Identity theft complaints still rising

Businesses, law-enforcement agencies and consumers may be beginning to turn the tide in the war against identity theft, data from the Federal Trade Commission suggest.

Identity-theft complaints were up again last year to nearly 256,000, the FTC said, but that was only 3.5 percent higher than the year before. In 2004, complaints rose by 15 percent and in 2003 by 33 percent.

Complaints about credit-card fraud — the largest subset of identity theft — declined 1.3 percent last year to 67,228, from 68,113 in 2004, and were also lower than the 2003 level. Total consumer-fraud complaints — including identity theft — totaled 686,683 last year, up slightly from 2004.

Industry officials and analysts say the development and widespread adoption of antifraud technologies are responsible for lower levels of card fraud. Visa USA Inc. said investments in its risk-management systems have reduced fraud levels to six cents for every $100 processed, down from 12 cents a decade ago.

Separately, the FTC is expected to announce Thursday tough action against a company at the center of the personal-data industry. ChoicePoint Inc. is expected to agree to pay a multimillion-dollar penalty to settle alleged data-security violations stemming from a yearlong investigation by federal regulators, according to a person briefed on the matter. ChoicePoint spokesman Chuck Jones declined to comment.

ChoicePoint, which sells consumer data to financial institutions and government agencies, last February disclosed that criminals posing as legitimate businessmen had fraudulently obtained personal information on 145,000 people. That figure was later revised to 162,000 people.

In order to prevent fraud, many companies have turned to real-time fraud-scoring systems, which — much like credit-scoring models — assign three-digit scores to credit applications based on a variety of data confirmations and behavioral examinations. Steven Gal, vice president for corporate development at ID Analytics, a San Diego company that provides fraud-detection services, says his company screened over 250 million applications last year for potential fraud, a fourfold increase from 2004.

The FTC figures offer a rare bit of hopeful news for consumers concerned that the recent string of security breaches at credit-card processors and banks will place them at risk, and for a financial industry continually under attack by computer fraud and other scams.

To be sure, identity theft remains a huge threat that costs businesses $50 billion a year and plunges victims into a draining, time-consuming battle to eradicate fraudulent activity. The FTC will release a survey this spring, but its most recent figures show that 10 million people, or roughly 4.6 percent of the adult population, are affected by identity theft each year, and that victims spend an average of $500 and 30 hours to clear their records.

The FTC report, based on data the agency receives from consumers, comes after a year of high-profile security lapses that exposed personal information belonging to more than 50 million consumers and familiarized many people with the crime of identity theft. Just Wednesday, financial-services provider Ameriprise Financial Inc. announced that the theft of one of its employees’ laptops had compromised the data of some 226,000 clients and workers.