Identity Theft: a Pernicious and Costly Fraud

Abstract

On October 3, 2003, the Payment Cards Center of the Federal Reserve Bank of Philadelphia sponsored a workshop on identity theft to examine its growing impact on participants in our payments system. Avivah Litan, vice president and research director of financial services for Gartner Inc., led the workshop. The discussion began and this paper follows with a broad study of identity theft, at times compared with traditional payment fraud, and continues with an evaluation of its overall risk to consumers, merchants, and credit providers. The paper compares the incentives each such party has to address identity theft in concert with current market response to the crime. Finally, the paper concludes by posing several questions for further study. This paper supplements material from Litan’s presentation with additional research on the crime of identity theft.