By this time in 2007 it should be clear to just about everyone that identity theft is a real and growing problem throughout the world, but especially here in the United States where there is so much affluence (and of course available credit). The Federal Trade Commission reports that for the 5th year in a row identity theft topped the list of consumer complaints. In this article we will explore what identity theft is, how it is most commonly perpetrated, and how big of a threat it really is to the average consumer.

Credit Card Fraud versus Identity Theft

When someone illegally obtains your credit card information and uses it then that is credit card fraud. It is not identity theft in the purest sense but when the government estimates the number of identity theft victims and the financial impact of identity theft it generally includes this number. The term most commonly used now is Identity Fraud which broadens the scope to include credit card fraud. In 2006 the total estimated cost of identity fraud was $56.6 billion, up from $54.4 billion in 2005.

Credit card fraud accounts for approximately 26% of identity theft. The balance of identity theft is comprised mostly of new account identity theft, where your personal information is compromised to the point where the thief is able to establish new accounts (bank, credit card, utilities) in your name. This type of theft can have a devastating effect on an individual’s life and can take years and thousands of dollars to clean up and restore your good name. Some individuals never recover from this type of identity theft.

Identity Theft Thieves

Most people think of identity theft thieves as individuals or small groups working together, digging through trash or stealing mail. While these are legitimate methods used by thieves, there is also a much broader identity theft market that get little media attention. And that is from computer data breaches. The amount of personal information compromised from computer breaches in this country over the last two years is staggering.

In 2005 there were 151 major data breaches potentially compromising the personal information of 57.7 million individuals. In 2006 there were 327 data breaches totalling 48.8 million records. That’s over 100 million records of various types of personal information floating around. As a result an entire black market industry has developed for these stolen records.

This worldwide criminal identity theft marketplace is mature and is very structured. The players come from all over the world, but most of the Web sites where they meet are run from computer servers offshore or overseas, with many in the former Soviet Union, making them difficult to police. Credit cards, bank account numbers, Social Security numbers, and other personal data are commonly traded and sold in huge numbers. There are buyers and sellers, intermediaries, service industries, and even tutorials.

The Next Big Threat?

And the assault is continuing. Gary Miliefsky, a founding member of the U.S. Department of Homeland Security and chief technology officer of network security firm NetClarity, stated that Malware (an umbrella term used to a variety of hostile in intrusive program codes) attacks on personal computers are increasing at an unprecedented rate by organized criminals.

“Malware writers are attacking your computer like they never have before,” says Miliefsky. “Plain viruses are declining, and new attacks are taking advantage of a hole in an operating system or browser to plant Trojan viruses. As the business of online identity theft has continued to grow: malware is now an $8 billion industry, according to the FBI.

Preventing Identity Theft

Currently the average consumer has a 1 in 7 chance of becoming an identity theft victim. Identity theft thieves are attacking us on multiple fronts in their unrelenting quest for our personal information. Our trash cans are being rifled through, our mail is being taken, corporate computers are being hacked and now even our own personal computers are under attack.

The task of insuring the safety of our personal information should not be taken lightly. A method of tracking and monitoring your credit is crucial to insure that no one can create a personal financial and credit disaster through identity theft.