For the sixth year in a row, identity theft tops the annual list of consumer complaints collected by Federal Trade Commission. The list is strikingly similar to last year, with online auction fraud, sweepstakes, and advance-fee loans also in the top 10. But the number of consumers victimized via wire transfer has skyrocketed, tripling in the past two years, the FTC said. And child ID theft cases have nearly doubled in that span.
In all, some 685,000 consumer complaints were filed with the agency last year, with victims reporting losses of $680 million.
While the number of complaints only edged up about 5 percent from last year, the dollar losses appear to be rising rapidly. In 2005, 49 consumers reported losing $1 million or more during 2005, the FTC said, compared with 42 in 2004. Nearly 14,000 victims said they'd lost over $5,000 to a con artist, a steep jump from just over 11,000 in the previous year.
Average losses were $2,400 per victim; median losses were $350. In 2004, the average was $1,846 and the median was $263.
The data suggest that identity theft may lose its long-standing title as the fastest-growing white collar crime in America -- 2005 saw only a small increase in reported victims. Still, over 255,500 complaints were compiled by the FTC, a slight uptick from last year's 247,000.
Child ID theft up, auction fraud down
But there was a steady rise of child ID theft victims. In 2003, 6,512 ID theft reports were filed on behalf of victims under 18 years old. In 2004, the number jumped to 9,595. Last year, the number was 11,601.
There were 430,000 non-identity theft crimes reported; about half of those involved the Internet. At the top of that list is auction fraud complaints, but they've dropped sharply.
In 2004, auction fraud made up 16 percent of all complaints, or about 100,000 reports (an MSNBC.com estimate -- the FTC does not reveal the exact number in its report). In 2005, auction fraud complaints were only 12 percent of the total, or about 82,000 (also an estimate).
The steep jump in wire transfer payments to con artists is noteworthy. Generally, consumers have no protection -- no ability to get a refund, or to cancel the transaction -- when they wire money using a service like Western Union. Two years ago, only 6 percent of victims told the FTC they paid their con artist using wire transfers. In 2005, 15 percent did. Their total losses were $86 million.
Wire fraud a growing problem
That finding corroborates a similar finding in a study released last week by the National Fraud Information Center/Internet Fraud Watch. The group, operated by the non-profit National Consumers League, said wire transfer complaints filed at its Web site tripled from 2003 to 2005. Nearly one-third of victims who reported crimes to the agency's Fraud.org Web site said they'd paid their con artist with wire transfers.
"For the first time since we began tracking Internet fraud, wire transfer was the No. 1 method of payment," said Susan Grant, NFIC/IFW director. "It's really alarming. The whole reason why scam artists try to convince people to wire money to them is because it's so hard to trace and track wire transfers."
Grant said the studies indicate government and private groups need to do a better job communicating the dangers of wire transfers.
"The most basic thing consumers need to know is there is no legitimate company or organization that would be asking you to send your payment in that manner," she said. "If someone wants you to wire money to them, that should immediately set off all kinds of alarm bells. You know it's a scam then."
Victims told the FTC they'd lost $336 million on Internet-related scams last year, the study reveals.
Now, the good news
The FTC study hints at some silver linings, however, including a significant drop in the rate of increase of identity theft. It's not clear if that signals a leveling-out of the crime, however, because overall fraud reports to the FTC also leveled out.
But the finding is similar to other recent research, says James Van Dyke, who studies identity theft for Javelin Research.
"We're seeing a longer term trend where ID fraud is not increasing," he said. The firm will issue a study on the prevalence of ID theft on Jan. 31. "That's the finding we had last year. Of course, it's still very, very big ... but it's not increasing."
And the FTC study hints at a modest trend toward fewer reports of credit card fraud -- from 28 percent of all identity theft victims, to 26 percent. Two years ago, the figure was 32 percent.
But there was jump in ID theft victims who were hit by unauthorized electronic funds transfers -- bank-to-bank wire transfers -- from 6.6 percent in 2004 to 7.9 percent in 2005. The jump was not as significant as last year, however when electronic transfers climbed from 4.8 percent in 2003 to 6.6 percent in 2004.
And there is some indication that identity theft victims are still having trouble getting police reports when they visit their local authorities. About 40 percent of victims say they reported the incident to a police department, and one-quarter of them said a report was not taken. That's about the same percentage as the previous year.
In the meantime, 61 percent of victims did not report the crime to a police department.
Many identity theft victim rights, such as those granted to victims by the Fair and Accurate Transaction Act of 2003, require a police report. These include the ability to file some credit bureau fraud alerts and to obtain applications filled out by imposters for investigative purposes.
The top fraud states
Arizona, Nevada, and California reported the most cases of ID theft, adjusted for population. The top metro areas for ID theft reports were Phoenix-Mesa-Scottsdale, Ariz. (178 per 100,000 population), Las Vegas-Paradise, Nev., (159 per 100,000), and Riverside-San Bernardino-Ontario, Calif., (146 per 100,000).
Vermont, South Dakota, and North Dakota were the lucky states at the bottom of the list. A North Dakota resident was more than 6 times less likely to report a case of ID theft to the FTC than an Arizona resident.
Alaska, Washington, and Arizona reported the most non-identity theft fraud cases. Louisiana, Arkansas, and Mississippi reported the fewest. Mississippi residents were about 3.5 times less likely to report fraud cases to the FTC as Alaska residents.
The most fraud victimized cities were the Washington DC area (190 per 100,000); the Tampa-St. Petersburg-Clearwater, Fla. area (187 per 100,000), and Seattle-Tacoma-Bellevue, Wash. (186 per 100,000).
The data used in the FTC report is collected in the agency's Consumer Sentinel database. Complaints are funneled to the FTC by a number of law enforcement agencies, including the Internet Fraud Complaint Center; consumers also directly contact the FTC. The agency says Consumer Sentinel now has 3 million complaints logged since its inception in 1997.
Bob Sullivan is author of Your Evil Twin: Behind the Identity Theft Epidemic.