Internet-related identity theft and fraud complaints may be leveling off, but overall financial losses are growing from the security breaches, new data from the Federal Trade Commission (FTC) reveals.
According to the FTC’s annual report on fraud, consumer complaints about identity theft top the list, accounting for 255,000 (37 percent) of more than 686,000 complaints filed with the agency in 2005.
In 2004, ID theft accounted for 38 percent of the FTC complaints, down
slightly from 2003’s 40 percent. The FTC does not report financial losses
from ID theft, considering it a form of fraud.
Credit card fraud was the most common form of reported identity theft,
followed by phone or utilities fraud, bank fraud and employment fraud.
Internet-related fraud complaints accounted for 46 percent of all reported
fraud complaints in 2005, with monetary losses of more than $335 million. In
2004, Internet-related fraud complaints totaled 52 percent of all complaints
with reported losses of $271 million.
Two years ago, 54 percent of all reported fraud complaints were
Internet-related with reported losses of $205 million.
After ID theft, the top sources of Internet fraud complaints originate with
online auctions (12 percent), foreign money offers (8 percent) and Internet
services (5 percent).
Foreign money offers used to be called Nigerian e-mail scams but, according
to Jay Miller of the FTC’s Bureau of Consumer Protection, the practice now
extends “far and wide beyond Nigeria.”
The FTC considers a complaint Internet-related if it concerns an Internet
product or service, the company initially contacts the consumer via the
Internet or the consumer responds via the Internet.
One category that showed a marked increase was Internet-related fraud
complaints with “wire transfer” as the reported form of payment more than
tripling between 2003 and 2005.
Unlike credit card payments, wire transfers leave consumers little chance of
recovering their losses since the transfer is from bank-to-bank and serves
the same purpose as a cash payment.
The FTC’s Miller was unsure why the wire transfer form payment showed such
an increase in 2005.
“There’s really no good science why we get ebbs and flows in our data,” he
The FTC data also shows that the Washington, D.C., area leads the country in
per capita fraud reported, followed by Tampa/St. Petersburg and Seattle.
The major metropolitan areas with the highest per capita reported ID theft
are Phoenix, Las Vegas and the Riverside/San Bernardino/Ontario, Calif.