Gartner Says Identity Theft is up Nearly 80 Percent; 7 Million U.S. Adults Were Identity Theft Victims in the Past 12 Months.

Business Editors

STAMFORD, Conn.--(BUSINESS WIRE)--July 21, 2003

Seven million U.S. adults, or 3.4 percent of U.S. consumers, were victims of identity theft during the 12 months ending June 2003, according to a new survey by Gartner Inc. (NYSE: IT and ITB). This represents a 79 percent increase over the 1.9 percent rate reported in a Gartner consumer survey concluded in February 2002. Because this crime is often misclassified, the thieves have better than a one in 700 chance of being caught by the federal authorities.

In May 2003, Gartner surveyed by mail 2,445 U.S. households to gauge the impact identity theft is having on U.S. consumers.

"Identity theft is not necessarily a high-tech crime, and can just as easily damage the credit reputations of low-tech adults who don't spend any time on the Internet," said Avivah Litan, vice president and research director for Gartner.

"More than half of all identity theft - where the method of theft is documented - is committed by criminals that have established relationships with their victims, such as family members, roommates, neighbors, or co-workers," said Litan, citing numbers published by the Federal Trade Commission.

With identity theft, a thief takes over a consumer's entire identity by stealing critical private information, such as the Social Security number, driver's license number, address, credit card number or bank account number. The thief can then use the stolen information to obtain illegal loans or credit lines to buy goods and services under the stolen name. Identity thieves typically change the consumer's mailing address to hide their activities.

"Many banks, credit card issuers, cell phone service providers and other enterprises that extend financial credit to consumers don't recognize most identity theft fraud for what it is," Litan said. "Instead they mistakenly write it off as credit losses, causing a serious disconnect between the magnitude of identity theft that innocent consumers experience and the industry's proper recognition of the crime. This causes a disincentive to fix the problem with the urgency it requires."

Without external pressure from legislators and industry associations, financial service providers (FSPs) may not have the sufficient incentive to stem the flow of identity theft crimes. Gartner analysts said banks and other FSPs must be pressured by consumers and lobbyists to proactively back efforts such as the U.S. Fair Credit Reporting Act, which would cover security and accuracy of personal financial information and access to credit and financial services, and BITS' Work on Identity Theft, which would make it easier for victims to report a crime to financial institutions.

"Most importantly, however, banks and FSPs must implement solutions that effectively screen for application fraud, so they don't wrongfully extend credit to identify thieves," said Litan. "Without industry prevention efforts, consumers whose identities have been stolen will continue to bear the brunt of social and indirect economic costs."

Additional information is available in two Gartner reports. These reports examine the rising trend of identity theft and what solutions are emerging in the market to prevent it. "Underreporting of Identity Theft Rewards the Thieves" can be purchased on Gartner's Web site at www.gartner.com/DisplayDocument?id+399457&ref=g_search. "Identity Theft Fraud Prevention Solutions Start to Proliferate" can be purchased on Gartner's Web site at www.gartner.com/DisplayDocument?id=399455&ref=g_search.

Further in-depth analysis on security is available to subscribers of the Gartner IT Security Directors Membership Program. This powerful tool is designed to help those charged with ensuring optimal security for their business and IT infrastructures achieve their goals, and also help them to manage costs. The Gartner IT Security Directors Membership Program provides market analysis, decision support tools, on-site workshops, newsletters, bulletins, and access to analysts via a Web portal designed specifically to address the growing issues and concerns of IT security directors. For more information on Gartner's IT Security Directors Membership Program, visit www.gartner.com/pages/story.php.id.3436.s.8.jsp or call Gartner at 203/316-1233.

About Gartner

Gartner, Inc. is a research and advisory firm that helps more than 10,000 clients leverage technology to achieve business success. Gartner's businesses are Research, Consulting, Measurement, Events and Executive Programs. Founded in 1979, Gartner is headquartered in Stamford, Conn., and has more than 3,800 associates, including approximately 1,000 research analysts and consultants, in more than 75 locations worldwide. Revenue for calendar year 2002 totaled $888 million. For more information, visit www.gartner.com.

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    CONTACT: Gartner
             Christy Pettey, 408-468-8312
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    KEYWORD: CONNECTICUT
    INDUSTRY KEYWORD: HARDWARE BANKING
    SOURCE: Gartner, Inc.