A Brief History of Identity Theft

Identity theft can ruin lives and has been around for centuries

Man showing passport, close-up

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Identity theft is a serious issue that can affect many areas of your life. It can prohibit you from getting a credit card or receiving approval for a car loan. If a criminal hurts your credit enough, it could even ruin your chances of getting a job. That's why it's so important to protect yourself against identity theft.

Identity theft has been around in one form or another for hundreds of years, but the rise of technology in the late 20th century ushered in a new era of identity fraud. The crime is now more common than ever, and potentially more devastating.

Early Forms of Identity Theft

Many Americans in the 21st century think of identity fraud purely in terms of credit cards, online shopping, and FICO scores, but those are all recent developments for this crime. Technically, identity theft occurs anytime someone steals personal information and uses the information to commit fraud.

Under that broad definition, the history of identity theft stretches back much further than the first fraudulent Amazon order.

Ballot Stuffing and Voter Fraud

Historians have documented the commonplace of voter fraud in the 1800s, as voting shifting from an oral tally to a paper ballot system. Voter fraud is a form of identity fraud—the scammers assume someone else's identity or create an identity to cast more votes for their favored politician.

Legal Drinking Ages Push Teens Into Identity Fraud

Drinking ages were set by states until the National Minimum Drinking Age Act of 1984. Thirsty college freshmen could once simply embark on a road trip to another state that would serve them. With the implementation of a national minimum age, students resorted to criminal activity, acquiring fake IDs that fraudulently boosted their age to at least 21.

Identity Theft and Immigration Restrictions

The U.S. had largely open borders in its first century of existence. It wasn't until the Chinese Exclusion Act of 1882 that the federal government began determining on a national level who should be allowed to move to the U.S. Immigration law became increasingly strict in the decades that followed, including the "Era of Restriction" after World War I and the implementation of national origin quotas. 

Much like how stricter drinking laws created a desire for fake IDs that could skirt those laws, new restrictions on immigration created a demand for ways to subvert those restrictions. The exact type of identity theft depended on the immigration laws in place at the time, but possible examples included crafting fake IDs to feign a different country of origin. In the 21st century, there have been cases of immigration-related social security identity theft.

Digital Era Ushers in Modern Identity Theft

Identity theft as many Americans understand it in the 21st century was codified in federal law in 1998. That's when Congress passed the Identity Theft Assumption Deterrence Act, which officially declared identity theft a federal crime.

The move came on the heels of the rapid expansion of the internet. As more people moved their lives online, more of their data became vulnerable to hacks, malware, and phishing. Credit reports and credit cards became increasingly at risk.

Aside from attaching criminal repercussions to identity theft, this act also established a method for tracking identity theft. The Federal Trade Commission (FTC) was tasked with logging the complaints from Americans who fell victim to identity theft. As of 2020, the FTC remains the point of contact for those who want to report identity theft or fraud.

Identity Theft Penalties Get Harsher in the 21st Century

The next development in identity theft came in 2004 with the Identity Theft Penalty Enhancement Act. As the name suggests, this new law didn't substantially alter the U.S.'s understanding of what identity theft was. Instead, it provided more tools for law enforcement efforts in the form of harsher penalties. For example, it expanded the maximum sentence for Social Security fraud to two years of imprisonment.

President George W. Bush established the first Identity Theft Task Force in 2006, bringing together 17 federal agencies to focus on identity theft prevention and response. Soon after the creation of this task force, the Identity Theft Red Flags Rule compelled financial institutions to create identity theft prevention policies.

Penalties were again made harsher in 2008 with the Identity Theft and Restitution Act of 2008. This act expanded some definitions of identity theft, as well as adding some potential punishments. The law also introduced a new concept for identity fraud victims: restitution. This was the first time the federal government ensured that victims had the right to compensation for any losses they experienced as a result of identity theft.

Unfortunately, these new laws have done little to stop the spread of identity theft. Fraudsters are continually coming up with new ways to take advantage of technology in nefarious ways. According to the Insurance Information Institute, the financial impact of identity theft on victims doubled between 2016 and 2018, reaching an annual total of roughly $1.7 billion.