What are the Penalties for Identity Theft?

Identity theft is the act of stealing a person's identification information, usually for some criminal purpose such as accessing the victim's resources and plundering them, or establishing credit accounts in the victim's name without his knowledge. Although the term “identity theft” was first used in the 1960s, suggesting it was a problem even then, it wasn't until the final decade of the 20th century that meaningful penalties for identity theft began to be established and imposed by countries worldwide. Before then, when identity theft was committed for the purpose of using the victim's identifying information to commit a crime such as credit card fraud, that crime itself would be prosecuted, but the identity theft itself generally was not. Essentially, the penalties for identity theft were at best mild, and at worst non-existent.

Without meaningful penalties for identity theft, it became a lucrative crime for criminals who would steal the identity information and sell it to other criminals, often out of the victims' jurisdiction, who would use the information to commit such crimes as credit card fraud or theft of the victim's resources from bank and brokerage accounts.

Identity theft is difficult to prosecute because it often goes undetected for a long time, with the victim being unaware of it until a process server arrives with subpoenas from multiple creditors for non-payment. By the time of detection, then, many months would have passed, leaving law enforcement with a cold trail to follow. The crime received little attention from legislatures and law enforcement other than public hand-wringing because they saw the retailers and credit card companies, which experienced actual monetary losses, as the real victims. In addition, law enforcement agencies were reluctant to investigate such crimes because there was a low probability of leading to an arrest or conviction. The consumers whose identifying information had been stolen to commit those crimes were considered to have been merely inconvenienced by a situation that could be cleared up with a couple of telephone calls, leading some to suggest that it was the victims who paid the only penalties for identity theft.

In the mid-1990s, though, the increasing severity of the problem and public outcry reached such a level that nations worldwide began to take legislative action to recognize identity theft itself as a crime. New legislation imposed significant penalties for identity theft. The most significant of these, from the victim's perspective, was full restitution, as well as reimbursement of all costs incurred by the victim in the process of restoring credit files, medical and police records, and other compromised records. In addition, those convicted of identity theft are subject to imprisonment, generally up to five years, although longer terms are available depending on the severity of the identity theft. These prison terms are in addition to whatever penalties are imposed for the crimes committed with the stolen identities. When identity theft is used in conjunction with any act of terrorism, though, the penalties are much more severe, with imprisonment of up to 25 years.

The strengthening of the law took time in the United States because most theft statutes are at the state level; theft is not a federal crime unless the victim is the federal government. This led to many jurisdiction problems. The high-tech nature of identity theft, though, makes it likely that elements of the crime are committed in different states, thus making the crime more appropriately dealt with at the federal level. Federal laws were amended in 2003 and in later years to address identity theft specifically, classifying it as a serious felony even for those who do nothing with the material they've stolen but sell it to someone else. Establishing and enhancing the penalties for identity theft, though, have not made it any easier to apprehend these criminals and convict them.

The difficulty in capturing and convicting identity thieves has made it clear that the first line of defense is consumers themselves, who must safeguard their personal identification information whenever possible, and be alert to attempts to compromise it by a criminal element that's becoming ever more sophisticated. In the United States, consumers in all 50 states can elect a credit freeze, which virtually guarantees that new credit accounts in their names cannot be opened without their direct knowledge and approval.