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costs
This page explores the cost of identity crime.
It covers -
introduction
The preceding page of this profile highlighted estimates
of the cost of identity crime, online and offline. Those
estimates vary significantly and it is not uncommon for
a particular organisation to present substantially different
figures to discrete audiences.
The basis of many estimates - or guesstimates - is unfortunately
unclear. The nature of much identity fraud (with non-disclosure
because of corporate or personal embarrassment) and definitional
disagreements mean that a comprehensive and rigorous costing
is probably unachievable. Some costs do not involve direct
financial losses or investment in prevention but from
the perspective of an individual identity may be meaningful
because they involve time, annoyance, stress and loss
of opportunities.
The following paragraphs instead discuss some types of
costs regarding identity theft/fraud, particularly in
the Australian environment where there are arguably greater
expectations about corporate responsibility.
dissecting identity crime costs
In considering costs we can broadly divide expenditure
and loss into three categories -
- prevention/minimisation
- direct
and indirect losses through identity crime
- enforcement
offenders
There are few persuasive estimates regarding the number,
location or other demographics of identity criminals.
Literature from academics, government agencies and industry
bodies has typically concentrated on 'losses' rather than
'profits', centred on victims rather than perpetrators.
Much coverage of who commits particular identity crimes,
why they engage in that activity and the scale of their
rewards is anecdotal and sensationalist. It for example
features unsubstantiated claims about russian or other
mafias and omits benchmarks that might lead readers to
question hyperbole about online versus offline risks.
It appears from several government, industry and academic
studies that much crime is distinctly domestic.
As suggested earlier in this profile, there are indications
that many students have manipulated documentation to gain
access to a venue or service. The overall financial benefit
to them may not be high; some sceptics have suggested
that the cost of enforcement in dealing with fare evasion
outweighs losses through commuters improperly claiming
benefits. Some adults have subverted credentialism by
engaging in fraud rather than outright theft (eg doctoring
a vita rather than appropriating someone else's
name). Much paper-based fraud involves a member of a household
appropriating another member's entitlements, with or without
that individual's permission.
Theft of cards and documents from mailboxes appears to
be locally-based, rather than predominantly featuring
itinerant gangs of mail thieves, although information
may well be passed along a long distribution chain. As
with many property offences, those at the wrong end of
the chain may receive little remuneration and appear to
be more likely to be apprehended.
Some identity theft clearly occurs at a distance and across
borders, whether because it is electronic or because it
involves travellers, who for example have suffered skimming
after using a credit card to make a payment or supply
a bond.
Prosecutions for electronic theft indicate that some paper
and electronic card fraud involves groups, with varying
sophistication, rather than one or two individuals. Characterisation
of 'organised crime' remains contentious. Much scholarship
suggests that it is pervasive but disorganised, contrary
to depictions of godfathers atop Chandler-style corporate
pyramids.
Is 'major' electronic identity crime profitable, with
sufficient revenue to offset the risk of prosecution (or
merely allow the perpetrator to pay off the police, prosecutor
and judges)? The answer is uncertain. Most online electronic
identity fraud does not appear to result in conviction;
studies of credit card fraud noted on the preceding page
of this page indicate that much theft is not detected
until too late. Savvy operators located in a weak jurisdiction
and with access to a complaisant ISP and financial institution
thus probably have little to worry about if operating
across borders.
winners, losers and bystanders
The following page notes the usefulness of identity theft
as a topic for sustaining newspaper circulation and broadcast
ratings. Other bystanders have benefited from identity
crime.
US government reports have thus highlighted identity crime
in the 'war against terror'. The UK Cabinet Office exercised
more restraint in commenting during 2001 that
For
the state, theft and fabrication of identity is linked
to organised crime in a variety of ways, for example:
-
illegal immigrants require identity to access goods
and services in this country;
- drug
couriers and criminals engaged in money-laundering
rarely operate under their own identity. Identity
theft and fabrication constitute one of a
number of ways of avoiding detection;
-
organised criminals can and do perpetrate large-scale
frauds against the state and against private sector
bodies through the use of false identities
next page (responses)
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