The FTC says identity theft retains its throne as No.1 consumer scourge

The Federal Trade Commission’s annual look at its Consumer Sentinel Network database of complaints found that 2012 was the first year the agency got more than 2 million complaints overall.

And, has been true for the past 13 years, Identity theft was the top consumer complaint the commission received.

Eighteen percent or 369,132 of 2012′s complaints were related to identity theft. Of those, more than 43% related to tax- or wage-related fraud, the agency stated.

A closer look at the identity theft trend finds:

Government documents/benefits fraud (46%) was the most common form of reported identity theft, followed by credit card fraud (13%), phone or utilities fraud (10%), and bank fraud (6%). Other significant categories of identity theft reported by victims were employment-related fraud (5%) and loan fraud (2%).

Complaints about government documents/benefits fraud increased 27 percentage points since calendar year 2010; tax or wage-related fraud accounted for the growth in this area, with 43.4% of identity theft victims reporting this problem in 2012. Employment-related fraud complaints, in contrast, have declined 6 percentage points since calendar year 2010.

Forty-two percent of identity theft complainants reported whether they contacted law enforcement. Of those victims, 68% notified a police department.

Fifty-four percent of these indicated a report was taken.

Florida is the state with the highest per capita rate of reported identity theft complaints, followed by Georgia and California.

Rounding out the Top 10 most complained about activities are:

-Debt collection 199,721 10%
-Banks and lenders 132,340 6%
-Shop-at-home and catalog sales 115,184 6%
-Prizes, sweepstakes and lotteries 98,479 5%
-Impostor scams 82,896 4%
-Internet services 81,438 4%
-Auto-related complaints 78,062 4%
-Telephone and mobile services 76,783 4%
-Credit cards 51,550 3%

Steps taken

The Internal Revenue Service recently said it had taken a big shot at the identity theft problem completing what it called a massive national sweep targeting 389 suspects in 32 states and Puerto Rico. The IRS Criminal Investigation unit cited the total number of identity theft investigations to more than 1,460 since the start of the federal 2012 fiscal year on Oct. 1, 2011.

In addition to the criminal actions, IRS auditors and criminal investigators conducted a special compliance effort starting on Jan. 28 to visit 197 money service businesses to help make sure these businesses are not assisting identity theft or refund fraud when they cash checks. The compliance visits occurred in 17 cities the IRS labels “high-risk” such as New York, Philadelphia, Atlanta, Tampa, Miami, Chicago, Houston, Phoenix, Los Angeles, San Diego, El Paso, Tucson, Birmingham, Detroit, San Francisco, Oakland and San Jose.

The identity theft push over the last several weeks reflects a wider effort under way at the IRS. Among the highlights:

-The number of IRS criminal investigations into identity theft issues more than tripled in fiscal year 2012. The IRS started 276 investigations in fiscal year 2011, a number that jumped to 898 in fiscal year 2012. So far in fiscal year 2013, there have been more than 560 criminal identity theft investigations opened.

-Total enforcement actions continue to rapidly increase against identity thieves. This category covers actions ranging from indictments and arrests to search warrants. In fiscal year 2012, enforcement actions totaled 2,400 against 1,310 suspects. After just four months in fiscal 2013, enforcement actions totaled 1,703 against 907 suspects.

-Sentencing of convicted identity thieves continue to increase. There were 80 sentencing in fiscal year 2011, which increased to 223 in fiscal year 2012.

-Jail time is increasing for identity thieves. The average sentence in fiscal year 2012 was four years or 48 months—a four-month increase from the average in fiscal year 2011. So far this fiscal year, sentences have ranged from four to 300 months.

-By late 2012, the IRS assigned more than 3,000 IRS employees—over double from 2011—to work on identity theft-related issues and the IRS has trained 35,000 employees who work with taxpayers to recognize identity theft indicators and help people victimized by identity theft.

Read More