The author(s) shown below used Federal funds provided by the U.S. Department of Justice and prepared the following final report: Document Title: Identity Theft Literature Review Author(s): Graeme R. Newman, Megan M. McNally Document No.: 210459 Date Received: July 2005 Award Number: 2005-TO-008 This report has not been published by the U.S. Department of Justice. To provide better customer service, NCJRS has made this Federally- funded grant final report available electronically in addition to traditional paper copies. Opinions or points of view expressed are those of the author(s) and do not necessarily reflect the official position or policies of the U.S. Department of Justice. This document is a research report submitted to the U.S. Department of Justice. This report has not been published by the Department. Opinions or points of view expressed are those of the author(s) and do not necessarily reflect the official position or policies of the U.S. Department of Justice. IDENTITY THEFT LITERATURE REVIEW Prepared for presentation and discussion at the National Institute of Justice Focus Group Meeting to develop a research agenda to identify the most effective avenues of research that will impact on prevention, harm reduction and enforcement January 27-28, 2005 Graeme R. Newman School of Criminal Justice, University at Albany Megan M. McNally School of Criminal Justice, Rutgers University, Newark This project was supported by Contract #2005-TO-008 awarded by the National Institute of Justice, Office of Justice Programs, U.S. Department of Justice. Points of view in this document are those of the author and do not necessarily represent the official position or policies of the U.S. Department of Justice. i This document is a research report submitted to the U.S. Department of Justice. This report has not been published by the Department. Opinions or points of view expressed are those of the author(s) and do not necessarily reflect the official position or policies of the U.S. Department of Justice. CONTENTS EXECUTIVE SUMMARY .......................................................................................................... iv 1. INTRODUCTION ....................................................................................................................... 1 2. DEFINITION OF IDENTITY THEFT ........................................................................................ 1 3. TYPES OF IDENTITY THEFT................................................................................................... 3 Exploiting Weakness in Specific Technologies and Information Systems ........................ 4 Financial Scams ................................................................................................................. 4 As a motive for other crimes.............................................................................................. 4 Facilitating Other Crimes................................................................................................... 5 Avoiding Arrest.................................................................................................................. 5 Repeat Victimization: “Classic” Identity Theft.................................................................. 5 Organized Identity Theft.................................................................................................... 5 4. EXTENT AND PATTERNING OF IDENTITY THEFT............................................................ 7 Sources of Data and Measurement Issues .......................................................................... 7 Agency Data ........................................................................................................ 7 Research Studies................................................................................................ 11 Anecdotes .......................................................................................................... 13 The Extent of Identity Theft............................................................................................. 13 Distribution in the U.S. .................................................................................................... 19 Geographic patterns ........................................................................................... 19 Offense-specific patterns ................................................................................... 20 Victims ........................................................................................................................... 21 Victim demographics......................................................................................... 22 Children as victims ............................................................................................ 22 Deceased as victims ........................................................................................... 23 Institutional victims ........................................................................................... 24 The elderly as victims ........................................................................................ 25 Repeat victimization .......................................................................................... 25 Offenders.......................................................................................................................... 26 Offender typology.............................................................................................. 26 Organizations as offenders................................................................................. 27 Relationship between victims and offenders.................................................................... 27 5. THE COST OF IDENTITY THEFT .......................................................................................... 30 Financial costs: Businesses .............................................................................................. 31 Financial costs: The criminal justice system.................................................................... 32 Financial costs: Individuals.............................................................................................. 34 Personal costs (non-financial) .......................................................................................... 35 Societal costs.................................................................................................................... 37 6. EXPLAINING IDENTITY THEFT: THE ROLE OF OPPORTUNTIY ................................... 38 Identity and its Authentication as the Targets of Theft .................................................... 39 Identity as a “Hot Product” .............................................................................................. 40 Exploiting Opportunities: Techniques of Identity Theft .................................................. 43 How offenders steal identities............................................................................ 43 How offenders use stolen identities ................................................................... 46 Why Do They Do It?........................................................................................................ 46 Concealment ...................................................................................................... 46 Anticipated rewards ........................................................................................... 46 A note on motivation ......................................................................................... 46 NEWMAN AND McNALLY ii This document is a research report submitted to the U.S. Department of Justice. This report has not been published by the Department. Opinions or points of view expressed are those of the author(s) and do not necessarily reflect the official position or policies of the U.S. Department of Justice. CONTENTS (Continued) 7. THE LAW ENFORCEMENT RESPONSE TO IDENTITY THEFT........................................ 47 Reporting and Recording of Identity Theft ...................................................................... 47 Harm Reduction ............................................................................................................... 49 Effective police response ................................................................................................. 49 Task Forces and Cross Jurisdictional Issues .................................................................... 51 State efforts to address the cross-jurisdictional issues ....................................... 52 Federal efforts to address the cross-jurisdictional issues ................................... 53 Attorney General’s Council on White Collar Crime Subcommittee on Identity Theft ................................................................... 54 The Know Fraud initiative ............................................................................................... 54 The FTC’s Efforts ............................................................................................................ 54 Investigation and Prosecution .......................................................................................... 56 State investigation and prosecution.................................................................... 57 Federal investigation and prosecution................................................................ 60 Sentencing and Corrections ............................................................................................