In 2011 identity fraud increased by 13 percent. More than 11.6 million adults became a victim of identity fraud in the United States, while the dollar amount stolen held steady, according to Javelin Strategy & Research.
In October 2011, Javelin Strategy & Research conducted an address-based survey of 5,022 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.
The study found four overall fraud trends:
Identity fraud incidents increased, amount stolen remained steady – The number of identity fraud incidents increased by 13 percent over the past year, but the dollar amount stolen remained steady. Additionally, consumer out-of-pocket costs have decreased by 44 percent since 2004, likely due to the improved prevention and detection tools that have come available as well as fraud alerts leading to reduced detection time.
Social behaviors put consumers at risk – For the first time, Javelin examined social media and mobile phone behaviors and identified certain social and mobile behaviors that had higher incidence rates of fraud than all consumers. LinkedIn, Google+, Twitter and Facebook users had the highest incidence of fraud although there is no proof of direct causation. The survey found that despite warnings that social networks are a great resource for fraudsters, consumers are still sharing a significant amount of personal information frequently used to authenticate a consumer’s identity.
Surprisingly those with public profiles (those visible to everyone) were more likely to expose this personal information. Specifically, 68 percent of people with public social media profiles shared their birthday information (with 45 percent sharing month, date and year); 63 percent shared their high school name; 18 percent shared their phone number; and 12 percent shared their pet’s name—all are prime examples of personal information a company would use to verify your identity.
Smartphone owners experience greater incidence of fraud – The survey found seven percent of smartphone owners were victims of identity fraud. This is a 1/3rd higher incidence rate compared to the general public. Part of this increase may be attributable to consumer behavior: 32 percent of smartphone owners do not update to a new operating system when it becomes available; 62 percent do not use a password on their home screen—enabling anyone to access their information if the phone is lost; and 32 percent save login information on their device
Data Breaches increasing and more damaging – One likely contributing factor to the fraud increase was the 67 percent increase in the number of Americans impacted by data breaches compared to 2010. Javelin Strategy & Research found victims of data breaches are 9.5 times more likely to be a victim of identity fraud than consumers who did not receive such a data breach letter.
Approximately 1.4 million more adults were victimized by identity fraud in 2011, compared to 2010. Countering this rise is the successful effort to combat identity fraud coupled with greater consumer awareness of the issue. While the number of fraud incidents increased, the total amount lost remained steady.
One of the key factors potentially contributing to the increase in incidents was the significant rise in data breaches. The survey found 15 percent of Americans, or about 36 million people, were notified of a data breach in 2011. Consumers receiving a data breach notification were 9.5 times more likely to become a victim of identify fraud.
According to the survey the three most common items exposed during a data breach are:
- Credit card number
- Debit card number
- Social Security number.
Some factors contributing to the decline in overall fraud amounts are the more stringent criteria financial institutions are applying to authenticate users and determine credit risk, as well as more Americans monitoring accounts online and using monitoring protection services that can provide alerts and updates. For the first time, more Americans detected fraud by monitoring accounts through the internet, ATM or other electronic means than by examining paper records (24 percent vs. 11 percent). Additionally, there was a 42 percent decline in new account fraud, which can be the most costly and difficult to detect.
“While identity fraud incidence increased last year, it is becoming less profitable for fraudsters. Consumers, the financial services industry, law enforcement and government agencies are stopping fraud earlier and making new account fraud more difficult to perpetrate,” said James Van Dyke, president and founder of Javelin Strategy & Research. “The study found specific opportunities for improvement. Consumers must be vigilant and in control of their personal data as they adopt new mobile and social technologies in order to not make it easier for fraudsters to perpetrate crimes. Our survey found data breaches are increasingly putting consumers at risk. Consumers and organizations should always carefully and actively monitor accounts, but they should pay particular attention after an incident.”