The next call is from the credit card company. It occurs to you that you have not seen a bill in a while. Your card is maxed, you are two months late, and they are courteously telling you that they are canceling your card.

The next time the phone rings, you just can’t pick up the line. Over the answering machine you can hear Uncle Fred’s voice – the uncle you are in the business deal with. He is screaming! His father and your father go back – oh well, you know the story. He wants to know what the heck you are doing declaring bankruptcy on him.

Sinking into your chair you get the final call. If the first four were not enough, the last is the best. Over the answering machine – remember, you’re not answering the phone anymore – you hear a voice you do not recognize. It is a nasty voice. The person introduces himself – as you, and laughs. This stranger knows about your new car, your new house, your credit cards, and your bankruptcy. This stranger has stolen your identity and has called you up to taunt you.

This story is based on a true and notorious case. The thief claimed that he could pose as the victim for as long as he wanted because, at that time, identity theft was not a crime. Ultimately, the thief made a mistake. He made a false statement in order to procure a firearm and got caught, receiving a brief sentence. The victim, in the mean time, spent four years and a few buckets of money to restore credit and reputation. This is one of the cases that prompted Congress in 1998 to pass the Identity Theft and Assumption Deterrence Act

The Theft

As a part of the new law, the Federal Trade Commission was directed to conduct a study and issue a report on identity fraud. The FTC set up a clearing house for ID theft information and in October 2000 released its first report. The information collected indicated that the most common complaint concerned credit card fraud. Other problems included, in the order of the magnitude of complaints, unauthorized phone or utility service, bank fraud, fraudulent loans, and government documents or benefits. 86.5 percent of the time the victim had no relationship with the perpetrator. When it could be determined how the perpetrator had obtained the information, the most common method was the loss of a wallet or purse (47 percent). The second most common method was theft of mail which included having someone fraudulently submit a change of address for the victim to the post office, directing the victim’s mail to the wrong address (23 percent). Thirty percent of the victims knew about the theft within one month. Some, however, did not realize the theft for as long five years. The biggest problem incurred by victims of ID theft was harm to their credit rating. Other injuries included the time and resources lost recovering from the theft and harassment by debt collectors. The average loss from identity theft was $2000 in 2002.