The costs of ID theft
By Sheyna Steiner • Bankrate.com

From one-time credit card fraud incidents to sophisticated organized crime syndicates, identity theft's reach is expansive. It's far from a victimless crime: Consumers, businesses, government and law enforcement all suffer.

The steep price of ID theft

• What is it? • Who does it and how? • How much it costs ... consumers • How much it costs ... businesses • How it affects law enforcement

According to an annual survey released in February by Javelin Strategy and Research, the incidence of identity fraud has steadily declined over the past three years in most parts of the country. But the scope of the problem still scrapes the stratosphere. "The total cost (in 2007) was $45 billion," says James Van Dyke, president and founder of Javelin. That's down from $51 billion the previous year. "It's a huge crime, the number of victims is 8.1 million," he adds.

Many studies have sought to put a dollar figure on identity fraud costs to consumers and business. Unfortunately, part of the price remains hidden. Criminals can piece together an identity from bits of valid information or make up a new identity from scratch in a scheme known as synthetic identity theft. Since individual consumers are not victims, this form of ID theft can be difficult to detect, says Avivah Litan, vice president and analyst at Gartner, a technology and research advisory company.

"There are no numbers that you can rely on for big-picture synthetic identity theft," she says. "That would have to come from the bank or the business -- anyone that issues new accounts to fake IDs, and they would have to classify it. And those companies aren't disclosing it either.

"Some of them don't know about it. If they're not looking for it, they just think that they made a bad loan or something."

With a big portion of the crime unknown and unmeasured, determining just how much the economy and society suffer as a whole remains difficult to gauge. But this much we know: It's a lot.

What is identity theft?
Because co-opting someone's identity can lead to numerous types of crimes, identity theft is a difficult crime to define and measure. According to the Federal Trade Commission, identity theft occurs when someone uses your personal identifying information to commit fraud or other crimes. Personal identifying information can include your name, Social Security number or a credit card number.