2014 was a mixed year in the fight against identity fraud, with some advances and some setbacks, according to Javelin Strategy and Research.
Javelin’s study found that fraudsters stole $16 billion from 12.7 million U.S. consumers last year, a rate of a new identity fraud victim every two seconds.
However, new account fraud—when someone opens an account in someone else’s name unawares—hit a record low in 2014, although it continues to be one of the most damaging types of fraud.
Data breaches were a big headline in 2014, and they had a significant impact on identity fraud. The study found that two-thirds of identity fraud victims in 2014 had previously received a data breach notification in the same year, with many indicating their wariness about shopping at merchants, including big box retailers.
By the numbers
Javelin says fraud amounts looked at year by year were: 2010, $20 billion; 2011, $18 billion; 2012, $21 billion; 2013, $18 billion; 2014, $16 billion.
Numbers of victims, per year: 2010, 10.2 million; 2011, 11.6 million; 2012, 12.6 million; 2013, 13.1 million; 2014, 12.7 million.
“Despite the headlines, the occurrence of identity fraud hasn’t changed much over the past year, and it is still a significant problem,” says Al Pascual, director of fraud and security, Javelin Strategy & Research. “Consumers, financial institutions, and retailers are all taking aggressive steps, yet we must remain vigilant.”
How fraud breaks down demographically
Among several demographic segments analyzed, students indicated the least amount of concern about fraud occurring, with more than 64% saying they were not very concerned about fraud. Yet, this same group is more likely to perceive significant effects due to the occurrence of fraud (15% experiencing moderate or severe impact).
Students are also the least likely to detect identity fraud themselves. In fact, 22% of students were notified that they were a victim of identity fraud either by a debt collector or when they were denied credit, three times higher than average fraud victims.
How victimhood impacts usage
2014 saw a significant amount of data breaches, most notably from retailers Neiman Marcus, Home Depot, Staples, and Michael’s, as well as JPMorgan Chase. These breaches had a great impact on consumer purchasing decisions, with 28% of fraud victims saying they avoided merchants post-fraud.
Notably, individuals whose credit or debit cards were breached in the past year were nearly three times more likely to be an identity fraud victim. This highlights the need for increased security, vigilance, and quick response by retailers.
New account fraud reached record lows in 2014, yet the study showed that victims of new account fraud are three times more likely to take a year or more to discover that their identities were misused compared to other types of fraud, such as existing non-card accounts.
This can open the door for fraudsters to be able to use the victim’s identity for illicit behavior for a long period of time, which can result in greater harm to consumers in the form of financial losses, and problems with their credit history and scores. These findings reinforce the need for consumers to actively monitor their identities and accounts.
- Goldman Sachs, J.P. Morgan and Citigroup Fintech Investments Growing Like Never Before
- U.S. Banks Leaders in Technology Innovation According to New Survey
- Online Bank Aspiration Launches Debit Card that Rewards Social Responsibility
- The Future of Asset Management, Part I: Where We’ve Been Explains Why We’re Here
- Freddie Mac and Fannie Mae Have Two Reasons to Celebrate