Is The Punishment For Identity Theft Harsh Enough?

One of the real problems with many of the types of crimes addressed on this website is that the punishment does not seem to be harsh enough from authorities.

By this, we mean that the punishment for credit card fraud and other forms of identity theft are almost certainly not severe enough to put others off trying their luck. One aspect that falls very clearly in favour of the criminal (if caught and if the case goes to court) is that to many it is a ‘victimless’ crime. Clearly, there are victims. But because most victims will recover the majority of their losses from banking and financial institutions, there is a perception that nobody was hurt.

As discussed elsewhere on this site, clearing up the damage to a reputation and financial position can take up to 2 years. That does not seem ‘victimless’ to us.

For the police, if the ‘value’ of the crime is small, there is often little incentive to chase the trail and try and make a conviction. The media will often round on local police officers that chase small and often petty crimes hard, when there are murderers out on the streets. Because of this, there is a real sense that small cases waste police time. If that is the situation, then clearly adequate punishment for credit card fraud is still a long way away.

Are You Worried About Your Personal Data?

In researching this subject for this site, your author has read that many areas of the United States have semi-official numbers in place to determine whether they investigate a financial crime or not. It seems that offences much below US$100,000 will be unlikely to receive much – if any – attention. There is no doubt that a sound economic reasoning and logic underpins this number. The value of police time, court time and the cost of sentencing and imprisonment make small crimes unworthy of attention.

However, should you have been on the receiving end of this, and now be ‘short’ (lets say) US$80,000, it would seem very serious. It may be that much of this money would eventually be returned by the credit card company, but it would still be a very stressful situation.

At this point, it might be worth pointing out that if the cost of a crime is reimbursed to a victim, then that cost will be passed on to all customers in some way. This might be in the form of higher charges, less ‘free’ benefits and gifts or higher insurance premiums, but somehow we will all pay. This seems just as unfair as the cost being met by one victim, but this is the way of the world.

In contrast to all these costs, the criminal – if caught and prosecuted – is often looking at light levels of punishment. Why? No actual physical harm was likely to have been caused to the victim. These crimes rarely involve an assault or attack. There will probably not be any damage to property either. In addition, it might be that a substantial amount of the crime cannot be proven to have been taken by this criminal. That means that while they might have obtained tens of thousands, they may have only been caught in the act with a few hundred or thousand. The courts can only convict and punish for what they see and know to be true.

Identity Theft Statistics Paint a Frightening Picture

When you are con­sid­er­ing whether or not to pur­chase an iden­tity theft pro­tec­tion plan, prob­a­bly the first bit of research you will do is check iden­tity theft sta­tis­tics. They give you an idea of just how vul­ner­a­ble you really are before you choose your cov­er­age. Some will tell you that you don’t need iden­tity theft pro­tec­tion but when you look at the sta­tis­tics, the facts tell you oth­er­wise. Agen­cies such as the Iden­tity Theft Resource Cen­ter (ITRC) based in San Diego, Cal­i­for­nia and Javelin Strat­egy & Research based in Pleasan­ton, Cal­i­for­nia con­duct stud­ies to col­lect these statistics.

Do the Sta­tis­tics Cre­ate the Need?

After exam­in­ing all of these alarm­ing sta­tis­tics, the ques­tion remains: Do you need iden­tity theft pro­tec­tion? You will have to admit that the num­bers are not small. Con­sider also that these days we con­duct a large por­tion of our finan­cial trans­ac­tions on the inter­net and most all of use ATMs. Can you really afford to be exploited by an iden­tity theft? How much expense are you will­ing to go through to fix the dam­age done? And, after it’s all fixed, what if it hap­pens again? Unless you’re an expert in iden­tity theft and fraud detec­tion, do you really know what to look for? As you exam­ine the sta­tis­tics that fol­low, keep these ques­tions at the fore­front of your mind.

Sta­tis­tics Related to Incidence

Accord­ing to a study done by Javelin in 2010, the instances of iden­tity theft were sum­ma­rized into a chart. It is no sur­prise that the high­est occur­rence of these crime inci­dents were related to mak­ing pur­chases either online or in per­son. Here is what they found.

In-person pur­chases – 42%

Online pur­chases – 42%

Mail/phone pur­chases – 21%ATM with­drawals – 10%

Writ­ing checks – 10%

Gift cards, pur­chase attempts, bill pay, obtain­ing a new credit card, obtain­ing health care, in-person cash with­drawal – less than 7%
As you can see, if you use a credit card either online or in-person, you are at more than a 4 in 10 chance of becom­ing an iden­tity theft vic­tim. Those odds are rather high. In 2007, the U.S. Depart­ment of Jus­tice esti­mated that 6.6% or 7.9 mil­lion house­holds had at least one mem­ber who was a vic­tim of this crime. While this sta­tis­tic makes the odds a lit­tle bet­ter, con­sider that com­pared to 2005, it was a 23% increase. The Depart­ment of Jus­tice also reported in 2007 that 30% of house­holds had at least $500 stolen from them due to an iden­tity theft inci­dent. Can you really afford to lose $500 or more?

Sta­tis­tics after the Crime

Just using your credit card online puts you at a 40% greater risk of being a vic­tim of iden­tity theft.

Sta­tis­tics after the crime are related to how long it takes for a per­son to real­ize he or she is a vic­tim. Credit mon­i­tor­ing ser­vices reduce the lull time between the crime and dis­cov­ery of it. Accord­ing to Javelin, a lit­tle under half (48%) of the total reported iden­tity theft inci­dents were dis­cov­ered by the vic­tims. This indi­cates that 4-5 out of 10 peo­ple are mon­i­tor­ing there credit files or state­ments and report­ing when some­thing looks out of place. Yet this fig­ure still indi­cates that the other half of the pop­u­la­tion is not mon­i­tor­ing their infor­ma­tion at all. Not mon­i­tor­ing could mean that it could take months to years to detect after sig­nif­i­cant dam­age has taken place.

The impor­tance of reg­u­lar mon­i­tor­ing of your credit file is crit­i­cal for timely action when the crime occurs.

What it all Costs

What is really dis­turb­ing as shown by iden­tity theft sta­tis­tics is the ris­ing costs to con­sumers for this type of crime. Javelin pub­lished a chart com­par­ing 2006 con­sumer mis­ap­pro­pri­ated funds to the same cat­e­gory for 2010. It is alarm­ing to find a total of $176,397 mis­ap­pro­pri­ated funds com­pared to the 2006 total of $75,000. It shows a 234% increase in what this crime costs to consumers.

Now that you know some of the stats, isn’t it time you got some pro­tec­tion?  To select a credit monitoring plan, read our review of the top 10 monitoring companies.