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Despite its name, identity theft is not limited to stealing someone’s personal information. It is a two-part crime: stealing an identity, and then using it as a cover for further theft. First, someone illegally takes information, which may include Social Security numbers, bank account and credit card data, home addresses and phone numbers, and birth dates. Then, the thief uses this information for unlawful economic gain, such as getting credit cards or obtaining loans. Fraud based on identity theft has become the fastest-growing crime in the United States. According to a September 2003 Federal Trade Commission survey, the total cost of identity theft in America surpassed $50 billion last year. The survey notes that 27 million Americans have been victims of identity theft in the past five years � and the numbers are rising fast. Last year alone, nearly 10 million Americans fell prey to this crime. Identity theft typically wreaks havoc on victims’ lives. Job opportunities, mortgages, credit and ATM cards, payroll deposits, and car loans can be jeopardized. Some victims have been unable to travel and have even been prevented from marrying until these problems have been resolved. In addition to any monies stolen, cleaning up the aftermath can be inordinately expensive and time-consuming. In fact, the Privacy Rights Clearinghouse found that the average victim devotes $800 and 175 hours to rectifying the problems spawned by identity theft. Workplace As Target Although personal information can be stolen anywhere, the workplace is a particularly attractive target. In fact, employment records are the primary source of all stolen personal information. Thieves go to great lengths to get this information, including combing through the trash of human resources or benefits departments, bribing employees who have access to personnel records, and hacking into corporate computer networks. Employer Liability Federal and state laws protect the victims. In the fall of 1998 Congress passed the Identity Theft and Assumption Deterrence Act, which made identity theft a federal offense. The law makes it illegal to knowingly use the identity of another person without his authorization in order to violate federal law or to commit a felony under applicable state law. Identity theft may also violate other federal statutes, such as credit card, computer, mail, or wire fraud. Similarly, every state, with the exception of Vermont, has enacted legislation explicitly prohibiting identity theft. While these federal and state laws seek to protect identity theft victims from perpetrators, they do not impose liability on employers for failing to secure employee personal information. But given that victims of identity theft are unlikely to recover from the thieves themselves, victims are increasingly looking to their employers for recovery for failure to protect their personal information. Recently, the stakes have gotten even higher for employers. In the past two years, a few states � California, Washington, and Georgia � have enacted statutes that specifically impose liability on the holders of the personal information, namely, employers. California has adopted extensive legislation limiting the disclosure of personal information by businesses. One California law requires employers to disclose security breaches of unencrypted personal information to affected residents. California also requires employers to remove Social Security numbers from many employee records. Notably, California laws apply to any company doing business in the state, not just to California employers. Other states are now pursuing similar measures. Washington State, for instance, recently enacted a law that holds employers responsible for “careless disposal” of business records that contain sensitive information. In addition, identity theft victims may sue employers that do not adequately protect sensitive personnel data under various common law causes of action, such as invasion of privacy and negligence. A court may find an employer liable based on an invasion of privacy claim if the disclosure of the personal information is: one, considered highly offensive to a reasonable person; two, the information is of no legitimate concern to the public; and three, the disclosed information is private in nature. Likewise, a court may find an employer negligent if it was careless in its storage, distribution, or destruction of employee records. In one recent case more than a dozen identity theft victims sued their employer, San Diego-based Ligand Pharmaceuticals, for negligence after an employee found an unlocked box of personnel records and used that information to rent apartments and purchase more than $100,000 in merchandise with credit cards. Ligand reportedly settled the negligence lawsuit out of court for an undisclosed amount in the six figures. (The company did not respond to requests for comment.) Preventing Theft And Liability Given the growth of identity theft and the potential for liability, employers should promptly take steps to protect confidential employee data:

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