ID theft again tops list of FTC complaints

Bob Sullivan Technology correspondent • Profile • E-mail

For the sixth year in a row, identity theft tops the annual list of consumer complaints collected by Federal Trade Commission. The list is strikingly similar to last year, with online auction fraud, sweepstakes, and advance-fee loans also in the top 10.  But the number of consumers victimized via wire transfer has skyrocketed, tripling in the past two years, the FTC said.  And child ID theft cases have nearly doubled in that span.

In all, some 685,000 consumer complaints were filed with the agency last year, with victims reporting losses of $680 million.

While the number of complaints only edged up about 5 percent from last year, the dollar losses appear to be rising rapidly. In 2005, 49 consumers reported losing $1 million or more during 2005, the FTC said, compared with 42 in 2004.  Nearly 14,000 victims said they'd lost over $5,000 to a con artist, a steep jump from just over 11,000 in the previous year.

Average losses were $2,400 per victim; median losses were $350. In 2004, the average was $1,846 and the median was $263.

The data suggest that identity theft may lose its long-standing title as the fastest-growing white collar crime in America -- 2005 saw only a small increase in reported victims. Still, over 255,500 complaints were compiled by the FTC, a slight uptick from last year's 247,000.

Child ID theft up, auction fraud down
But there was a steady rise of child ID theft victims. In 2003, 6,512 ID theft reports were filed on behalf of victims under 18 years old. In 2004, the number jumped to 9,595. Last year, the number was 11,601.

This year's top 10 The Federal Trade Commission's 2005 report of most common crime complaints, ranked by percentage of total complaints.  Last year's percentage is in parenthesis. — 1. Identity theft 37% (39% in 2004) — 2. Internet Auctions 12%  (16%) — 3. Foreign Money Offers 8% (6%) — 4. Shop-at-Home/Catalog Sales 8% (8%) — 5. Prizes/Sweepstakes and Lotteries 7% (5%) — 6. Internet Services and Computer Complaints 5% (6%) — 7. Business Opportunities and Work-at-Home Plans 2%  (2%) — 8. Advance-Fee Loans and Credit Protection 2% (3%) — 9. Telephone Services 2% (2) — 10. Other 17% (12)

There were 430,000 non-identity theft crimes reported; about half of those involved the Internet.  At the top of that list is auction fraud complaints, but they've dropped sharply.

In 2004, auction fraud made up 16 percent of all complaints, or about 100,000 reports (an MSNBC.com estimate -- the FTC does not reveal the exact number in its report). In 2005, auction fraud complaints were only 12 percent of the total, or about 82,000 (also an estimate).

The steep jump in wire transfer payments to con artists is noteworthy. Generally, consumers have no protection -- no ability to get a refund, or to cancel the transaction -- when they wire money using a service like Western Union. Two years ago, only 6 percent of victims told the FTC they paid their con artist using wire transfers. In 2005, 15 percent did. Their total losses were $86 million.

Wire fraud a growing problem
That finding corroborates a similar finding in a study released last week by the National Fraud Information Center/Internet Fraud Watch.  The group, operated by the non-profit National Consumers League, said wire transfer complaints filed at its Web site tripled from 2003 to 2005. Nearly one-third of victims who reported crimes to the agency's Fraud.org Web site said they'd paid their con artist with wire transfers.

"For the first time since we began tracking Internet fraud, wire transfer was the No. 1 method of payment," said Susan Grant, NFIC/IFW director. "It's really alarming. The whole reason why scam artists try to convince people to wire money to them is because it's so hard to trace and track wire transfers."

Grant said the studies indicate government and private groups need to do a better job communicating the dangers of wire transfers.

"The most basic thing consumers need to know is there is no legitimate company or organization that would be asking you to send your payment in that manner," she said.  "If someone wants you to wire money to them, that should immediately set off all kinds of alarm bells. You know it's a scam then."

Victims told the FTC they'd lost $336 million on Internet-related scams last year, the study reveals.

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