Waterbury-based Webster Bank tries to help its customers avoid identity theft through proactive communication.

Seven million adults throughout the nation, 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 Stamford-based Gartner Inc.

That represents a 79 percent increase over the 1.9 percent rate reported in a Gartner consumer survey concluded in February 2002. Because this particular crime is often misclassified, the chance of the thieves being caught by federal authorities is fewer than two in every 700 cases.

In May 2003, Gartner surveyed 2,445 U.S. households by mail 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 his 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 may not have the sufficient incentive to stem the flow of identity theft crimes.

Simple Steps

Gartner analysts said banks and other financial institutions 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 Washington, D.C.-based BITS’ Work on Identity Theft, which would make it easier for victims to report a crime to financial institutions.

“Most importantly, however, banks 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.”

“This is a very real story,” said Clark Finley, spokesman for Waterbury-based Webster Bank. “What we really do is try to be proactive with our customers.”

Finley explained that at Webster officials are often reminding customers that the “age of information and technology affords a great efficiency with your time and the services we’re able to provide. At the same time we have to, and we do, guard very closely against identity theft, in particular how it can be related to our e-business and how we handle accounts online. So much business is online today.”

Finley added that customers are reminded of simple steps they can take to avoid identity theft. Even something as simple as shredding mail from banks, or, if you don’t have a paper shredder, putting your bank mail in different trash cans in the house to keep things spread out.

“We tell our customers to keep your pass codes closely guarded,” he said. “Our online banking has really taken off, so we tell people to keep pass codes to themselves because a breach of security can happen very easily.” Although it’s not always easy to hear, Finley, like Litan, noted that oftentimes identity theft is perpetrated by people close to the victim.

Identity theft is taken very seriously at Webster, Finley said, remarking that it hasn’t yet experienced any major breaches. However, he said that the possibility of a major breach is real enough that the bank must make a determination as a company to take any and all precautions necessary.

“We have a whole department here that didn’t exist before,” he said. “Our team is one that is always changing, revamping and most importantly keeping up with the latest trends when it comes to security and identity theft.”

Valerie Carlson, spokeswoman for Bridgeport-based People’s Bank, explained that it has a similar, offensively minded attitude toward identity theft and general bank security.

“We really look at identity theft on a three-prong basis,” she said. “First we want to educate our employees, then we want to protect customers and we also have to be alert to manifestations of identity theft.”

As far as educating customers, People’s utilizes its Web site as an informational and instructional tool, providing access for customers to read up on the latest tips and tricks for preventing identity theft.

“We also look to help protect our customers and give them direction if they have questions of if they believe they’re victims of identity theft,” said Carlson. “In those situations we would normally direct them to the Federal Trade Commission, which has really been the front-runner as far as identity theft is concerned.”

She added, “Obviously it’s the fastest-growing crime, so we really look at it as an area of critical importance. We see ourselves as protecting and safeguarding both the customer’s money but also their financial identity and security.”

People’s also implements a Masters’ Program to help senior citizens learn about the dangers of identity theft throughout the state.

“It’s such a high priority for us,” said Carlson, noting that People’s hasn’t had any major breaches either. “We’re really keeping on the offensive at this point.”

Gartner Inc. is a research and advisory firm that helps more than 10,000 clients leverage technology to achieve business success. Gartner’s businesses include research, consulting, measurement, events and executive programs. Founded in 1979, the firm has more than 3,800 associates, including approximately 1,000 research analysts and consultants, in more than 75 locations worldwide. Its revenue for calendar year 2002 totaled $888 million.