The Identity Fraud Economic Divide: Reduce Consumer Losses by Customizing Protection Efforts to Income Levels

Published by: Javelin Strategy & Research

Published: Sep. 1, 2007 - 27 Pages

Table of Contents

Overview

Primary Questions

Findings and Analysis

Methodology and Definitions

Recommendations

Lower Income Segment

Higher Income Segment

Higher Income Has Highest Fraud Rates at 5.37%, But Lowest Consumer Costs

Lower Income Has Lowest Fraud Rates, but Highest Consumer Costs at $603

Lower Income Hindered by Disinclination to Transact Online, Not Necessarily Lack of Access

Some 57% of Lower Income Access Web Versus 69% of all Consumers

Victims Who Switch FIs and Forms of Payment May Have Greatest Impact

After Identity Fraud: Lower-Income Victims Avoid Online Banking while Upper-Income Victims Increase Online Monitoring

Debit Card Fraud More Prevalent for Lower Income

Credit Card Fraud More Common Among Middle and Upper Income Segments

For Lower Income Individuals, Fraud Takes Longer to Detect

Time from Compromise to Misuse Significantly Shorter for Middle to Upper Income

Higher- and Middle-Income Groups Victimized More Often with New Store-branded Credit Cards

Lower Income More Often Defrauded with New Telephone Accounts

Highest Income Level Suffers Highest Rates of Existing Card Fraud at 4.54%

Existing Card Fraud Higher for All Levels of Income

Appendix

Higher Income Consumers $100K-$149K Pay Higher Average Consumer Costs ($709)

Income Breakdown Shows Resolution Time Grows as Income Shrinks

After Fraud, Different Income Groups React in Opposite Ways

Higher Income Turns to Online Monitoring; Lower Income Turns Away from Online Channel

Consumer Education Needed

Some 68% Access Internet but only 60% Use Anti-Malware

Highest Average Fraud Amounts and Consumer Costs Experienced by Upper Income Asians despite Fast Resolution Times

African Americans Suffer Highest Rates but Lowest Fraud Amounts of any Ethnicity

Middle Income Victims More Likely to Experience Fraud from a Purchase or Transaction

Family Members Are Frequent Fraud Sources for Upper and Lower Income Victims

Regardless of Income Level, Half of All Fraud Victims Monitor their Accounts Online More Frequently

Two-thirds of Victims Avoid Online Registration of Personal Information

Nearly Half of Existing Non-Card Fraud Victims are Lower Income Individuals

Middle Income Consumers Comprise 30% of Existing Non-Card Victims

Misuse Duration Is Significantly Shorter for Most Middle- and Higher-Income Consumers

Almost 16% of Lower Income Consumers Report Misuse that Lasts One Year or More

Lower-Income Victims Engaging In More Traditional Fraud Protection Activities Prior to Information Compromise (By Income Group)

Online Bill Pay Is Low among Fraud Victims from All Income Groups

The Lower the Income Level, the Longer the Fraud Detection Times

Over Half of Middle- and Upper-Income Victims’ Frauds Are Detected Within One Week

Table of Charts

Chart 1: Incidence Rates, Fraud Costs, and Resolution Times (by Income Level)

Chart 2: Consumer Behaviors among Individuals with Internet Access (By Income Level)

Chart 3: Impact of Identity Fraud on Consumer Behaviors (by Income Level)

Chart 4: Existing Credit Card versus Existing Debit Card Fraud (by Income Level)

Chart 5: Fraud Lifecycle and Resolution Time (by Income Level)

Chart 6: Prevalence of New Account Fraud (By Income Level)

Chart 7: Table of One-year Fraud Incidence Rates (by Income Level)

Chart 8: Incidence Rates and Average Fraud Costs (by All Income Levels)

Chart 9: Changed Behaviors of Highest Income and Lowest Income Adults Due to ID Fraud

Chart 10: Consumer Financial Behaviors (All Consumers)

Chart 11: Table of Incidence Rates and Average Fraud Costs (by Ethnicity)

Chart 12: Source of Theft of Personal Information (by Income Level)

Chart 13: Consumer Behavior Changes after Fraud Victimization (All Fraud Victims)

Chart 14: Breakdown of Existing Non-Card Fraud Victims (by Income Level)

Chart 15: Duration of Misuse (By Income Level)

Chart 16: Consumer Financial Behaviors (By Income Level)

Chart 17: Fraud Detection Times from Misuse to Discovery (By Income Level)

Abstract

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