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ID theft: a $1bn a year crime |
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By John Leyden
Posted: 28/03/2003
Identity theft, reportedly America's fastest risking crime, cost US lenders at least $1 billion last year.
That's according to an estimate by analysts TowerGroup, which published a report on the problem, titled Identify Theft: Lenders Are Victims, Too, earlier this week.
Precise figures on the exact loss due to identity theft are hard to pinpoint, but there is little doubt about the seriousness of the problem.
In 2002, 161,819 individuals in the US reported to the Federal Trade Commission
that their identity had been stolen - bringing the number of reported US
incidences of identity theft to nearly 300,000 since the launch of a database
clearinghouse in 2000.
TowerGroup believes stronger action by lenders is
needed in order to combat the problem. It points to a certain level of
complacency within the industry regarding the issue.
"Lenders have
always been willing to accept a certain amount of risk," said Christine Pratt, a
senior analyst in the TowerGroup Consumer Credit practice and author of the
research, "and fraud losses, if they're not actively rising, have been an area
of complacency. Periodically, though, it's critical that lenders revisit their
assumptions on the fraud issue - and given the current potential economic and
geopolitical impact on their bottom line, now is the time."
Lenders are
the most vulnerable to identity theft fraud at new account opening, where even
the most sophisticated forms of identification (biometrics for example) are of
no value.
Almost 10,000 victims had fraudulent home loans, totalling a
thumping, $300 million taken out in their name last year, while another 68,000
were the victims of credit card-related ID fraud, Pratt told MSNBC.
The best
way for lenders to put a dent in this type of loss is to prevent the stolen
identity from being used in the initial loan application process.
The
problem with this approach, according to TowerGroup, is that technology to
authenticate a person's identity at the point of sale is not mature and the loss
associated with identity theft "so random and unpredictable" that financial
services institutions (unless they have been involved in substantial losses of
this type) have been unable to justify the IT expenditures.
Source and more: The Register
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