Calif. Leads Nation in Number of Fraud Complaints

Times Staff Writer

Consumer fraud complaints soared 73% last year and identity theft -- the stealing of personal information and using it to run up bills or commit crimes in someone else's name -- accounted for the lion's share of the growth, the Federal Trade Commission reported Wednesday.

California was the leader in the number of cases, with more than twice as many fraud and identity theft complaints as any other state, according to the FTC.

"Sometimes, being the leader isn't all that it's cracked up to be," said state Sen. Debra Bowen (D-Marina del Rey), who has sponsored numerous bills to combat identity crimes.

It is unclear whether the Golden State outpaces the country in reported fraud because it's the most populous state, because of a propensity for larceny here or because residents are more likely to report crimes, Bowen said.

On a per-capita basis, California ranked second to the District of Columbia in reported identity thefts and 13th in overall fraud.

Nationwide, consumers reported losing $343 million last year to identity theft, bogus Internet auctions, Nigerian money-laundering schemes and other scams.

The Federal Trade Commission's annual report on consumer fraud is based on complaints made through its Consumer Sentinel project, a central clearinghouse for data on consumer scams.

The latest report chronicled 380,103 complaints -- 161,819 of which involved identity fraud. In 2001, 220,089 complaints were lodged, of which 86,198 involved identity crimes.

Internet-based scams accounted for a good portion of the growth in reported fraud, FTC officials said. However, identity theft overshadowed all other categories, accounting for 43% of all crimes tallied. Worse, many experts believe the figures vastly understate the problem.

"The FTC statistics just reflect the victims who have called the fraud hotline," Bowen noted. "We know from our own research that's only a fraction of the people who have filed police reports."

For example, after the FTC reported that there were 1,335 identity crimes in Los Angeles in 2001, Bowen's office gathered police and sheriff's department records that showed there had been more than 13,000 identity theft crimes reported that year in L.A.

Legislative efforts to combat the growing threat of identity theft have been met with mixed results.

Bowen was able to get legislation passed in California that calls for gradually reducing the use of Social Security numbers on public documents. It also allows consumers to freeze access to their credit records after they have been victimized by identity fraud. But several federal bills aimed at curbing identity theft have failed to get out of key committees.

Sen. Dianne Feinstein (D-Calif.) reintroduced legislation this year to boost penalties for committing identity fraud. And Sen. Maria Cantwell (D-Wash.) said Wednesday that she would reintroduce a bill that would make it easier for victims of identity fraud to clear their names and clean up their credit records.

The FTC estimates that it costs the average victim $1,000 in long-distance phone calls, notary charges, mailing costs and lost wages to get his or her financial life back in order after an identity thief strikes.

The main problem, experts say, is that credit grantors are not compelled to check the accuracy of identifying information when issuing credit. The result is that thieves often can get credit in a consumer's name with nothing more than a Social Security number.

Discrepancies in an applicant's address, employment history, maiden name and, sometimes, gender often are ignored by the firms granting credit, experts add.

Meanwhile, many companies and schools are careless with consumers' Social Security numbers, printing them on everything from health-care forms to student report cards.

"As long as companies insist on handling personal identifying information as junk rather than classified data, we are going to lose the game here," said Linda Foley, executive director of the Identity Theft Resource Center in San Diego. "It is in the disposal and dissemination of Social Security numbers where we become victims of identity theft."

A Q&A; on identity theft is available at



The Federal Trade Commission compiled 380,000 consumer fraud complaints in 2002. Top categories:

Identity theft: 43%

Internet auctions: 13%

Internet services, computers: 6%

Advance loan fees, credit protection: 5%

Shop-at-home, catalog sales: 5%

Foreign money offers: 4%

Prizes, sweepstakes, lotteries: 4%

Business opportunities, work-at-home plans: 3%


Source: Associated Press

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