Identity theft: It's all in your mind

There's no doubt identity theft is a growing problem. The problem is, the place it could well be growing most is in consumers' minds. According to new research, consumers are more aware than ever that identity theft is a threat but they feel more vulnerable to it than they did a year ago.

The research, conducted by Opinion Research on behalf of RSA Security, found that 63 per cent of consumers were more aware of identity theft issues now compared to last year, but only 18 per cent of consumers felt themselves to be any safer as a result and 26 per cent thought they were actually less safe.

But when it comes to protecting consumers from identity theft it's all me, me, me – of those who did feel safer in 2004, around half did so because they'd implemented measures themselves while less than a third thought they were more protected because of new developments in technology or business processes in banks.

Consumers' fear of ID theft doesn't just harm confidence, it could actually be hurting online business, the figures suggest. The number of consumers unwilling to share data with online shops has risen from 35 per cent in 2003 to 44 per cent this year.

"Although government, financial services institutions and the security industry have taken great steps over the past year to increase awareness of identity theft and encourage better security practices among consumers, organisations still need to go further if they want to see an increase in consumer confidence toward online business," said John Worrall, VP of worldwide marketing at RSA Security, said in a statement. "Consumers must feel confident and safe when making online transactions - otherwise, businesses will never realise the cost savings and revenue potential of the internet."

The question of where responsibility lies for protecting consumers drew mixed responses, however. Sixty-five per cent of those questioned thought they themselves were in responsible for dodging ID theft and 53 per cent chose banks and just 24 per cent thought it was sellers.

Are consumers right to be worried? Possibly. Identity theft has been determined as the fastest-growing financial crime in the United States by the US Department of Justice and the cost of identity theft in Britain is now topping £1bn a year, according to government figures.

Password and PIN management isn't helping the problem either, with the RSA survey showing that most users have fewer then five passwords for all their access to electronic information and 15 per cent use one for everything.

Having loads of passwords isn't a lot of help if you write them all down though. A username and password survey conducted by Rainbow Technologies last year of 2,500 IT administrators, management and security professionals showed 50.5 per cent of users writing down their passwords - with 5.5 per cent writing down every one they have and giving the identity thieves an even easier ride.

It's not all doom and gloom, however. The increase in awareness is good news in the fight against identity theft. Take phishing scams, for example – more and more banks are putting out advisories warning customers not to be taken in by the scam emails and the more consumers are aware, the less chance there is they'll be taken in by the criminals.

"Awareness of identity theft is certainly the first step, but businesses clearly have a long way to go if they want consumers to feel protected," Worrall said.