Identity theft is the duplicitous acquisition of an unknowing person’s private information. Identity theft almost ever leads to identity fraud[1]. Identity theft is among the complex white-collar thefts that are experiencing a recent upsurge in their growth rate across the world. This increased rate of identity theft can be attributed to technological developments especially in IT, driven by the ubiquity of the internet and highly efficient computer databases (Brill & Allen, 2006). In this regard, this paper seeks to identify identity theft, current trends, and its impact on organizations.
Identity theft adversely affects companies as well as individuals (alive and dead). This crime has been around for ages, but has only recently gained popularity. In fact, its exponential growth and impact on millions worldwide has led to identity theft being billed as the ‘crime of the new millennium’. Identity theft dents a person’s finances, credit rating and goodwill. According Experian – a credit reference agency – it takes 467 days on average for a victim to realize that they have been victims of identity fraud (Experian Agency, 2010). Suffice it to say that it is almost impossible to catch the perpetrator involved in identity theft, and even prove innocence in case there are fraudulent acts involved.
A government report identified that the Internal Revenue Service (IRS) in 2014 paid out close to $5.8 billion in fraudulent refunds due to identity theft (King, 2015). Javelin Strategy and Research Company conducts an annual study into the state of identity fraud in the US. The most recent study from 2014 reveals very worrying trends in this crime. Around 13.1 million people were victims of identity theft in 2013, with a majority of these crimes being account takeovers[2]. A total of $18 billion was stolen in 2013; this represents a significant drop from the previous years’ figures and the all-time high of $48 billion recorded in 2004. Account takeovers are increasingly becoming common with 28% of reported cases being of this nature. In addition, there is a three times chance that fraudsters will use the stolen identities to make purchases. These purchases are often made on online e-commerce sites such as eBay and Amazon (Javelin Strategy , 2014).
Not all cases of identity theft result into identity fraud. Data breaches are more damaging now as opposed to a few years ago. Currently, a third of the people who are notified that their information has been compromised end up becoming victims of identity theft. It is important to note that there is rapid rise in non-card fraud. Credit card fraud has been very popular over the two decades. However, in 2013 non-card fraud accounted for $5 billion of the total amount that was pilfered through identity fraud. Non-card fraud involves the compromise of internet accounts such as PayPal and Skrill which are not tied to a credit card (Javelin Strategy , 2014).
What factors led to the popularity of identity theft in this tech-crazed generation? Researchers identified three attractions that have made identity theft such an appealing crime (King, 2015).
- Expected High Returns
- Mild sentences as opposed to other crimes[3].
- Advantage of anonymity which is fundamental to identity theft. Only about 1 of 700 fraudsters is ever caught (Javelin Strategy , 2014).
The internet is the main enabler of identity theft, in spite of the fact that the crime has been around longer than the internet. The internet has enabled the crime to transcend borders and to give it the ability to be run on a global scale. More and more businesses are opening up online stores in a bid to catch up with the current generation of consumers who are always online. Computer usernames, passwords, and other vital account access information are hacked on a daily basis. To simplify online purchases, companies rely on online one or two factor authentications – creating more opportunities for fraudsters to take advantage. Most individuals believe that a strong password will suffice to prevent online attacks. However, most breaches occur through the use of keyloggers[4] and phishing[5]. Both methods go unnoticed and they are often very hard to detect (Florêncio & Coskun, 2007).
There have been aggressive campaigns by the financial institutions against identity fraud. In fact, the amount lost to identity theft fraudsters in 2013 dropped by $3 billion as opposed to the previous year. Businesses are continuously coming up with ways to protect their users against identity them. As ever, however, the fraudsters seem to always innovate new ways of breaking through the security barriers that are set up. To effectively put an end to identity theft, individuals as well as organizations must learn to adjust their behavior and awareness of identity theft. Furthermore, more steps have to be taken to increase the online security of internet users and the databases that are held by all organizations. The ideology that identity theft cannot happen to certain people in the society has to be changed. Consumers have to put up safeguards especially when personal information is involved (Javelin Strategy , 2014).
To conclude, identity is a very common white-collar crime that involves the fraudulent acquisition of a victim’s personal information. Such information is often used in fraudulent activities such as requesting false tax return requests (King, 2015) and making online purchases without the knowledge of the victim. Studies have proven that identity fraud is often viewed as the preferred crime of this generation, and criminals made away with $18 billion in 2013 alone (Javelin Strategy , 2014). In spite of the efforts by the businesses to fight this crime, the fraudsters are continuously innovating new ways of getting involved in this crime. The best prevention method is for the consumers to learn how to protect themselves against identity theft.
Bibliography
Brill, A., & Allen, T. (2006). Identity Theft: How Companies – and Consumers – Can Protect Themselves. MMC Viewpoint.
Experian Agency. (2010). The Crime that Keeps on Stealing . Experian Credit Reference Agency.
Florêncio, D., & Coskun, B. (2007). Do strong web passwords accomplish anything. HotSec 7.
Javelin Strategy . (2014). 2014 Identity Fraud Study. Pleasanton: Greenwitch Associates.
King, R. (2015, February 20). CIO Journal. Retrieved March 4, 2015, from Wall Street Journal: http://blogs.wsj.com/cio/2015/02/20/irs-pays-5-8-billion-in-fraudulent-tax-refunds-amid-it-budget-cuts/
[1] Identity fraud occurs when the stolen identity is used to commit a fraud.
[2] An account takeover occurs when a fraudster gains total access to a victim’s email, bank, and credit card accounts and preventing access to the actual owners.
[3] Although the sentences vary according to country, it is rare for the accused to be sentenced to more than five years in prison due to involvement in identity theft.
[4] A keylogger is software that fraudulently records all the strokes typed using a keyboard on a PC.
[5] Phishing is an activity that tricks an account holder to share private account information by posing, often through a link, as the legitimate company.
