Last month, a reported 40 million credit cards were stolen from CardSystems Solutions, a third-party processor of payment data. An intruder was able to use security vulnerabilities to infiltrate the CardSystems network and access accounts, about 13.9 million are for MasterCard-branded cards and 20 million Visa-branded cards. CardSystems is one of several companies that process transactions for banks and merchants online.

Given events such as the above, a recent survey reported that 97 percent of those polled said identity theft was a major problem that needs addressing. However the survey also showed that fears about online identity fraud are out of proportion as consumers are ignoring the most glaring issues as most instances of identity fraud occur through traditional offline channels that are paper-based rather than Internet-based. To prove this a further study showed that these crimes are more frequently committed offline than online, are actually less severe, less costly and not as widespread as previously thought.

In fact in half of the cases the perpetrator is known and identity fraud is committed by someone close to the victim such as a friend, family member, relative, neighbor or employee. The most frequently reported source of information used to commit fraud was a lost or stolen wallet or chequebook. In addition the study concluded that identity fraud problems are improving, with the total number of victims in decline. Other conclusions from the US report include that;

• The annual dollar volume of identity fraud is highly similar to 2003 figures (adjusted for inflation) at $52.6 billion. However the number of identity fraud victims dropped from 10.1 million to 9.3 million in 2004 versus 2003.
  
• The median value of identity fraud crimes remained unchanged at $750; however most identity fraud victims incurred no out-of-pocket costs (as they were reimbursed by their bank).
  
•  The average time to resolve an identity fraud crime dropped by 15%- from 33 hours in 2003 to 28 hours in 2004.
  
• The majority of identity fraud crimes are self-detected. This reinforces the benefits of activity monitoring through electronic review of transactions, statements, and credit reports allowing consumers to check their account activities quickly and efficiently - without waiting for a paper bill or statement.