"They are switching over to white-collar crime because it's more lucrative and they know they will get less time."

Identity Theft Complaints Double in '02
The number of identity theft complaints nearly doubled in 2002, continuing to make it the Federal Trade Commission's most widely reported consumer crime since the agency started issuing reports three years ago.

The F.T.C. said that in the last year it had received 162,000 reports of identity theft, compared with 86,000 a year ago. They make up 43 percent of complaints. Auction fraud, an almost nonexistent crime six years ago, ranked second with 13 percent of the total. Internet-related fraud, which includes auction fraud, generated slightly more than 100,000 complaints. The rise in identity theft complaints partly reflects greater consumer awareness about reporting and does not necessarily indicate an increase in the crime.

"It's not scientific," said Betsy Broder, the assistant director at the F.T.C.'s Bureau of Consumer Protection. Also, because the statistics are self-reported, some consumers may define identity theft broadly to include fraudulent credit card charges. The statistics are compiled from state and federal sources, including the Federal Bureau of Investigation and the Secret Service.

Nonetheless, the information is helpful for companies and law enforcement agencies in spotting certain geographic trends and clustering patterns of the crime. In about one out of four reported cases, information from stolen identifies was used to open new credit card accounts. Loan and bank fraud made up another 23 percent of all identity theft. Fraudulent new cellphone accounts made up about 10 percent of cases. The places with the most victims per capita were the District of Columbia, California, Arizona, Nevada and Texas.

The trade commission recommends certain measures for consumers, such as shredding financial documents and giving out Social Security numbers judiciously. But law enforcement officials say the most serious identity theft is driven by insiders who have privileged access to the personal information — full name, date of birth and Social Security numbers — necessary to assume someone's identity.

Employees of financial institutions, insurance companies, medical offices and even health clubs have been among those charged with identity fraud. For example, in November, authorities said they broke up a three-man identity theft ring in New York City that had victimized more than 30,000 people. One of the suspects worked at a software company and could call up credit reports.

In December, computer equipment containing the personal information of about 562,000 people was stolen from the Phoenix office of TriWest, a Pentagon contractor that handles medical claims for the military. Pentagon officials say that no one has become a victim of identity theft, but those involved have been advised to alert the credit rating agencies: Equifax, Experian and TransUnion.

Former violent criminals are also using the Internet for identity theft, officers say.

"They are switching over to white-collar crime because it's more lucrative and they know they will get less time," said Lt. Tim Lee of the Michigan State Police. "Identity theft is not necessarily a sophisticated crime."

As credit and banking applications continue to move onto the Internet, fraud is becoming easier. For example, law enforcement agencies say they see rings of criminals using online mortgage applications to apply for fraudulent loans. The checks and paperwork are sent directly to lawyers' offices, leaving less of a trail for investigators to follow.
http://www.nytimes.com/2003/01/23/politics/23THEF.html