Identity theft -- don't be a victim
theft may be the fastest-growing crime in America, but it
had to rack up some pretty impressive numbers before corporations
and law enforcement started to take it seriously.
How many identity theft victims
have walked into a police department and spent time filling
out a report that was shunted to some dusty folder? How many
companies have fallen prey to an identity thief with a fraudulent
credit card and have opted against pursuing charges because
it would cost more than the amount the fraudster got away
with? Plus the loss is a write-off anyway.
Identity theft is a crime that
turns the victim's life upside down. But too often law enforcement
officials, overwhelmed with violent crime, told identity theft
victims there wasn't much they could do, and too often companies
wrote off the loss as a cost of doing business.
Now that identity theft is spiraling
out of control, it's beginning to get official attention.
Police departments are creating fraud units that take identity
theft very seriously. Companies that used to simply write
off losses are getting more aggressive about pursuing charges.
Identity theft is more common than
you might think: Within the past 12 months, identity theft
affected over 9.3 million Americans, says a 2005 identity
fraud survey report co-released by the Better Business Bureau
and Javelin Strategy & Research. The study was a longitudinal
update to the Federal Trade Commission's 2003 Identity Theft
Survey Report, which largely revealed similar figures. One
look at the following statistics will prove one thing: Identity
theft is a costly, pesky problem that has yet to go away.
- Victims: 9.3 million
- Loss to businesses: $52.6 billion
- Average loss to individual victims: $5,686
- Average number of hours victims spent resolving their
No one is saying that solving an identity theft
should take precedence over a murder, but perhaps it should
be taken as seriously as a nonviolent bank robbery.
Identity theft victims say their frustration
and anxiety are compounded by credit bureaus, banks and credit
card companies that aren't aggressively attacking the problem
and the fragmented approach of the legal system in dealing
with the crime.
Most cases involve at least two victims -- the
individual whose identity is stolen or whose credit or bank
account is compromised and the company or retailer that granted
credit or accepted a check or credit card from the bad guy.
Harrison says his identity was stolen by a man who opened
dozens of accounts in his name and defrauded companies out
of $260,000, in a spree that lasted only four months. Harrison
claims that the corporations involved too often simply write
off the loss as a cost of doing business and don't bother
Are companies that don't pursue charges, in
effect, helping to perpetrate the crime of identity theft?
There's a fair amount of finger-pointing that goes on when
you ask this question. But it's clear that for many companies
it's a bottom-line decision.
In 2004, when we first reported this story,
we spoke with a few of the companies that were victimized
by Jerry Wayne Phillips, the man who pleaded guilty to one
count of identity fraud in Harrison's case and was sentenced
to 41 months in prison.
Phillips had rented property in Virginia Beach,
Va., and written checks to Sandbridge Realty totaling $4,042.
It's not clear how many bounced, but Sandbridge general manager
Cathy Ruizgonbert said, at the time, that no one from law
enforcement told them he'd been caught, and the amount of
money, she said, wasn't worth pursuing anyway.
"We would press charges depending on what
we would have to do. We're a small company; we don't have
the staff to chase after this. We won't hire a lawyer or go
out of state. Sometimes," said Ruizgonbert, "you
just say, 'I'm glad they're gone,' and you move forward."
Phillips used Harrison's identity to buy two
vehicles, worth approximately $85,000, from Ford dealerships.
Police recovered the vehicles, and Ford was able to sell them
and recover partial restitution. At the time, Ford Credit
spokeswoman Melinda Wilson didn't address the specific incident,
but she said that even though Ford had gotten tougher on identity
theft, prosecution is left up to prosecutors.
"We used to have an unwritten policy that
if we recovered the vehicle, we moved on and didn't prosecute,"
she said. But Ford has gotten very serious about fraud, Wilson
said, and if they know someone intended to defraud them, they
work to prosecute.
"It's an issue of cooperation with the
local prosecutors or district attorneys. Most will not pursue
charges if the dollar amount isn't high enough. It's not a
violent crime, and they have other more pressing crimes to
deal with," said Wilson.
Citigroup and American Express, which also lost
money in the Phillips case, said they, too, rely on the judgment
of law enforcement when it comes to prosecution.
Robert Rawls is an assistant U.S. attorney in
the eastern district of Texas where the Phillips case was
prosecuted. Rawls ended up with the case when Phillips was
arrested on a Harley-Davidson motorcycle he had "bought"
at a local dealership, which filed a police complaint when
it caught on to his scam.
Although Phillips entered a guilty plea to only
that one count involving the Harley-Davidson, other crimes
attributed to him were considered in determining his sentence.
While some companies may not follow through with prosecution,
complaints they have filed with various police jurisdictions
can be included.
"Obviously he committed a number of other
ID theft transactions across the country. All the losses nationwide
were included at sentencing, even though there's only one
charge in our district. That's not uncommon," says Rawls.
"He enters a guilty plea to that one count
and a pre-sentencing report is prepared that brings in similar
conduct he's done. There was an extensive investigation. Otherwise
he would have gotten a much lower sentence. If it were just
Harley-Davidson, it could have been just about a year.
"We prosecute almost every ID theft case
that comes in and the local district attorney's office pursues
a fair amount also. There is no dollar amount; it's more the
quality of the evidence. For a long time we had difficulty
getting records from credit card companies. It wasn't until
it had an impact where losses reached a certain percentage
level that they became a little more cooperative in an effort
to stem ID theft."
The U.S. Justice Department, which prosecutes
identity theft cases, provided two officials for this article
but requested that they not be identified. They say the dollar
amount of the loss could be a factor in determining whether
a case will be prosecuted, but it's only one of several things