Monday, May 14, 2007

The Hidden Costs of Identity Theft

Recently I read a news article written about a seminar recently given on identity theft by an attorney from the Federal Trade Commission. While I will save my opinion of his stated facts about the cost of identity theft for another post, he said 99 percent of identity theft victims pay nothing, and if there is any cost vendors pay for it! WHAT? Did he just fall out of the sky and crash land on planet earth, head first?

Just think about all the other costs, the unseen, uncalculated, or unaccounted costs, we could be referring to a value that in some instances would be unbelievable.

Let’s look at time alone. Depending on what statistical survey you refer to, the time spent per victim usually averages in the range of 500 hours to clear all the hurdles to restore their name and credit and obtain any restitution. When do they do this? Many during normal business hours. An employer of a victim, and many are employed, will lose thousands in lost time and productivity due to phone calls, paperwork, making copies, faxing information and police reports. Also time off for trips to court, an attorney’s office, or police department. Think of the time loss and cost to the self employed.

Emotional costs are also not included in his figure. I was at an event recently and spoke with many individuals about identity theft, and I was truly amazed at how many had been victims or knew a victim directly. One woman had the most emotionally charged story about a close relative who stole her identity. She was forced to press police charges against that close relative, otherwise she could not get the $6,000 in theft cleared from her name and she did not have the funds to cover it either. She was extremely distraught because she knew the negative impact it would have on her if she did not press charges, but she also knew the lifelong damage the close relative would endure for this one event.

Others feel violated, hurt, constantly suspicious, untrusting and the list goes on.

So what impact do those feelings that now have on the economy? Many of these people will stop using credit or debit cards, will not buy online, will not do many things that will impact the economy much like a recession.

And for the cost to the vendors that do actually pay for or cover losses, where does he think that money will ultimately come from? We all bear the burden of paying for the costs of identity theft. Much in the same manner we share the costs for insurance when a major hurricane hits even a majority were never impacted by it.

So in the grand scheme of identity theft the impact of the actual dollar amount may only be a small part of the total cost, but everyone who gets hit with identity theft pays a price.