Federal Trade Commission: Identity Theft Costs Billions

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More than 27 million people have been victims of identity theft in the last five years, costing them $5 billion and businesses and financial institutions almost $48 billion, the Federal Trade Commission (search) said Wednesday.

The FTC released a survey showing that in the last year alone, 9.9 million people were victims of identity theft.

"For several years we have been seeing anecdotal evidence that identity theft is a significant problem that is on the rise," said Howard Beales, director of consumer protection for the FTC. "Now we know. It is affecting millions of consumers and costing billions of dollars."

The figures were extrapolated from a random survey of 4,057 adults, the agency said.

Identity theft (search) occurs when someone gets identifying information on another -- credit card numbers and checking account information, for example -- and uses it to make purchases or otherwise pretend to be someone else.

In 2002, the FTC received 161,819 complaints about identity theft -- double the year before -- but agency officials acknowledge many people don't report the crime.

Indeed, the Justice Department (search) estimated that as many as 700,000 Americans are victimized annually, costing each more than $1,000 to right the damage to their accounts and reputations.

Credit card fraud was the most common form of identity theft last year, accounting for 42 percent of the complaints to the FTC. Second at 22 percent was phone or utility fraud, followed by bank fraud at 17 percent.

Privacy advocates advise consumers to protect themselves from identity theft by checking their credit reports twice a year, shredding personal documents before throwing them away and cleansing wallets of old receipts and printed Social Security (search) numbers.

In 2001, the FTC introduced a Web site and toll-free phone number for identity theft victims.