Identity Thieves

The timing couldn't have been worse. When Jeremy Johnson discovered that someone had applied for a couple of credit cards in his name and had run up a $6,000 tab, it was late September and law-enforcement agencies were busy tracking down terrorists. Johnson, 31, a production assistant at a cable-channel website, called his local precinct in Brooklyn and was told the N.Y.P.D. was so swamped, the detectives couldn't do anything unless he had the perpetrator's name and address.

Johnson knew that identity theft violates both state and federal laws, so he called the FBI and was forwarded to the Secret Service, which investigates counterfeiting and other types of financial fraud. An agent asked whether the case involved more than $25,000. Otherwise, he intimated, he had bigger fish to fry.

Johnson thought investigators were overloaded because of Sept. 11, but police say their response would have been pretty much the same had he called months earlier or phoned a precinct in Kansas City or Key West. In an age of instant credit, when you can apply online and start shopping within 30 seconds, identity theft has become an American epidemic. Calls to the fraud-victims help line at a national credit bureau have nearly doubled from the 522,922 received in 1997, and 86,168 identity-theft cases were reported to the Federal Trade Commission last year, making it the top consumer-fraud complaint. Because law enforcement lacks the manpower to investigate all the small-potatoes cases and creditors shrink from costly prosecution, identity theft remains a lucrative, low-risk crime.

But that may change, as government and industry efforts converge to protect a staple of the U.S. economy: easy credit. Sept. 11 underscored the ways that terrorists use identity theft to slip into U.S. society and fund their operations. Investigators have linked several suspects to credit-card fraud, including the two men with box cutters who were arrested on a train Sept. 12. The terrorist convicted last year in a 1999 plot to blow up Los Angeles International Airport used 13 identities lifted from the membership files of a Boston health club. Potential losses in Secret Service investigations jumped from $850 million in 1998 to $1.4 billion in 2000, prompting some lenders to begin to pool their fraud data.

Like most stories of identity theft, Johnson's is one of initial confusion and lingering anxiety. "How did someone get so much of my personal information, and what's to stop them from using it again?" he asks. "My Social Security number can go from criminal to criminal. I'm screwed for life."

Consumers have to pay only the first $50 of fraudulent charges made on their accounts, and many lenders waive even that amount. But last year credit-fraud victims spent countless hours and an average of $1,173 to restore their credit ratings. And all it takes to get the ball rolling is one crooked telemarketer or someone who fishes a receipt or "preapproved" credit-card offer out of your trash.