Enhanced awareness, improved monitoring and more stringent authentification criteria appear to be helping to reduce identity fraud in the US.
In fact, new research produced by Javelin Strategy & Research and sponsored by Fiserv, Intersections Inc. and Wells Fargo & Company, shows that approximately three million fewer adults were victimized by identity fraud in 2010, compared to 2009. That's a 28 percent drop over the past year and the largest single-year decrease since Javelin started tracking data in 2003. It exceeds the combined decline from 2003-2007, when identity fraud started to increase again. Previously, the largest decrease in consumer fraud was 800,000 consumers between 2003 and 2004.
But, not all of the data in Javelin's 2011 Identity Fraud Survey Report was as positive.
The survey also found that:
Consumer fraud costs increased in 2010. While the total number of fraud incidents decreased, the mean consumer out-of-pocket cost due to identity fraud actually increased 63 percent from $387 in 2009 to $631 per incident in 2010. Javelin says this may be attributable to changes in the types of fraud perpetrated in 2010, including new account and debit card fraud, and highlights the need for continued consumer vigilance. Consumer fraud costs include costs incurred by the victim towards payoff of any fraudulent debt as well as fees (legal or otherwise) to resolve fraudulent claims.
New account fraud was most damaging. Although all types of fraud declined over the past year, new account fraud was responsible for the greatest fraud amount ($17 billion). New account fraud, in which accounts have been opened without the victim's knowledge, is harder to detect and is the most likely to severely impact the victims. Existing card fraud amounts declined by 38 percent to $14 billion from $23 billion in 2009.
"Friendly fraud" is on the rise. Friendly fraud fraud perpetrated by people known to the victim, such as a relative or roommate grew seven percent last year, with consumers between the ages of 25-34 most likely to be victims of this type of fraud. People in this age group are most likely to have their Social Security number (SSN) stolenwith 41 percent of fraud victims in this group reporting theft of their SSN.
While it's encouraging to see the downward trend in fraud cases, overall, it's also clear that consumers and businesses must remain vigilant regarding privacy and monitoring of financial activity.
"Identity fraud underwent a marked decline and shift over the past year. This great news is a testament to the significant efforts businesses, the financial services industry and government agencies are making to educate consumers, protect data, and prevent and resolve identity fraud," said James Vana Dyke, president and founder of Javelin Strategy & Research. "Economic conditions also appear to have contributed to this year-over-year decline, as well as increased security measures and some significant law enforcement successes. However, the rise in out-of-pocket costs carries a warning. Consumers cannot put their finances on autopilot or ignore important safeguards. Simple safeguards may dramatically reduce fraud risk, such as frequently monitoring banking, credit and other financial activities, securing computers and paper records, and activating electronic alerts to help prevent fraud and address the situation quickly when it occurs."
