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Home > Privacy and Business > Financial Privacy > Identity Fraud ("Identity Theft")

Identity Fraud ("Identity Theft")

Identity fraud (often called "identity theft") is a major concern in the Information Age. In the most common instance of identity fraud, criminals use information obtained wrongly to take out credit cards and charge goods in the names of others. This costs a great deal of money for credit card companies, who generally suffer the losses, and it causes heartache for the victims, who must struggle to prove that they did not make the purchases that have been attributed to them. Though commonly referred to as a "privacy" problem, identity fraud is more accurately a financial crime.

Many proposals to limit identity fraud cast the net very broadly indeed. Because information is the "instrument of crime" in identity fraud, some proposals would limit the use of information by law-abiding citizens and businesses just to get at the criminals. The sale of credit header information, for example, is often cited as a main cause of identity fraud, though direct evidence of this is scant. Outlawing the sale of credit header information has been proposed.

As the Federal Trade Commission reported in 1997, "convenient access to . . . information about individuals . . . confers myriad benefits on users of these services and on society." Identity information is an important part of a smooth-running, efficient economy, and of criminal and civil justice. Imposing broad limits on use of this information to get at identity fraud could impose larger costs society-wide than identity fraud imposes today.

Because they suffer enormous financial losses in cases of identity fraud, financial services companies are searching for ways of protecting themselves and their customers. They should be assisted by government in pursuing identity fraud as the crime that it is. They should resist the urge to view information with many lawful beneficial uses as an accessory to crime.


identity theft Web page,

Internet Fraud Complaint Center, Federal Bureau of Investigation and National White Collar Crime Center

Identity Fraud: Information on Prevalence, Cost, and Internet Impact is Limited, General Accounting Office (May 1998)

Individual Reference Services: A Report to Congress, Federal Trade Commission (December 1997)

Report to the Congress Concerning the Availability of Consumer Identifying Information and Financial Fraud, Board of Governors of the Federal Reserve System (March 1997)

Comments? (Subject: IdentityTheft)

[updated 04/21/02]

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