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December 19, 2010

11.7 MILLION Victims of Identity Theft in U.S.

According to a survey conducted in 2008, the results of which were just released on December 16, 2010, by the Bureau of Justice Statistics, an estimated 11.7 million U.S. citizens were victims of identity theft during the two year period prior to 2008.

The losses from this vast number of instances of identity theft totalled more than $17 billion (with a "b").

However, the definition of identity theft used in the survey was quite broad.  It included what we have discussed on this blog as actual identity theft (i.e. the fraudulent use of someone's personal identifiers to open new accounts) as well as account take over (where an existing legitimate account is used by someone other than an authorized user for their personal gain). 

In my experience, many more people are victims of account takeovers than identity theft, so this seriously skews the numbers of this survey.  In fact, I was a victim of an account take over between the period of 2006 and 2008 when someone in Germany made three fraudulent purchases with my Discover card.  My experience was like most who are victims of account takeover.  It was all fixed with a simple call to my credit card.

Identity theft, on the other hand, is never that simple to fix.  It usually takes years of vigilance and time spent by the victim making phone calls, writing letters and generally proving his or her innocence because, unlike in the criminal justice system, the identity theft victim is considered guilty until he proves his innocence and, usually, even after he has proven his innocence time and time again.

According to the survey, the average loss was only $1,870.  This again is skewed by the inclusion of account take over in the identity theft definition the survey used.  I would think that most account take over victims suffer either no financial loss or possibly the cost of a stamp or two.  Identity theft victims, on the other hand, suffer much greater financial loss, usually in the several thousands of dollars.  That's if they are not sued and forced to hire an attorney by the hour to defend them from the frivolous lawsuit against them.  Of course, if they hire someone like me to represent them in a lawsuit against the credit bureaus and/or the fraudulent credit grantors, the attorney should not charge by the hour but should instead be paid a contingency fee after successful resolution of the lawsuit.

Also, 16 percent of the victims in the survey were the victims of multiple types of identity theft, such as the traditional version and attempts to obtain government or health insurance benefits.  I recently represented a victim of identity theft whose brother used his identity to obtain student loans and eventually went to work for Fed Ex in Memphis using my client's Social Security number.  This resulted in my client suffering the tax burden of his brother's wages.  Very much a mess that took a lawsuit against Sallie Mae and others to straighten out.

More stats from the survey -

  • 6.2 million were victims of actual or attempted account take overs of traditional credit cards;
  • 4.4 million were victims of actual or attempted account take overs of debit cards;
  • 1.7 million were victims of true name identity theft;
  • Income matters - those with a household income of more than $75,000 were more likely to be victims;
  • Gender does not matter - men and women are equally likely to be identity theft victims;
  • Only about 17 percent reported the crime to law enforcement (but this again is skewed by the inclusion of account take over victims in the definition of identity theft);
  • Approximately 20 percent described the identity theft as "severely distressing" (again skewed by the inclusion of account take over); and
  • Nearly 40 percent had some idea how their personal identifiers were compromised.
All in all, some pretty interesting results.

December 11, 2010

$1 million verdict against Equifax won't be reduced

This man's story reminds me of a client I represented a while back against ... you guessed it ... Equifax.  More about my case below:

By Maria Dinzeo

SAN FRANCISCO (CN) - A cancer survivor who won more than $1 million from Equifax for improperly handling his identity theft report can keep the full award, a federal judge ruled.

U.S. District Judge Susan Illston rejected the credit reporting agency's motions for a new trial or to set aside so-called "excessive" damages.

Eric Drew, who was twice referred to hospice care by hospitals that said they could not treat his cancer, had his identity stolen in 2003 by a phlebotomist working at the cancer center where he had undergone treatment.

Drew discovered that multiple fraudulent credit accounts had been opened in his name with thousands of dollars in balances.

"Plaintiff testified that, while he was away from home being treated for near fatal cancer, he singlehandedly caught the individual who had stolen his identity even though the police and hospital personnel had not believed him or wanted to help him," Illston wrote.

Fearing that his life was in danger, Drew called newspapers, the FBI, police and his hometown mayor in Los Gatos, Calif.

When a local television station picked up his story, the identity thief was caught and convicted of criminal violation of the Health Insurance Portability and Accountability Act.

Over the next two years, however, Equifax and a number of other credit reporting agencies and banks allegedly thwarted Drew's attempts to repair his credit and reinvestigate his claims of identity theft.

After a nine-day trial, a jury awarded Drew $6,326.69 in economic damages, $315,000 in noneconomic compensatory damages and $700,000 in punitive damages.

Among Equifax's requests on appeal, the company argued to reduce "excessive" compensatory and punitive damages to $200,000 and $50,000, respectively.

"Here, defendant leaves the court to speculate where its $200,000 figure comes from," Illston wrote. "It does not explain why $315,000 is shocking to the conscience or unsupported by the evidence while $200,000 is a proper number."

Illston refused to grant remittance, finding that Drew had "presented significant evidence of emotional distress that he suffered as a result of his unique circumstances."

"The evidence strongly supports a finding that the harm plaintiff suffered was not the result of mere accident," the ruling states.

Against all odds, Drew identified the man who stole his identity, beat cancer and launched an unprecedented criminal HIPAA prosecution, "but he couldn't navigate the system that defendant had set up to correct his credit report," Illston wrote.
Now, about my case.  Just like Eric Drew, my client helped the authorities nab his identity thief who, among other things, had opened scores of accounts in my client's name and had even bought 2 or 3 vehicles, including a Harley, using my client's identity.  Thanks to the persistence of my client, the authorities (the FBI if I remember right) caught the identity thief while riding the ill-gotten Harley.  The identity thief was tried, convicted and sentenced.

Unfortunately, just like Mr. Drew, my client's story did not end there.  Equifax and the other three bureaus refused to believe my client's disputes regarding the scores of accounts opened in his name, despite the conviction of the identity thief that opened the accounts.  In fact, the identity thief served his entire sentence before Equifax and the other bureaus finally fixed my client's credit reports and then only after I had sued the bureaus on behalf of my client.  In other words, the conviction of the identity thief was not good enough proof for Equifax, Experian and Trans Union.  But my federal lawsuit ironically got the job done, but not before my client suffered very, very significant emotional distress.  At his lowest point, he was sitting in his closet with a gun in his mouth because of the sheer shambles that this life had been turned into after the complete loss of his financial independence caused by the credit bureaus' failure to do their job.

Luckily, he did not pull the trigger and eventually fought back through his lawsuit, which led to his credit reports being corrected.  Equifax should be ashamed to claim that Mr. Drew's damages did not justify an award of $315,000 in light of their intentional and flagrant disregard for their statutory duties.  I'm glad the judge saw through Equifax's sham of an argument.  But I'm sure they will appeal to the next level.

As for my client, his case never went to trial as Equifax and the other bureaus settled for a "confidential" sum after suit was filed.