quite yet.

YDSTIE: Identity theft takes many forms. What's the most common way this stolen information is used?

ABRAMSON: Well, this new government study underscores that the most common form of identity theft is credit card fraud. Half of all of the reported identity theft was some sort of credit card fraud. And that's also the most innocuous form because right now there are very good protections. If you see on your bill that somebody has bought something with your credit card and you didn't want them too, you can tell the credit card company and they'll immediately refund the money to you. So there's really no cost or sometimes a few dollars to you.

However, there is a cost to the economy because usually the merchant in that case will have to pick up the cost. So even though the study says that there was a $3.2 billion loss to consumers in this 2004 period, the cost to the economy is often measured in terms of around $50 billion. Because even though you may be protected by various laws and practices, somebody's gotta pay for that merchandise.

What is much more difficult to correct, however, is when somebody opens up a brand new account in your name. You don't see that account when somebody goes out and says they're John Ydstie and they start buying something with a new home equity loan on your house. And so it could take months for you to notice and it could take many, many months for you to correct. And this new government study says those are the situations that take the longest for consumers to resolve.

Again, since there are so many different forms of identity theft, sometimes for example, if you are the victim of identity theft on your debit card, you are usually able to get that money back from the bank. However, you may not notice it right away and your bank account could be empty for a while, incurring you all kinds of fees and things, and ruining your credit with the merchants that are trying to draw on that account. And that's why a lot of people urge consumers not to use debit cards for a lot of purchases because you're not as well protected as you are with a credit card.

YDSTIE: Mm hmmm. So what's being done about this?

ABRAMSON: Well, more than 20 states have passed disclosure laws in the last few years and a lot of this was spurred in the last year and a half after all of those data spills. You may recall that ChoicePoint and many other companies, including banks, have lost consumer information, and that's raised concerns about whether the source of the information that's being misused is in fact the corporations that are trafficking in our information.

More than 20 states have passed disclosure laws that say that you should know when your information has been stolen. As a matter of fact, a bill was passed by the House Commerce Committee and sent to the House floor that would require disclosure on a federal level. That bill would preempt all of those state laws, and some people feel the state laws are more aggressive and should be left alone.

So there's still a lot of battling going on about what the right step is to take. However, at the same time, a lot of companies have taken steps to secure information so that these data spills aren't as egregious, aren't as damaging to consumers, but every week we hear about the loss of personal information, again, affecting thousands and thousands of consumers.

YDSTIE: NPR's Larry Abramson, thanks very much.

ABRAMSON: Thank you.

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