Internet-related fraud problems are less severe, less costly and not as widespread as previously thought, as most cases of identity theft actually occur offline, research has claimed.

The 2005 Identity Fraud Survey Report, released by the Better Business Bureau and Javelin Strategy & Research, found that that those who access accounts online can provide earlier detection of crime than those who receive only monthly paper statements by post.

By managing their financial activities online, consumers can reduce access to personal information on paper bills and statements that could be used to commit identity theft and fraud, the study claimed.

Victims of identity theft who detected the crime by monitoring accounts online experienced financial losses less than one-eighth of those who detected the crime via paper statements.

"Our numbers show that fears about online identity fraud may be out of proportion to the relative risk, causing consumers to ignore the most glaring issues," said James Van Dyke, Javelin's founder and principal analyst.

"Indeed, most instances of identity fraud occur through traditional channels and are paper-based, not internet-based."

The research project, sponsored by CheckFree, Visa and Wells Fargo, found that the most frequently reported source of information used to commit fraud was a lost or stolen wallet or chequebook.

It estimated that computer crimes accounted for just 11.6 per cent of all known identity fraud in 2004. Half of these digitally-driven crimes stemmed from spyware.

Among cases where the perpetrator's identity is known, half of all identity fraud was found to be committed by a friend, family member, relative, neighbour or employee. In other words, someone known to the victim.

The study also claimed that the annual monetary value of identity fraud in 2004 is similar to 2003 figures adjusted for inflation at $52.6bn. The number of identity fraud victims dropped from 10.1 million to 9.3 million in 2004 compared to 2003.

"This new research contradicts some common assumptions about identity theft and points to new paths of prevention," said Ken Hunter, president and chief executive at the Better Business Bureau.

"There are several steps consumers can take to improve their identity safety and protect themselves against this type of fraud. An informed consumer is an empowered consumer."