This article is simply wrong on a number of fronts. I invite you to read the large volume of comments left by readers for a sense of why the author just doesn't understand what she's talking about.

As an example, the article states that "independent researchers at Javelin Strategy & Research show fraud declining to $48 billion in 2008 from $58 billion in 2003." Yet James Van Dyke, the head of Javelin, comments that "based on annual phone surveys of about 5,000 US consumers from Javelin, there was actually a statistically-significant increase in the number of victims over the past year", and that "we all need to be vigilant against a crime that causes the average victim to spend 30 hours restoring their personal affairs."

Despite your assertion that "the people who have their identity stolen don't lose much", even the author acknowledges that, in the case of new account fraud "a victims average losses only totaled $579." Oh, it's "only" $579? That a lot of money to a lot of people.

Funny how the author says that identity theft amounts to a "fear campaign designed to get us to buy expensive services that we don't need", yet in the beginning of the article says that online merchants who are fooled by identity thieves "should have done a better job figuring out who I was before parting with my money or their goods." And how would they do that? Isn't that what this digital identity thing is all about? Or would that be just another service we don't need?
 

I think Dave's post (or re-post of the article) is mainly pointing out Fear Mongering to sell products, which cannot be denied. The main point of his post and the article is that "Identity Theft" is not the issue, the issue is Fraud. Identity Theft (as a label) is misused and a Marketing trick. Does that mean that Fraud is any less of an evil? Nope.