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The financial damage caused by online identity theft is not only mounting, it’s exploding at a growth rate of about 300 percent a year, according to Aberdeen Group, a Boston-based industry analyst firm.
Financial loss from identity theft is expected to reach $73.8 billion in the United States by the end of this year — $221.2 billion worldwide, reports Aberdeen analysts in a study released this week. The current trajectory — based on a 300 percent compound annual growth rate — has the figures reaching $2 trillion by the end of 2005.
”Financial loss rates from identity theft have traditionally being downplayed as a cost of doing business,” says Jim Hurley, vice president of security and privacy at Aberdeen Group. ”However, the mushrooming loss rates indicate that identity theft in all of its forms is on track for $2 trillion in financial losses by the end of 2005. No longer constrained to petty thieves and garage operations, identity theft is quickly becoming organized and financially lethal. Identity theft can no longer be swept under the rug.”
Identity theft is defined as a crime in which key pieces of data, which are used to identify someone, are stolen. Targeted data usually includes social security numbers, drivers license numbers, and health and welfare identifiers. The thief uses the information to obtain credit, merchandise, and services in the guise of the person whose information he has stolen.
And Aberdeen analysts say it’s a profitable crime.
It currently pays an average of $9,800 per incident, according to the Aberdeen report.
Last year, there were 161,819 cases of identity theft reported to the U.S. Federal Trade Commission (FTC). The FTC also reported that identity fraud complaints were the most common type of fraud complaint reported by American consumers in 2002, accounting for 43 percent of all FTC complaints. Nationwide, identity theft reports nearly doubled last year, totaling more than 160,00 with losses of more than $343 million.
That brought the total number of reported U.S. cases of identity fraud to nearly 300,000 since the launch of a database clearinghouse in 2000, according to the TowerGroup, a research firm focused on the global financial industry.
