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Nearly 10 million consumers have been victimized by some form of identity theft in the past year, the Federal Trade Commission said Wednesday. In the first government-backed study of its kind, the FTC found identity theft is much more common than previously believed. Victims lost $5 billion because of the crime last year, FTC officials said, and businesses have lost close to $50 billion dealing with the problem.

AFTER A NATIONWIDE SURVEY of 4,000 adults conducted in March and April , the FTC concluded that 27 million adults had been victimized by some form of ID theft in the past five years. Victims spend between 30 and 60 hours cleaning up the problem after they’ve been hit, the report said.

ID theft can be extremely lucrative for criminals, the survey found, who can walk away with over $10,000 per victim when they manage a full-blown identity theft.

The report suggests earlier government statistics on identity theft victims were severely underestimated. Congress’ General Accounting Office had estimated about 750,000 ID theft victims annually; the Federal Trade Commission said in January that about 200,000 consumers reported that they were victims of identity theft.

FTC Bureau of Consumer Protection director Howard Beales said he was surprised at the number of victims found by the survey.

“It was considerably higher than we expected. ... We knew we had a problem with identity theft before this report, but we didn’t know the contours,” he said. “It’s important to know the scale of the problem we’re dealing with.”

But this is not the first survey to suggest millions of Americans have been victimized by identity theft. Earlier this year, consulting firm Gartner Inc. published a study claiming 7 million people had been hit by identity theft last year. And last month, Privacy & American Business published a study which arrived at the same number.

Avivah Litan, who authored the Gartner study, welcomed the FTC report that confirmed her findings.

“That’s great. I hope someone wakes up,” she said. “There really is nobody looking after the consumers. The banks and financial institutions have no incentive to go after it. I don’t think the numbers look big enough on a balance sheet to for them to spend millions of dollars on a solution.”

‘INVISIBLE STRIKE’

One reason ID theft estimates range so widely: Many victims don’t report the crime. The FTC survey showed that 38 percent of victims “never told anyone,” Beales said.

“There was good news to be found in the FTC survey, Beales said. Two thirds of victims faced no out-of-pocket expenses. Victims are discovering the crime quicker too, thanks to increased attention on the problem: One-third of victims discovered the problem within a week, Beales said.

“Consumers are learning to look for signs of trouble,” he said.

And while incidences of ID theft are still growing, the rate of growth has slowed in the past year, Beales said. And most of that growth is in simple account takeovers, such as credit card fraud, which is easier to fix than full-blown identity theft.

But the crime still has severe consequences, and is still shrouded in mystery for most consumers, Beales said.

“Identity theft starts out as an invisible strike,” Beales said. “Half the victims had no idea how the thief got their information.”

SIZE OF THE PROBLEM DISPUTED

Counting identity theft victims can be tricky because there is disagreement over the definition of a victim. Not all experts agree that simple credit card fraud — a thief purchasing something with a victim’s credit card account — is really identity theft. They limit use of the term to criminals who manage to gather enough personal data, usually including a Social Security number, to open new bank accounts or take out loans in the victim’s name.

Even by that measure, the FTC survey still indicates there are millions of victims facing this more severe, or “full-blown” identity theft. About 3.3 million victims had new accounts opened in their names in the last year, the FTC survey indicated.

The Gartner survey actually indicated higher rates of such full-blown identity theft. It said 7 million consumers had new financial accounts created in their name in the last year, and an additional 11 million faced credit card fraud.

Identity Theft Resource Center Executive Director Linda Foley said she welcomed the FTC study, but felt it was still understating the size of the problem. Her group will soon release its own study on ID theft. Moreover, Foley said, her group’s study showed that “while they may find out sooner, it is taking victims far longer than ever before to remedy the situation and that the imposters are using the information over a longer period of time.”

WHAT CONGRESS IS DOING

The accounting discrepancy is important, because the survey results have been released into a highly charged legislative atmosphere. This fall, Congress is set to consider several pieces of identity theft legislation, including laws designed to extend expiring provisions of Fair Credit Reporting Act. Identity theft advocates are opposing a House bill proposed by Reps. Spencer Bachus, R-Ala., and Darlene Hooley, D-Ore., which they say would pre-empt many state laws with strict penalties for companies that leak private consumer data or maintain erroneous credit information.

Credit industry officials say their business would be hamstrung if they had to deal with a patchwork of state laws dealing with privacy protections; they are pushing to maintain the current federal standard, which includes exemption from state laws.

In a bid to promote opposition to the Bachus bill, the California-based Foundation for Taxpayer and Consumer Rights used the Internet to buy the Social Security numbers of CIA Director George Tenet and Attorney General John Ashcroft.

Foley said the Bachus bill would be a disaster for identity theft victims because it would limit their rights against creditors and credit reporting agencies that don’t act quickly to clean up errors in their credit reports.

“I am seeing a bunch of state laws going up in smoke,” she said.

But Beales said Wednesday he was in favor of the House bill, adding it wouldn’t curtail many state law provisions, such as new criminal penalties for ID theft criminals. The bill would help potential victims, he said, because it calls for free credit reports to consumers. And he echoed the financial industry’s concern about varying state laws governing the credit reporting system.

“It is really important to have a uniform national standard,” Beales said.

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