The 2013 Identity Fraud Report released today by Javelin Strategy
Research (www.javelinstrategy.com),
reports that in 2012 identity fraud incidents increased by more than one
million victims and fraudsters stole more than $21 billion, the highest
amount since 2009. The study found 12.6 million victims of identity
fraud in the United States in the past year, which equates to 1 victim
every 3 seconds. The report also found that nearly 1 in 4 data breach
letter recipients became a victim of identity fraud, with breaches
involving Social Security numbers to be the most damaging. Over the past
year, companies are responding more quickly which means a consumer’s
information is being misused for fewer days than ever before, and the
mean cost per victim has been flattening.
Now in its tenth consecutive year, the comprehensive analysis of
identity fraud trends is independently produced by Javelin
Strategy Research, and made possible by Citi
and Intersections
Inc., companies dedicated to consumer fraud prevention and
education. It is the nation’s longest-running study of identity fraud,
with 48,200 respondents surveyed over the past 10 years.
Identity fraud is defined as the unauthorized use of another person’s
personal information to achieve illicit financial gain. Identity fraud
can range from simply using a stolen payment card account, to making a
fraudulent purchase, to taking control of existing accounts or opening
new accounts, including mobile phone or utility services. In October
2012, Javelin Strategy Research conducted an address-based survey of
5,249 U.S. consumers to identify important findings about the impact of
fraud, uncover areas of progress and identify areas in which consumers
must exercise continued vigilance.
“This past year was one where there were both successes and setbacks for
consumers, institutions and fraudsters,” said Jim Van Dyke, CEO of
Javelin Strategy Research. “Consumers and institutions are now
starting to act as partners—detecting and stopping fraud faster than
ever before. But fraudsters are acting quicker than ever before and
victimizing more consumers. Consumers must take data breach
notifications more seriously and maintain vigilance to safeguard
personal information, especially Social Security numbers.”
Key Findings
The study found several significant identity fraud trends:
-
Identity fraud incidents and amount stolen increased—The number
of identity fraud incidents increased by one million more consumers
over the past year, and the dollar amount stolen increased to $21
billion, a three-year high but still significantly lower than the
all-time high of $47 billion in 2004. This equates to 1 incident of
identity fraud every 3 seconds. -
1 in 4 data breach notification recipients became a victim of
identity fraud—This year, almost 1 in 4 consumers that received a
data breach letter became a victim of identity fraud, which is the
highest rate since 2010. This underscores the need for consumers to
take all notifications seriously. Not all breaches are created equal.
The study found consumers who had their Social Security number
compromised in a data breach were 5 times more likely to be a fraud
victim than an average consumer. -
Fraudsters misuse information fewer days than before—Consumer
information was misused for an average of 48 days in 2012, down from
55 days in 2011 and 95 days in 2010. Misuse time was down for all
types of fraud including fraud on cards, loans, bank accounts, mobile
phone bills and other types of fraud due to consumer and industry
action. More than 50 percent of victims were actively detecting fraud
using financial alerts, credit monitoring or identity protection
services and by monitoring their accounts. -
Small retailers are losing out—Fraud victims are more selective
where they shop after an incident, and small businesses were the most
dramatically impacted. The study found that 15 percent of all fraud
victims decided to change behaviors and avoid smaller online
merchants. This is a much greater percentage than those that avoid
gaming sites or larger retailers.
Understanding the Findings
Fraud incidents and the amount stolen continued its upward trend.
Approximately one million more adults were victimized by identity fraud
in 2012, compared to 2011. This is the second highest number of victims
since the study started.
Data breaches continued to play a significant role in identity fraud.
Organizations alert their customers when their information was
compromised and sent a letter (i.e. “data breach letter”). Receiving
this letter does not define a consumer as a victim of fraud. Yet the
survey found 1 in 4 data breach notification recipients became a victim
of identity fraud in 2012, compared to less than 1 in 5 in 2011.
The personal information lost in data breaches are frequently used to
commit fraud. While credit card numbers remain the most popular item
revealed in a data breach, in reality other information can be more
useful to fraudsters. Personal information such as online banking login,
user name and password were compromised in 10 percent of incidents and
16 percent of incidents included Social Security numbers. Recipients
need to take data breach letters seriously and protect themselves by
enrolling in identity protection services and taking other steps.
