Reports of identity theft from victims in Wisconsin fell 3.4% in 2007 compared to 2006 according to the Federal Trade Commission (FTC). Do these statistics mean that id theft is down in Wisconsin? Not necessarily, and it is not very likely.

Nationwide ID theft reports increased 5%. These statistics are based on victim reports made directly to the FTC and made by law enforcement and other agencies who forward the reports they receive to the FTC.

A 3.4% decline in reports represents approximately 85 fewer reports by Wisconsinites in 2007 compared to 2006. Statistically, 85 fewer reports are not significant. To draw a conclusion that ID theft has decreased in Wisconsin is a stretch. Overall, the number of identity theft reports made by Wisconsin victims is relatively small. The total number of victims reporting in Wisconsin in 2007 was only 2,450. However, the number of victims in the state could easily be more than 50 times that number.

It has been established that the majority of identity theft crimes go unreported. Identity theft involving credit or bank fraud may go unreported if the victim resolves the issue with their creditors. It's common for creditors to resolve the complaints, and to pass the costs of fraud onto consumers in the form of increased costs of services and increased rates. Creditors are not required to file incidences with the FTC, although proposed federal legislation may require it in the future because of concerns that ID theft is much more widespread than reported.

Financial forms of identity theft compose an estimated 50% of identity theft crimes. The non-financial forms of identity theft have been said to be rising. These forms of ID theft may go unnoticed by consumers. Some of these non-financial ID theft crimes include misuse of Social Security Numbers for illegal employment; use of personally identifiable information (PII) to obtain medical services, insurance and utilities; and the use of another person's identity in the commission of a crime. Even when the victim is aware of the misuse of their PII, they may not report the crime to the FTC or other agencies for any of a variety of reasons. For example, because of the widespread belief among consumers that identity theft is limited to credit or bank fraud, non-financial ID theft may go unreported because victims don't recognize those forms of identity misuse as ID theft. Some victims feel there will be some type of retribution if they report the crime. Others don't know that they should report the crime, and still others don't know who to report it to. Try to file a complaint with the FTC by phone or email, and you may find it frustrating and just give up. Since they don't resolve the issue for you, consumers may ask what the point of filing is.

Although the FTC only receives about 250,000 reports of identity theft annually, they estimate that the number of victims is 40 times higher or 10,000,000 victims annually. This is the estimated number of victims they have been using since 2002 when they commissioned an important consumer ID theft survey by research firm Synovate. Last year, an independent study by another research firm, Gartner, concluded that ID Theft had increased nationwide by 50% to 15,000,000 victims annually. A report by Deloitte Touché corroborated the Gartner finding. The new estimate suggests that the number of victims is 60 times higher than what is being reported to the FTC. These independent surveys establish a relationship between reports and actual victims. Wisconsin's 2,450 victim reports suggest the actual number of victims in Wisconsin last year to be between 100,000 and 150,000.

The significant question is why ID Theft in Wisconsin would decrease while nationally there is an increase in reports. Should we be patting ourselves on the back, or should we be concerned that consumers are not detecting and reporting ID theft. 

A few groups suggested the decline could be because of rising consumer awareness education in Wisconsin. However, consumer awareness education has increased nationally and so have reports of victimization. Although Wisconsin's consumer education is increasing, it may be that it is lagging the rest of the nation. If consumer awareness is waning, relative to the rest of the nation, reports could decline as a result.

Since the reports gathered by the FTC come from consumers, law enforcement and agencies, the decline may also suggest that law enforcement or other agencies have been remiss in their reporting to the FTC. We have heard numerous instances of law enforcement refusing to take victim reports, although mandated by state law. The failure of one jurisdiction to either take or to report victims could easily account for 100 or more victim reports.

A few consumer groups and a state official suggested the decline in reports may be a result of state consumer programs and credit freeze legislation. However, these programs are practically invisible to consumers. Credit freezes would only impact new account fraud, which is estimated as 25% of all reported ID theft. Because of the expense, complexity and consequences of imposing a credit freeze, it is doubtful that consumers would take such a draconian action as a preventative step. A credit freeze may be a good choice for a victim who had experienced an extreme case of id theft, but not for the average non-victim consumer. Credit freezes are not a recommended preventive measure.

It is more likely, that a real decrease in ID theft would be attributed to the increased subscription by consumers in the various credit monitoring programs and other ID theft services, such as fraud alerts, which have pervaded the airwaves over the last year. Such services are also offered as employee benefits by employers where employees can learn about ID theft and how to prevent it. The mere presence of such commercial advertising raises the awareness of ID theft and dwarfs the lack of publicity on state sponsored consumer programs.

Generally the financial services industry benefits from lower estimates, because decreasing reports of identity theft help to build consumer trust and confidence in banking and financial services, especially online services. However, even the Wisconsin Banking Industry was skeptical that the decreased reporting from Wisconsin added up to declining victimization. The Associated Press article reporting the decline said, "Kurt Bauer, the Wisconsin Banker Association's president and CEO, said the crime is underreported. He said the drop in complaints does not jibe with a poll the association conducted recently." Bauer was quoted as saying, "In December, our survey of bank CEOs suggested that there was an increase in all forms of financial crimes including those directed at bank customers during the last six months."

ID Theft reports down in Wisconsin. Consumers beware!

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