Security : Fraud : Survey :
12 Million Fraud Victims Reported in 2012
The 2013 Identity Fraud Report released by Javelin Strategy & Research, 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.”
Identity Fraud Rate Rose in 2012
Javelin Strategy & Research Report, made possible by Citi and Intersections Inc.
The study found several significant identity fraud trends:
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.
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.