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WASHINGTON--Identity theft may be one of the fastest growing crimes in the country, but it shows no signs of squelching e-commerce, experts say.

Compared to a projected $7.2 billion 2002 online retail industry, identity theft trends are only a trickle amid the gushing growth of online spending, says Forrester analyst Chris Kelley.

"It's very tempting for politicians, the press, anybody to see identity theft and see that it's rising and say the sky is falling," Kelley says. In reality, the crime's impact on e-commerce is "very, very small," he says.

Many details surrounding identity theft remain a mystery. Law enforcement has no statistic on how often the Internet is used for these crimes. No firm numbers are available on how the crimes start or how often they are solved. And if the crime is spreading, it's difficult to say how fast and how far.

Crime Opportunity

Identity theft is the dark side of the last decade's tech boom. Brave new technologies put consumer information online where it is easy to access. The Internet creates new avenues for criminals to steal and exploit personal information such as a Social Security or credit card number. Stolen identities can be used to open credit cards, obtain loans, or even launder money.

For example, identity theft victim Lisa Sharf says it took criminals using the Internet less than a week to open six credit cards in her name. Heidi Anderson says an identity thief used the Web to help open more than 30 accounts in her name--fraudulently charging more than $45,000. Even a PCWorld editor has experienced such fraud.

The government and other experts say identity theft, facilitated by the Internet, is rising rapidly. Official estimates are that between 500,000 and 1.1 million crimes will occur this year. Some 700,000 consumers became victims of identity theft during 2001, according to the Identity Theft Resource Center, which follows the crime.

"The Internet . . . has made it so much easier to engage in this kind of fraud," says Betsy Broder, a manager with the Federal Trade Commission, which monitors and investigates thousands of identity theft complaints each year. "Gone are the days when everyone you do business with knows your name," Broder adds.

But Forrester's Kelley says identity theft ranks only fourth among consumer concerns when they shop online. He thinks that's about the right ranking.

"In the grand scheme of things, it's not the biggest thing people should be worried about," Kelley says.

Spending Jumps

American spending on non-travel Web sites last quarter increased 41 percent over last year, says ComScore Networks, a firm that tracks e-commerce. Americans also spent three times as much time banking online as they did a year earlier.

These numbers "indicate to me anecdotally that the fear of identity theft is shrinking," says Brian Methvin, a ComScore division president.

A study released last week by the U.S. General Accounting Office found no comprehensive central database tracking prosecution of identity theft, let alone singling out Internet-based cases. Still, the GAO, Congress' investigative arm, has said since 1998 that Americans are becoming less skittish about cybercrime.

Identity theft is hard to track because it is usually a part of a larger crime and because it hasn't received priority attention from police, says Linda Foley, executive director of the Identity Theft Resource Center.

"These cases often go to the bottom of the file when it comes to investigations," Foley says. "The victim becomes the chief investigator."

New Priorities

The GAO concurs that identity theft is dealt with infrequently. According to its recent report, "Officials in several of the ten states [examined] told us that limited resources are allocated to priorities such as violent crimes and drug offenses and, thus, the number of investigators and prosecutors for addressing identity theft often is insufficient."

About 18 percent of those who try to file a police report before contacting the FTC are unable to do so, said Howard Beales, director of its Bureau of Consumer Protection, at a July hearing. That number is down from 35 percent since International Association of Chiefs of Police renewed their commitment to address the crime in late 2000, he testified.

Federal officials, hoping to quell the crime's growth, are trying to prioritize identity theft investigations. In the past month, at least two hearings reviewed the subject. Lawmakers also are considering bills to enhance identity theft penalties and make it easier for victims to recover from the crime.

In May, Attorney General John Ashcroft announced an initiative to ferret out and prosecute identity thieves. That effort combines with penalty-enhancements to take a "two-pronged" approach to stopping the crime.

The Identity Theft Resource Center says consumers can help protect themselves by annually checking their credit reports, guarding their Social Security numbers, shredding waste paper that contains sensitive information, and being wary of phone solicitors who ask for personal details.

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