NATIONAL IDENTITY SECURITY STRATEGY Identity crime and misuse in Australia Key findings from the National Identity Crime and Misuse Measurement Framework Pilot IDENTITY SECURITY ISBN: 978-1-925118-34-6 © Commonwealth of Australia 2014 All material presented in this publication is provided under a Creative Commons Attribution 3.0 Australia licence (www.creativecommons.org/licenses). For the avoidance of doubt, this means this licence only applies to material as set out in this document. The details of the relevant licence conditions are available on the Creative Commons website as is the full legal code for the CC BY 3.0 AU licence (www.creativecommons.org/licenses). Use of the Coat of Arms The terms under which the Coat of Arms can be used are detailed on the It’s an Honour website (www.itsanhonour.gov.au). Contact us Enquiries regarding the licence and any use of this document are welcome at: Business Law Branch Attorney-General’s Department 3–5 National Cct BARTON ACT 2600 Telephone: 02 6141 6666 [email protected] Contents Foreword 3 Executive summary 4 One of Australia’s most prevalent crimes 4 Acquiring a fraudulent identity 5 Identity crimes and the criminal justice system 5 Impacts on victims 6 Prevention activities 8 The economic impacts of identity crime 8 Data quality and availability 9 The way forward 10 Background 11 Methodology 13 Australia’s national identity infrastructure 14 Definition of key terms 15 Identity Crime Conceptual Model 16 Measurement Framework indicators 18 1. Acquisition of fraudulent identities 18 2. Use of fraudulent identities 18 3. Consequences of identity crime 18 4. Remediation of identity crime 19 5. Prevention of identity crime 19 KEY FINDINGS FROM THE NATIONAL IDENTITY CRIME AND MISUSE MEASUREMENT FRAMEWORK PILOT 1 Key findings 20 1. Acquisition of fraudulent identities 20 2. Use of fraudulent identities 27 3. Consequences of identity crime 48 4. Remediation of identity crime 56 5. Prevention of identity crime 60 Estimating the economic impact of identity crime to Australia 66 Conclusion 69 Identity crime in depth: a case study 70 References 71 Appendix A—Summary of key findings 77 Appendix B—Measurement framework pilot indicators 80 Appendix C—Government agencies involved in pilot 83 Appendix D—Definition of key terms 85 Appendix E—Calculating the direct losses caused by identity crime 87 2 IDENTITY CRIME AND MISUSE IN AUSTRALIA Foreword It is almost ten years since Australian governments recognised that tackling identity crime should be a national priority, with the agreement in 2005 to develop a National Identity Security Strategy. In 2007, this was formalised in an Intergovernmental Agreement to a National Identity Security Strategy, which provides a roadmap for collaboration between the Australian Government and states and territories to strengthen Australia’s ‘identity infrastructure’. Since that time, Australians have seen more and more of their everyday interactions with government, business and each other move from face-to-face to online channels. Australians have the right to remain anonymous in a wide range of situations. But it is becoming increasingly important that people can have confidence in the identities of the people with whom they are conducting sensitive or high value transactions; and that their own identities can be protected when transacting online. Growth in the Australian digital economy creates real efficiencies for government and businesses and fosters greater opportunities for improving the wellbeing of all Australians. Unfortunately, it also creates new ways for criminals to defraud governments, businesses and individuals, assisted by the criminal misuse of an individual’s identity. Identity crime is one of the most prevalent criminal activities in Australia, affecting hundreds of thousands of Australians every year. Criminals can generate significant profits by stealing personal identity information, then manufacturing or selling fraudulent identity credentials to defraud businesses, individuals and financial institutions. Criminals also use these illicit identities to access government benefits and services to which they are not entitled. Identity crime also lies at the heart of some of the most heinous criminal activity in facilitating terrorism, human trafficking and many other serious offences, where a criminal needs to disguise their true identity. Taking all these impacts into account, this report estimates the economic impact of identity crime to Australia is likely to exceed $1.6 billion dollars every year. The development of new and innovative approaches to identity security should be informed by a comprehensive and reliable evidence base on identity crime. With this in mind, this report represents one of the first attempts by any government worldwide to develop an identity crime measurement framework at the national level. KEY FINDINGS FROM THE NATIONAL IDENTITY CRIME AND MISUSE MEASUREMENT FRAMEWORK PILOT 3 Executive summary Efforts to combat identity crime require a reliable evidence base that quantifies the complete nature and extent of the problem. In Australia