Identity Fraud Down 28% in 2010/ March 28th, 2011
The number of identity fraud victims in 2010 dropped by 28% to 8.1 million U.S. adults—the largest single-year decrease since 2003. And the total amount stolen decreased to $37 billion—the smallest amount in eight years. However, consumer out-of-pocket expenses rose significantly—63%, says a new study. The survey, produced by Javelin Strategy & Research, San Francisco, is the nation's longest-running study of identity fraud; it was based on 5,004 telephone interviews. The study, reported by the Credit Union National Association's News Now, defines identity fraud as unauthorized use of another person's personal information to achieve illicit financial gain. The 8.1 million fraud victims were three million fewer than in 2009, and the total amount stolen decreased from $56 billion in 2009 to $37 billion. Consumers' costs rose significantly due to the types of fraud that were successfully perpetrated and an increase in "friendly fraud," according to Javelin. "Identity fraud underwent a marked decline and shift over the past year. This great news is a testament to the significant efforts businesses, the financial services industry, and government agencies are making to educate consumers, protect data, and prevent and resolve identity fraud," says James Van Dyke, Javelin's president and founder. "Economic conditions also appear to have contributed to this year-over-year decline, as well as increased security measures and some significant law enforcement successes." Van Dyke notes the increase in out-of-pocket costs "carries a warning: Consumers cannot put their finances on autopilot or ignore important safeguards. Simple safeguards may dramatically reduce fraud risk, such as frequently monitoring banking, credit, and other financial activities, securing computers and paper records, and activating electronic alerts to help prevent fraud and address the situation quickly when it occurs."
Consumers cannot put their finances on autopilot or ignore important safeguards.Among other findings:
- The mean fraud amount per victim declined to $4,607 from $4,991 in 2009. A likely factor was the significant drop in reported data breaches. Industry reports indicate 404 breaches in 2010 with 26 million records exposed. That compares with 604 the year before, with 221 million records exposed.
- The mean consumer out-of-pocket cost due to identity fraud increased in 2010 to $631 per incident from $387 in 2009. The report attributed the rise to changes in the types of fraud perpetrated. These include new account and debit card fraud, and highlight the need for continued consumer vigilance, according to Javelin. The costs include those incurred by the victim toward payoff of any fraudulent debt as well as legal and other fees to resolve the fraudulent claims.
- New account fraud caused the most damage. Although all types of fraud declined in the past year, new account fraud, in which accounts are opened without the victim's knowledge, was responsible for the largest amount—$17 billion. Javelin reasoned this type of fraud is harder to detect and is the most likely to severely affect victims.
- Friendly fraud, or fraud perpetrated by people known to the victim such as a relative or roommate, grew 7% last year. Consumers 25 to 34 years old were most likely to be victims in this type of fraud and most likely (41%) to report theft of their Social Security number.