FTC: Identity Theft is Still Up to its Old Tricks

Identity theft is on top again. The Federal Trade Commission (FTC) recently released its top 10 consumer fraud complaints of 2011 -- and for the 12th year in a row, identity theft was the number one consumer complaint. Out of the more than 1.8 million complaints filed in 2011, roughly 279,000 or 15% were concerning identity theft complaints.

The most-common form of identity theft involves fraud related to government documents or benefits. Uncle Sam would not be pleased as the majority of government fraud is tax or wage-related fraud, which has doubled since 2009.

The entire not-so top 10 includes:

1.         Identity theft

2.         Debt collection

3.         Prizes, sweepstakes, lotteries

4.         Shop-at-home, catalog sales

5.         Banks and lenders

6.         Internet services

7.         Auto-related complaints

8.         Impostor scams

9.         Telephone and mobile services

10.       Advance-fee loans and credit protection/repair

Gallop’s Take: As e-filing tax returns with the IRS has never been easier, there has been a significant increase in fraudsters stealing personal information and using it to fraudulently file a tax return to claim a refund.  Many taxpayers have no clue their identity has even been stolen until they attempt to submit their tax refund and receive a rejection notice from the IRS. And you thought tax day couldn't get any worse.

Fortunately, the IRS is aware of the problem and has procedures in place to recover stolen tax refunds. Much of this information has been made available to consumers at the IRS website. See IRS: Identify Theft

It is also no surprise that the runner-up on the list is debt collection complaints. Unbeknownst to many debtors, however, there is a powerful tool to protect them known as the Fair Debt Collection Practices Act (FDCPA). The FDCPA prohibits debt collectors from calling repeatedly or at inconvenient hours, using obscene or abusive language, misrepresenting the amount owed, threatening lawsuits without justification and a number of other abusive practices.

If a collector violates any provision of the FDCPA, they can be liable for actual damages sustained as a result of the violation, punitive damages of up to $1000 per claim, and costs incurred in filing the suit along with attorneys’ fees. An easy-to-read consumer guide is available on the FTC’s website at: Debt Collection FAQs: A Guide for Consumers

This list serves as a good reminder that not only is it worthwhile to report scams and voice your complaints, but it is also as important as ever to protect your personal information. Hopefully with increased awareness of the newest scams consumers will be able to knock identity theft down a few pegs in the upcoming year.