Identity Fraud Levels Drop to 4-Year Low
Identity theft declined in 2010, but victims were forced to pay more out-of-pocket when defrauded, according to a survey by Javelin Strategy & Research.
The number of identity fraud victims decreased by 28 percent last year, bringing the total number of victims down to 2007 levels. Total annual fraud also decreased from $56 billion to $37 billion — the smallest dollar amount in the past eight years the study has been conducted.
The reason? Researchers found an almost-perfect inverse relation between the state of the economy and identity fraud. “The fraud incidence rate (has) almost a perfect inverse correlation to retail sales,” says James Van Dyke, president and founder of Javelin. “As criminals have less money to spend on stuff, they are more likely to turn into identity criminals.”
The decline is also attributed to fewer reported data breaches — just seven percent of U.S. consumers received notice their personal information was exposed to a data breach last year. Researchers note increasingly stringent creditworthiness guidelines from financial institutions also helped the decline in identity fraud, along with, an increase in online and mobile monitoring of financial accounts and an increase in the use of protection services.
But despite the drop in overall fraud, the cost to resolve identity fraud issues rose last year. Among the 5,004 people interviewed, the mean consumer out-of-pocket cost jumped 63 percent in 2010, rising from $387 in 2009 to $631 in 2010.
Why the dramatic uptick in price? The survey notes changes in the type of fraud being perpetuated — like new account fraud, which is harder to detect and is the most damaging to consumers — as one culprit. New account fraud is also popular with “friendly fraudsters,” who target people they are personally acquainted with such as roommates or relatives.