Computer technology underlies the top three categories of consumer fraud complaints lodged with the U.S. Federal Trade Commission in 2002, including the number one complaint: identity theft.
Forty-three percent of the 380,000 fraud complaints to the FTC in 2002 involved identity theft, including the theft of business employee databases, while 13 percent were about Internet auctions and 6 percent were about Internet services or computers, the agency said Wednesday. No other category of complaint topped 5 percent.
By comparison, 4 percent of the complaints were about sweepstakes and lotteries, and 2 percent were about health care.
Joanna Crane, manager of the FTC’s Identity Theft Program, said the theft of business records is a growing problem, which often involves hacking computer networks and stealing data on computer disks. “It’s much easier for them to bring that home with them on a disk than on reams of paper,” she said.
Other ways in which identity thieves use technology include the creation of false documents — such as photo identification cards and forged checks — using computers or the purchase of merchandise online with stolen credit cards, because signatures aren’t required and no video cameras record the transaction.
“(The Internet) has facilitated the job of being an identity thief,” Crane said. “It has just enabled thieves to do a better job of impersonating people, and doing it anonymously.”
In the FTC’s publication, “When Bad Things Happen to Your Good Name,” the agency identifies personal computers as a conduit for identity theft. The publication recommends people take several steps to protect themselves from computer-aided identity theft, including using firewalls and virus protection software, avoiding downloads from strangers, and keeping personal information off laptops.
The FTC fielded 220,000 fraud complaints in 2001, and the dollar loss consumers assigned to the fraud they reported grew from US$160 million in 2001 to $343 million in 2002.
In 2001, identity theft accounted for 42 percent of the complaints to the FTC, while Internet auctions accounted for 10 percent, making for a slight percentage increase in 2002. Internet services or computers accounted for 7 percent of the complaints in 2001, compared to 6 percent in 2002. Crane noted that while the percentages didn’t change much, the total number of Internet-related complaints did rise significantly.
The FTC is the main consumer protection agency for the U.S. government.
A total of 102,517 Internet-related fraud complaints were reported to the FTC in 2002, at a cost to consumers of over US$122 million. Fourteen consumers reported a loss each of $1 million or more.
Fifty percent of complaints classified as Internet-related were about online auctions. Another 13 percent were about online retail sales, and 11 percent were about Internet access services.
J. Howard Beales III, director of the FTC’s Bureau of Consumer Protection, attributed the increase in total complaints in 2002 to the FTC’s outreach efforts letting more people know where to report fraud and to more partners signing on to the FTC’s Consumer Sentinel fraud-reporting database. About 40 percent of the complaints in the database come from partners such as the U.S. Social Security Administration’s Office of Inspector General and the Internet Fraud Complaint Center.