It’s not just online fraud or data breaches. More than 1.5 million
consumers were victims of familiar fraud, which is fraud when victims
know the fraudster. Lower income consumers were more likely to be
victims of familiar fraud. The information most likely to be taken via
familiar fraud includes name, Social Security number, address and
checking account numbers.
Encouragingly, consumers, financial institutions and identity protection
services are working closely together and that is having a positive
impact. In 33 percent of cases, consumers were notified of the fraud by
a bank or card issuer. Email and other proactive alerts can help
consumers discover and stop identity fraud more quickly. Consumers must
retain vigilance as 50 percent found the fraud themselves by monitoring
their bank accounts, statements, credit scores and purchasing identity
protection services. When reported in a timely manner, costs can be kept
down.
Seven Safety Tips to Protect Consumers
Javelin Strategy Research recommends that consumers work in
partnership with institutions to minimize their risk and impact of
identity fraud by following a three-step approach: Prevention, Detection
and Resolution™.
Prevention
1. Keep personal data private—Secure your personal and financial
records behind a password or in a locked storage device whether at home,
at work and on your mobile device. Familiar fraud is a serious issue
with 12 percent of fraud victims knowing the perpetrator personally.
Other ways to secure information include: not mailing checks to pay
bills, shredding documents, monitoring your accounts weekly, and
protecting your computer and mobile device with updated security
software. Use a trusted and secure Internet connection (not a public
Wi-Fi hotspot) when transmitting personal or financial information, and
direct deposit payroll checks.
2. Look for security features—When paying online be sure you have
a secure connection. Two ways you can denote a secure connection are to
look for “https” and not just http at the start of the merchant’s web
address or a bright green box and padlock graphic in the address bar of
most browsers. Check for either one of these before entering personal or
payment information.
3. Think before you share—Before providing any sensitive
information, question who is asking for the information. Why do they
need it? How is the information being used? Do not provide the
information if you are unsure about the legitimacy of the request. Be
careful when clicking on links that then take you to a page asking for
personal information. If an organization asks you for your Social
Security number to validate your identity, request another question.
Detection
4. Be Proactive—There are many different levels of identity theft
protection and consumers should work in partnership with institutions on
identity theft prevention. By setting up alerts that can be sent via
e-mail and to a mobile device and monitoring accounts online at bank and
credit card websites, consumers can take a more proactive role in
detecting identity fraud and stopping misuse. In 2012, 50 percent of
fraud was first detected by the victims.
5. Enlist others—There are a wide array of services available to
consumers who want extra protection and peace of mind including payment
transaction alerts, credit monitoring, credit report fraud alerts,
credit freezes and database scanning. 3 out of every 5 identity fraud
victims did not know the source of their fraud, but many services will
now provide alerts directly to a consumer’s smartphone. Some services
can be obtained for a fee and others at no cost to the consumers who are
victims of a data breach. These services can monitor credit reports,
public records and online activity for signs of fraudulent use of
personal information.
Resolution
6. Take any data breach notification seriously—If you receive a
data breach notification, take it very seriously as you are at a much
higher risk according to the 2013
Identity Fraud Report. If you receive an offer from your financial
institution or retailer for a free monitoring service after a breach,
you should take advantage of the offer, closely monitor your accounts
and put a fraud alert on your credit report.
7. Don’t wait. Report problems immediately—If you suspect or
uncover fraud, contact your bank, credit union, wireless provider or
protection services provider to take advantage of resolution services,
loss protections and methods to secure your accounts. A fast response
can enhance the likelihood that losses are reduced, and law enforcement
can pursue fraudsters so they experience consequences for their actions.
For Additional Educational Tips, Consumers Should Visit:
-
Citi
https://online.citibank.com/US/JRS/pands/detail.do?ID=SecurityCenter -
Intersections Inc.
http://www.identityguard.com/what-is-identity-theft/
To take an identity fraud safety quiz, download a free consumer version
of Javelin’s identity fraud report, and get additional safety tips,
visit www.idsafety.net.
About Javelin Strategy Research
Javelin Strategy Research, a division of Greenwich Associates,
provides strategic insights into customer transactions, increasing
sustainable profits for financial institutions, government, payments
companies, merchants and other technology providers. Javelin’s
independent insights result from a uniquely rigorous three-dimensional
research process that assesses customers, providers, and the
transactions ecosystem.
For more information on this project or other research studies by
Javelin Strategy Research, visit www.javelinstrategy.com/research.
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