Just how common is ID theft?

The new study comes just days after the retail industry took a step to reel in some of the bad news surrounding identity theft. In an editorial published Monday in USA Today, Mallory Duncan of the National Retail Foundation wrote that "despite the hype, true identity theft cases are few and far between."

He reiterated that sentiment in an interview with MSNBC.com.

"There's actually not nearly as much identity theft as the headlines would lead you to believe," Duncan said. "The numbers that you're looking at are unfortunately misleading."

His argument: identity theft and credit card fraud are two different things. A fraudulent charge on a credit card is one thing, easily solved by a call to the issuing bank. Full-blown ID theft, where someone else takes out loans or buys cars in the victim's name, is another.

"If someone gets your credit card number, the worst they can do to you is try to charge something to that account," said Duncan. "That's not identity theft. That's something consumers can easily fix by calling the card company." 

Simple credit-card fraud, together with thefts from checking and savings accounts, represent two-thirds of the 10 million victims estimated by the FTC, he said.  "The true number of identity theft victims is nowhere near 10 million," he said.  Duncan said one study indicated there were as few as 160,000 ID theft victims per year, but that even if there are 3 million victims each year, "that's only about 1 percent of the population. That's few and far between."

How the government defines ID theft
Other kinds of frauds muddy the counting problem even further. There is existing account takeover -- such as someone draining a consumer's checking account. Then there's new account creation, such as a criminal opening a new credit card in someone else's name. Then there's identity creation, when a criminal uses a victim's Social Security number, but an entirely different name and other information. Victim consumers may never find out about the last one, making the real size of the identity problem hard to quantify.

Joanna Crane, who manages the Federal Trade Commission's identity theft group, said credit card-only fraud represented only about half of the 10 million annual victims estimated by group's study. The study estimated that 1.5 million had existing accounts like checking or savings accounts raided by criminals; 3.3 million had new credit cards and other new accounts opened in their names.

Duncan says that only the new account fraud cases represent true identity theft — because consumers who suffer credit card fraud or checking account theft can usually quickly recover with a call to their bank, and don't face the prospect of additional fraud by that same criminal later on.

But the FTC calls all of it identity theft because Congress said to, Crane said. The Identity Theft and Assumption Deterrence Act of 1998 included credit card fraud in its definition of the problem, Crane said. And what's more, the 5 million credit card-only fraud victims represented in the study indicated they lost an average of $140 because of the incident. Some of that was from lost wages due to time spent fixing the problem, and some because they didn't dispute the fraudulent charges on time. 

"The majority of people pay nothing ... but there are a number of credit-card only victims who spend time and money resolving the issue," Crane said. "The cost is not zero in all cases."

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