"Last year alone, nearly 10 million Americans had their identities stolen by criminals who rob them and the nation's businesses of nearly $50 billion through fraudulent transactions," said the President. "The bill I'm about to sign sends a clear message that a person who violates another's financial privacy will be punished."
Most identity theft, where a fraudster uses a victim's personal information in order to obtain benefits, such as access to bank accounts, social security benefits or even a passport or driving licence, occurs off-line.
Fraudsters can obtain the necessary details from rummaging through rubbish bins, looking over a victim's shoulder at a cash machine or through 'skimming' - where a credit card is passed through a reader that downloads the information contained on it, allowing another unauthorised card to be made.
But the growth of the internet has created another opportunity for fraudsters to obtain this information, through on-line scams that fool web and e-mail users into handing over personal details, whether by inadvertently downloading keylogging software that allows a third party to read information as it is typed into the computer, or by the growing phenomenon of phishing.
Phishing occurs when a fraudster sends an e-mail that contains a link to a fraudulent web site where the users are asked to provide personal account information. The e-mail and web site are usually disguised to appear to recipients as though they are from a trusted service provider, financial institution or on-line merchant.
The number of phishing attacks is rising. Around 57 million Americans have been subject to an attack, costing US banks and credit card issuers around $1.2 billion last year, according to a Gartner report issued in May. The call for action is increasing.
In response the US has tightened up the criminal penalties that may be imposed upon individuals committing identity theft.
Introduced by Congressman John Carter, and signed by the President on Thursday, the Identity Theft Penalty Enhancement Act introduces a new offence of aggravated identity theft, which means that a person convicted of a crime involving identity theft will be given an additional two years in prison, in addition to any other sentence he or she may receive.
The penalty is increased to five years, where the crime was related to terrorism.
The Act also allows for the introduction of tougher sentences for employees who steal information from their corporate database, to be used in ID theft related crimes.
The Act was signed less than a week after Senator Patrick Leahy introduced a Bill into the Senate which, if passed, would leave phishers facing a prison sentence of five years and a fine of $250,000.
The final text of the Act was not available on-line at the time of writing.