The New York Times flips out over "identity theft."

Media criticism.
May 30 2006 7:12 PM

The Times Hypes ID Theft

Even the Associated Press knows better.

Credit cards. Click image to expand.

We're losing the war on identity theft, implies the panicky above-the-fold headline on Page One of today's (May 30) New York Times: "Technology and Easy Credit Give Identity Thieves an Edge."

The horror builds as we learn that some of the crooks—ripped on that scariest of scary drugs, methamphetamine—have "outpaced" law enforcement's "efforts to stop them" in the Phoenix area. Those dastardly tweakers now use the Web to data-mine court documents for the sensitive financial information found on divorce documents: bank account numbers; addresses; and scans of signatures. Just before the story jumps inside, we learn of a 2003 federal government survey finding that the economy took a $48 billion hit the previous year from identity fraud, and that 1 in 30 Americans had their identities stolen.

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The article cools off after the jump, as "officials and consumer advocates" describe identity-theft as a byproduct of easy credit. Identity thieves rob banks because that's where the money is—and because the banks leave the vaults open. But try as it may, the piece never translates the criminal inventiveness in Arizona into anything close to a technological "edge" enjoyed by ID thieves over law enforcement. By one important measure, cited in the article, the banks are actually winning the identity-theft war. Visa tells the Times it's "reduced loss from fraud as a percentage of overall transaction volume" from 18 cents per $100 in transactions in 1990 to today's 7 cents per $100.

The idea of rampant ID theft grows out of the government's 2003 estimate of a $48 billion loss to the economy from identity theft, which the Times cites before the jump. But how good are those numbers? I wouldn't take them to the bank.

A Federal Trade Commission telephone survey asked 4,057 U.S. adults about their personal experiences with identity theft.Just 1.5 percent of them claimed that they had suffered the kind of classic kind of identity theft most of us worry about—that is, somebody abducts your personal information to open a unauthorized new credit account, take out a new loan, or engages "in other types of fraud, such as misuse of the victim's name and identifying information when someone is charged with a crime, when renting an apartment, or when obtaining medical care."

When the surveyors expanded the definition of ID theft to include "misuse of one or more" existing credit cards, another 2.4 percent of survey participants responded in the affirmative. When misuse of noncredit accounts was folded in (checking, savings, or telephone accounts), another 0.7 percent were tallied. In all, 4.6 percent of survey participants claimed some sort of ID theft in the previous year, or about 10 million.

While I'm prepared to accept the survey's census of 10 million, I doubt the $48 billion worth of economic damages. Survey question No. 29 allows the participants to estimate the "approximate total dollar value of what the person obtained while misusing" the ID information.  Is the victim the best-informed source about how much financial institutions and business lost when his identity was stolen—or is he just the easiest to find? I'm also troubled by the fact that the survey report doesn't explain how these numbers volunteered by victims produce the $48 billion estimate.

Additional reasons to distrust the survey's results appear on Page 9 of the FTC report. Only 25 percent of all victims reported the ID theft crime to local police, and only 43 percent of the victims of ID theft "classic" did so. Why not? Could it be because many of the thieves are friends or family members, a notion supported by pages 28 and 29?

None of this is to suggest that identity theft isn't real. It is. Nor do I mean to imply that the Times is fantasizing about tech-savvy meth-heads surfing the Web for financial information. But the paper hypes the prevalence of ID theft completely out of proportion. I'm not the only one who thinks so. As I finished this column, I discovered via Nexis a sober and skeptical Associated Press story from 2005  by reporter Brian Bergstein.

Bergstein ri ngs all the right bells, finding that "identity theft is too broadly defined and often misunderstood"; kicks holes in the FTC report; and points to a 2005 study in which half of the "victims" who figured out who ripped them off blamed relatives, friends, neighbors, or in-home employees for the theft of their ID. *

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