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ID Theft Hits Paper Harder

Off-line identity theft is more substantial than online fraud.

Despite growing fears of online fraud (see related article) related to Web-based banking services, the increase in identity theft is hitting consumers closer to home than in cyberspace. Identity theft crimes are more often committed off-line rather than online, according to a recent identity fraud survey released by the Better Business Bureau and Javelin Strategy & Research. The most frequently reported source of information used to commit fraud was a lost or stolen wallet.

Additionally, the survey notes that the loss due to off-line identity theft is much higher than the cost of online crimes. The study found that in 2004 the average loss from paper-statement-based fraud was $4,543 compared to $551 in losses from online attacks, relates Jim Van Dyke, principal analyst and founder, Javelin Strategy and Research.

"Based on responses from victims, we have learned that these crimes are more frequently committed off-line than online," says Van Dyke. In fact, the use of online statements may actually help customers detect if they are victims of identity theft, he says. "Those who access accounts online can detect crimes earlier than those who wait for paper statements."

The research - which was supported and underwritten by CheckFree (Norcross, Ga.), Visa (San Francisco) and Wells Fargo (San Francisco) and is based on 4,000 telephone interviews with consumers over the age of 18 - also concluded that about one quarter of identity theft victims surveyed knew the person who committed the crime. According to data from the survey, in 2004, 26.2 percent of those surveyed knew the person who stole their identity.

Although the survey emphasizes the increase of identity theft off-line, consumers should still be aware of the dangers of phishing and viruses, according to Ken Hunter, president and CEO of the Council of Better Business Bureaus. "It is not a matter of now you don't need to worry about phishing," he says. "It is not that at all - [rather], we have become complacent about our wallet and it is a comfort zone."

Being aware of online dangers such as phishing and virus attacks is important, but so is the use of technology in detecting fraudulent activity - both for banks and consumers, Hunter relates. "We can use technology to more frequently check the status of our accounts for the fraud that is being committed," says Hunter, echoing Javelin's Van Dyke. "When we do, we reduce the length of time and the losses that occur," he explains. "We need to look seriously at the amount [of banking] that we do electronically."


Cost of ID Fraud in Dollars and Time

Though the cost of identity theft to consumers increased in 2004, resolution times decreased.


Average total cost: $5,686

Average out-of-pocket cost: $652

Average resolution time: 28 hours


Average total cost: $5,072

Average out-of-pocket cost: $536

Average resolution time: 33 hours

Source: Javelin Strategy & Research (Pleasanton, Calif.)

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