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Identity Theft: How to Build a Hype

How to build a hype:

1. Read a Bureau of Justice Statistics Report, which finds that:

  • 6.7% of U.S. adults were on the receiving end of “identity theft” last year, but
  • this definition includes “attempted misuse” that was unsuccessful, and
  • the most common way adults found out about such activity was to be contacted by a financial institution that had already noticed and intervened to stop the activity, and
  • only 14% of this 6.7% (about 0.9% of Americans) lost more than a dollar due to “identity theft” last year
  • “Victims who experienced a direct and indirect financial loss of at least $1” — that 0.9% of Americans — “lost an average of $1,769 with a median loss of $300.” The difference between the mean and the median means that most people lost relatively little money, and just a few people lost a lot of money.

2. Now write an ABC News story that:

  • Features an inflated headline reading “1 in 14 Fell Prey to Identity Theft in 2012” (6.7% is actually the equivalent of 1 in 15)
  • Ignores that the vast majority of this group did not “fall prey,” since they lost nothing
  • Falsely writes that “Two-thirds of identity theft victims experienced financial losses, which averaged $1,769” (the average of $1,769 is only of the 14% of the 6.7% of Americans who lost more than a dollar)

A careful read of the BJS report should leave you comforted. A quick read of the ABC News headline could make you panic.

Don’t panic.

2 thoughts on “Identity Theft: How to Build a Hype”

  1. Bill says:

    You’re right in suggesting that this is an over-hyped issue, but I just wanted to point out that there’s more than one way to “fall prey” to identity theft — dollars lost isn’t the only measure.

    Since the 1990s I’ve fallen prey to unauthorized credit card number use four different times (most recently two years ago), and every time I’ve had to cancel the compromised bank card. I’ve never lost a penny (more than temporarily, at least) because the banks are pretty efficient at refunding disputed charges, but every time I go through this it becomes ever more inconvenient. Dozens of companies I do business with online have my card on record (which is, of course, how my numbers keep getting ripped off…shame on me, I guess), and with many of those companies I have automatic monthly charges set up. When I have to cancel a card I need to go back to each of those companies and register a new card number with them. And of course I can never remember them all, so inevitably I start to get “transaction denied” notices from those I’ve forgotten…which can really gum up the works. As commerce becomes ever more internet-enabled this gets to be ever more of a PITA.

    Also, bear in mind that every time a credit card is misused somebody pays. Hacker W lifts Consumer X’s card number and uses it to buy a computer from Company Y, charged to X’s account at Bank Z. X notices the unauthorized charge and disputes it with Z, which cancels the charge and takes the money back from Y and credit’s X’s account. Typically, Y doesn’t have the time or resources to track down W for restitution, so W ends up with a free computer and Y just passes its loss on to all of its honest customers in the form of higher prices. I have no doubt that someone has done a study on what this costs the economy every year, but I haven’t seen it. I would guess it might come in at the high billions per year, though. Looked at in this light, 100% of us “fall prey” to identity theft, but our losses are invisible so we don’t actually notice.

    1. Jim says:

      You’re right, Bill, that’s fair.

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