Identity theft Summary

  • Last updated on November 10, 2022

The criminal act of identity theft costs Americans and American businesses millions of dollars per year in losses, legal fees, and investigations and fosters distrust between consumers and businesses.

Identity theft is the act of one individual stealing another’s personal information for the purposes of posing as that person. The most common method of identity theft is Credit cards;identity theftcredit card fraud, but there are many other variations. There is no official record of the first reported case of identity theft, but incidents can be identified throughout history. In 1863, for example, New York City fell into rioting because of the Union draft. Wealthier citizens who were drafted paid lower-class men to take their identities and report to the Union recruiting centers. The common price was $300 for individuals willing to assume a fraudulent identity for the purpose of being drafted. During those earlier times, victims of identity theft were simply inconvenienced by the need to replace their identification, but as the years progressed, the crimes expanded and the victims multiplied with every offense.Identity theft

In 1998, the Federal Trade CommissionFederal Trade Commission (FTC) was directed to create a repository of all data related to identity crimes. The repository would include the number of victims, cost to the victims, cost to the businesses involved, and length of time to remedy the problem. Within the first year, more than 1,000 crimes were reported, with that number increasing to 31,000 the next year. Each subsequent year, the number of reported crimes doubled from the previous year. By 2004, the number of reported crimes a year climbed to 650,000. The list of offenses had grown from just credit card fraud to include theft of telephone calls, bank accounts, government benefits, and loans, as well as employment-related fraud. Victims were reported from all age groups, including minors. Another survey performed by the FTC in 2006 through telephone interviews found that more than 8 million Americans living at the time had been the victims of some form of identity theft.


There are many costs resulting from identity theft; the greatest weighs on the consumer. The 2006 FTC survey reported that over 50 percent of all identity theft crimes from the previous year resulted in gains to the thieves of $1,000 or more. One-quarter of these crimes cost the victims at least $1,000 from their own pockets. In total, from 2001 to 2004, the FTC reported that victims paid out almost $4 billion. These victims also learned that money was not the only thing they lost as a result of these crimes. Some 60 percent of victims spent at least ten hours attempting to resolve the fallout after the incident, with more than half of that number spending forty hours or more.

Not included in the survey were lost wages, legal fees, and other monies directly related to the time spent resolving the problems created by the thefts. On the surface, once money has been repaid and the issue has been handled, everything can slowly go back to normal, but victims quite often continue to have various problems that plague them after the crime has been committed. The paramount complaint is from creditors, because after an identity theft, the victim becomes a greater risk for future attacks. Collection agencies can start to call for charges that the victim never made, banks can refuse to service victims through new loans or opening new accounts. The legal ramifications could be the worst problem of all. Law-enforcement agencies continue to investigate the incident and watch the victim in case they are struck again. The problems that arise after the crime has been resolved may persist for years and, in worst-case scenarios, until the end of the victims’ lives.

American businesses as a whole have also suffered greatly. Lost manpower hours hurt any organization, but to a small business, losing an employee for any amount of time can very difficult to work around. The FTC survey also reports that businesses were losing around $197 for every data record lost to identity theft. Businesses can also lose money for the same reasons that individuals do, if they are tied up in legal troubles, as well as developing an inability to trust their client base. Insurance companies spend millions of dollars a year on cases in which their clients have been victimized. The government also spends billions of dollars a year maintaining multiple task forces and organizations that assist in combating identity theft.

Law-Enforcement Efforts

The FTC gathers information on identity thefts. The Department of Justice, Central Intelligence Agency (CIA), Federal Bureau of Investigation (FBI), and Secret Service all get involved in tracking down criminals who commit identity theft. Several of these organizations travel the world, tracking down identity thieves and perpetrators of fraud against American citizens. The President’s Task Force on Identity Theft, formed May, 2006, is a cooperative organization that aids the other government agencies by sharing information between them all. The task force was designed to aid the law-enforcement community to track down and prosecute identity theft criminals. It also provides education services to governmental agencies and corporate businesses on how they can help individuals protect themselves against identity predators. As identity theft increases, the need for government response grows, as does the burden on taxpayers. Identity theft affects all citizens, whether they have been victims or not.

Further Reading
  • Abagnale, Frank W. Stealing Your Life: The Ultimate Identity Theft Prevention Plan. New York: Broadway Books, 2007. Practical advice on avoiding identity theft from a former master of identify theft.
  • Collins, Judith M. Investigating Identity Theft: A Guide for Businesses, Law Enforcement, and Victims. Hoboken, N.J.: John Wiley & Sons, 2006. Comprehensive survey of identity theft investigations with many case studies.
  • Cullen, Terri. The “Wall Street Journal” Complete Identity Theft Guidebook: How to Protect Yourself from the Most Pervasive Crime in America. New York: Three Rivers Press, 2007. Practical advice on methods to avoid having one’s identity stolen.
  • Hammond, Robert J. Identity Theft: How to Protect Your Most Valuable Asset. Franklin Lakes, N.J.: Career Press, 2003. General guide for laypersons focuses on identity theft prevention and awareness.
  • Hayward, Claudia L., ed. Identity Theft. New York: Novinka Books, 2004. Collection of articles on a variety of aspects of identity theft.
  • Sullivan, Bob. Your Evil Twin: Behind the Identity Theft Epidemic. New York: John Wiley & Sons, 2004. Comprehensive exploration of identity theft investigation, prevention, and education.


Credit card buying


Insurance industry


U.S. Department of Justice

Online marketing

Organized crime

Private security industry

U.S. Secret Service

Categories: History