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By Mark Henricks
The number of identify fraud victims fell 28 percent in
2010, while the dollar amount of fraud fell even more sharply. A report by
Javelin Strategy & Research said the decline in victims and amount of
identify fraud, which slid 34 percent from $56 billion to $37 billion, was
probably due to the steep drop in reported data breaches, which were down from
604 cases in 2009, with 221 million records exposed, to 404 cases in 2010, with
26 million records exposed
In releasing results of its 2011
Identity Fraud Survey Report, Javelin noted that costs were being shifted
to consumers, who saw their costs rise. Also, rises were found in so-called
“friendly fraud” cases as well as non-credit card and new account types of
fraud.
The number of identity fraud victims decreased by 28 percent
to 8.1 million adults in the United States, three million fewer victims than
the prior year, Javelin said. The total amount of $37 billion in fraud was the
smallest amount found in the eight years the study has been conducted.
Identity fraud, which is generally defined as the
unauthorized use of another person’s personal information to achieve illicit financial
gain, is changing as well as declining, said James Van Dyke, president and
founder of Javelin Strategy & Research. Van Dyke said economic conditions
may have contributed to some of the drop. Fraud generally moves opposite to
retail sales -- when retail sales increase, fraud decreases, suggesting
economic hardship as an contributor. Increased security measures and law
enforcement successes were also factors, he said.
While the mean fraud amount per victim declined from $4,991
in 2009 to $4,607, which Javelin credited to fewer data breaches, consumer
out-of-pocket cost due to identity fraud increased 63 percent from $387 in 2009
to $631 per incident. Consumer fraud costs include paying off fraudulent debt
as well as legal and other fees to resolve fraudulent claims. Javelin said the
increase could be due to changes in the frequency of specific types of fraud.
New account and debit card fraud grew in popularity. New
account fraud was most damaging and was responsible for the greatest fraud
amount at $17 billion. This type of fraud is harder to detect and is the most
likely to severely impact the victims. Existing card fraud, meanwhile, declined
by 38 percent to $14 billion from $23 billion in 2009.
Fraud perpetrators increasingly emphasized opening new
non-bank and non-card accounts, such as health club memberships, telephone
service and cable television subscriptions. Javelin noted that checking credit
reports will not always catch this type of fraud. Consumers may need to study
financial statements, and consider using a service that monitors public
records, the company said.
New account fraud was the type of fraud most likely to
involve friendly fraud perpetrated by people known to the victim. It accounted
for roughly 30 percent of new account fraud for which the cause was known,
Javelin said.
The survey involved more than 5,000 telephone interviews
with U.S. consumers conducted from September through November 2010.
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