Fraudsters gain £1.9 billion from UK consumers each year through stealing identities, according to the National Fraud Authority.
On stealing details from individuals, they then use them to obtain goods, services and benefits.
A further £800 million is spent by authorities attempting to detect and prevent fraud.
Around 1.8 million people have their identity stolen each year, with fraudsters gaining an average of £1,000 in credit or benefits in each case.
In the first three quarters of 2010 levels of identity fraud increased by almost 10%, according to the UK Fraud Prevention Service.
This week, as part of National Identity Fraud Prevention Week the NFA is reminding people to take responsibility for protecting their identity.
Despite nine out of 10 people in the UK thinking they are at risk from identity fraud, only 44% regularly check bills and financial statements against receipts.
In addition, only 55% verify emails or calls from organisations before responding to them.
To help you stay wise to fraudulent activity, the national fraud reporting centre, Action Fraud, provides the following advice:
1. Don't throw out anything with your name, address or financial details without shredding it first.
2. Check your bank and credit card statements carefully and report anything suspicious to the financial institution concerned.
3. If you're expecting a statement and it doesn't arrive, tell your bank or credit card company.
4. Get regular copies of your credit report from a credit reference agency, such as experian or equifax.
5. Make sure your computer has up-to-date anti-virus software installed.
6. Make sure you use all the privacy settings available on social networking sites - but don't put too much personal information up there.
7. If you move house, always get Royal Mail to redirect your post.
8. Don't ignore bills, invoices or receipts for things you haven't bought or services you haven't asked for - contact the company immediately.