and also internationally, there are limited sources of comprehensive, reliable data about identity crime and its consequences. To address this gap in knowledge, the Council of Australian Governments (COAG) agreed in 2012 that work should be undertaken to develop a national measurement framework for identity crime to better inform efforts to implement the National Identity Security Strategy (NISS). This report presents the key findings from a pilot data collection exercise that was undertaken as part of the project established to develop this measurement framework. One of Australia’s most prevalent crimes Key finding: Each year around 4 to 5% of Australians (around Each year around 4–5 per 750,000 to 937,000 people) experience identity crime resulting cent of Australians in a financial loss. However, the true extent of identity crime is experience identity crime likely to be unknown, as a considerable proportion of incidents resulting in a financial loss. go unreported. The Australian Institute of Criminology conducted a 5,000-person online community survey (the AIC Survey) in 2013 as part of this pilot. They found that 9.4 percent of respondents reported having their personal information stolen or misused in the previous 12 months, with five percent reporting that they suffered financial losses as a result (Smith & Hutchings 2014). Identity crime is likely under-reported by both individual victims and Identity crime is one organisations. For example, recent research has shown that only of the most prevalent 50 percent of credit card fraud victims and 66 percent of identity theft crime types affecting victims reported the incident to a formal institution, such as law Australians each year. enforcement or a financial institution (ABS 2012). Key finding: Compared with other personal and theft-related crimes (i.e. assault, robbery, break-ins and motor vehicle theft), identity crime is one of the most prevalent crime types affecting Australians each year. When compared with the results from similar self-report victimisation surveys on other personal and theft-related crimes, At least one data breach it can be seen that identity crime is one of the most prevalent occurs every week in offence types in Australia (i.e. four percent of the population or Australia, with an average around 750,000 people) (ABS 2012). For example, survey data of 19,000 records lost from the ABS show that in 2012–13 an estimated three percent of Australians aged 15 years and over (498,000 people) were victims or stolen per incident, of assault, 2.7 percent of households (239,700 households) were costing $138 per record victims of at least one break-in, 0.4 percent of people (65,700 and a total of $2.16m to the people) were victims of robbery, and 0.6 percent of households had their motor vehicle stolen (57,200 incidents) (ABS 2014a). organisation involved. 4 IDENTITY CRIME AND MISUSE IN AUSTRALIA EXECUTIVE summary Acquiring a fraudulent identity Key finding: The price of fraudulent identity credentials suggests they are relatively cheap and easy to obtain. This is reflected in the variety of ways that these credentials are used to commit identity fraud. Information on data breaches (many of which go unreported) also suggests that the personal information needed to create fraudulent identity documents is also available to those willing to seek it out. In the main, criminals will use one of two approaches to obtaining a fraudulent identity: either creating a fictitious identity; or stealing all, or parts of, personal information from another person (living or deceased). To get the personal information required to establish a fraudulent identity, some criminals will illegally access databases held by government agencies or private sector organisations and steal personal information, or obtain this information through traditional means such as stealing it from mailboxes. In other cases, personal information will be accidentally made publicly available. Research into data breaches shows that there is an average of one every week in Australia, with around 19,000 records lost or stolen per incident, at an average cost of $138 per record, costing the agency or organisation involved an average of $2.16m per incident (Ponemon Institute 2012). Another approach is to purchase a fraudulent identity credential, such as a driver licence or Medicare card, on the ‘black market’. Information provided by the Australian Federal Police indicated that the price of fraudulent identity credentials ranges from around $80 (Medicare cards), to around $350 (driver licences), and $1,500 (for an Australian passport to be altered by a professional document forger) up to $20,000-$30,000 (for a legitimately issued passport with fraudulent details). Although some fraudulent credentials are relatively cheap to acquire, the ability to use them to facilitate criminal activity largely depends The price of fraudulent identity on their quality and the intrinsic security features (i.e. counterfeited documents compared to credentials ranges from around $80 legitimately-issued documents with fraudulent details).