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FTC Issues Fraud and ID Theft Data for 2006

Unauthorized credit card charges were the leading contributor to more than $1.1 billion bilked in reported consumer fraud complaints last year, according to new figures released today by the Federal Trade Commission.

Shop-at-home/catalog sales and prizes and sweepstakes accounted for nearly 15 percent of all fraud-related complaints, followed closely by Internet services and online auctions. While the FTC's data tracks both online and offline fraud, the commission said some 60 percent of fraud complaints stemmed from transactions where the initial contact with the consumer was over e-mail (45 percent) and the Web (15 percent). (The PDF version of the FTC report is here.)

Credit-card fraud was the most common source of reported losses, followed by phone or utilities fraud (16 percent), bank fraud (16 percent) and employment fraud (14 percent). The latter category usually involved the unauthorized use of someone's Social Security number in order to secure employment.

Claudia Bourne Farrell, a spokesperson for the FTC, was herself a victim of employment fraud.

"I learned about it when the Internal Revenue Service asked why I wasn't declaring income and paying taxes on my job" at a Washington, D.C., restaurant, she said. Investigators later linked the identity thief to a local man using her Social Security number under the name Claudio Farrell.

While consumers are usually reimbursed by their bank for fraudulent credit- and debit-card charges, fraud that results from new accounts being opened in a victim's name -- from new cell phone and utility services ordered by the fraudsters -- represent a far more serious type of fraud, said Beth Givens, director of the San Diego-based Privacy Rights Clearinghouse.

"Usually, when a new account is opened in your name, the monthly statements go to a drop box or the criminal's address, and the victim doesn't generally find out about it until they go to open a new line of credit or orders a copy of their credit report," Givens said. "This is the most difficult type of fraud to erase from your file." A victim must do a great deal of work to expunge the fraudulent accounts from their credit files, she said.

The FTC warned that the percentage of fraud complaints where wire transfers were the reported payment method continued to increase last year. Most wire transfer losses are associated with Internet auction scams, where auctioneers simply take the money but never ship the promised merchandise. Twenty-three percent of the consumers reported fraud incidents where wire transfer was the payment method, an increase of eight percentage points from calendar year 2005, the FTC said.

California, Texas and Florida led the nation in the total number of identity and consumer fraud cases that were reported last year. Virginia and Maryland were sixth and eighth, respectively, in the rankings of consumer fraud complaints per 100,000 people by state. Maryland came it at No. 11 in the rankings of reported identity theft cases per 100,000 people, while Virginia came in at 15 in the same measure.

For Washington, D.C., the FTC said there were 1,904 complaints made by city residents last year about consumer fraud or identity theft. The Washington region in general ranked 110 in fraud complaints out of the top 400 metropolitan areas in the country.

Consumers in the 18-29 age set were the largest age group that reported losses from fraud. That finding closely mirrors other studies that have identified younger online users as those most likely to be defrauded or scammed.

The overall number of fraud complaints was down slightly from 2005, but the FTC noted that one major data contributor did not properly catalog many of its complaints, so comparisons with previous years are difficult.

The FTC and consumer advocates urge consumers to keep a close eye on their credit files for signs of fraudulent activity. Under federal law, consumers are entitled to a free copy of their credit report each year. Consumers can order their free credit report by visiting

By Editors  |  February 7, 2007; 5:11 PM ET
Categories:  Fraud  
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