2009 Identity Fraud Survey Report: Identity Fraud on the Rise But Consumer Costs Plummet as Protections Increase

Published by: Javelin Strategy & Research

Published: Feb. 1, 2009 - 97 Pages

Table of Contents

Executive Summary

Major Findings

Key Demographic Findings

Recommendations

Recommendations to Institutions

Recommendations to Consumers

Recommendations to Merchants

Measuring the Impact of Identity Fraud

Regional Overview of Identity Fraud: Incidence Rates by State

Existing Accounts Fraud

Existing Card Accounts Fraud

Consumers Suffer Almost Twice as Many Credit Frauds as Debit Frauds

Credit versus Debit

Existing Credit Card Fraud Incidence Rates Drive Increase

Average Fraud and Consumer Costs for Debit, Credit and All Existing Cards

2008 Existing Credit Card and Debit/Prepaid Card Total Fraud Changes

Victims Less Impacted by Existing Network-Branded Credit Card Frauds

Existing Non-Card Accounts Fraud

Which Existing Non-Card Accounts Have the Highest Rates of Misuse?

Account Controls Improving; Addresses Still Most Vulnerable

Identity Theft Address Discrepancy and Red Flags Rules: No Mercy for Noncompliant FIs

New Accounts and Other Frauds

Synthetic Identity Fraud

Decrease in Fraudulent New Network-Branded Credit Cards

Data Breaches ¯ Sidebar

What Types of Information Are Compromised?

Identity Breaches Among Children

Preventing Identity Fraud

Prevention Capabilities Increase in 2008 - Staying One Step Ahead

How Is Information Obtained?

Female Victims Victimized From In-Store Purchases

Fraud Amounts Remain Highest for Traditional Crimes

Detecting Identity Fraud

Consumer Self- Detection Leads to Faster Discovery of Fraud

The Identity Fraud Life-Cycle

What Means Are Used to Commit Fraud?

How Long Is Information Misused?

How Is Misuse Length Linked to the Way Information Is Obtained?

How Long Does It Take to Detect Identity Fraud?

How Long Does It Take to Detect Fraud for Each Detection Method?

How Is Identity Fraud Detected?

Which Detection Methods Result in the Lowest Average Fraud Amounts?

Which Method of Detection Is Most Effective for Each Fraud Type?

How Does Detection Method Correlate with Consumer Costs?

Consumers More Apt to Discover Debit Fraud, While FIs Continue to Excel in Detecting

Credit Frauds

Resolving Identity Fraud

Consumer Costs

Detection Times and Consumer Costs

Overall Average Resolution Times Increase

Legal Actions Taken by Consumers

Consumer Profiles ¯ An Overview

The Risks by Gender

The Risks by Income

The Risks by Age Group

The Millennials (18 - 24)

Seniors

The Risks by Ethnicity

Latinos Less Impacted by Existing Card Fraud, at Higher Risk for New Accounts Fraud

Consumer Behaviors

How Does Identity Fraud Alter Consumer Behavior?

Victim Responses Vary by Age

18- to-24 year-old Fraud Victims React by Avoiding Certain Merchants

Related Research

Appendix

Glossary

Methodology

Companies Mentioned

Table of Figures

Figure 1: Overall Measures of Impact

Figure 2: Total Annual Cost of Fraud and Incidence Rates 2004-2008

Figure 3: Incidence Rates and Average Fraud Amounts for New Accounts by Year

Figure 4: Incidence Rates and Average Fraud Amounts for All Existing Accounts by Year

Figure 5: Incidence Rates and Average Fraud Amounts for Existing Card Accounts Versus Existing Non-Card

Accounts by Year

Figure 6: Numbers of Victims (in Millions) and One-Year Incidence Rates

Figure 7: U.S. Fraud Incidence Rates by State, Averaged Over Three Years

Figure 8: Existing Accounts Fraud Total Annual Cost by Type of Fraud for 2006-2008

Figure 9: Historical Incidence Rates by Fraud Type (One-Year Data)

Figure 10: Existing Card Accounts Total Annual Fraud Amounts and Incidence Rates 2006-2008

Figure 11: Existing Card Fraud by Credit and Debit Percentages

Figure 12: Incidence Rates for Existing Card Fraud by Type

Figure 13: Existing Card Fraud by Type: Mean and Median Fraud and Consumer Costs

Figure 14: Total Dollar Fraud Amounts for Existing Card Fraud by Credit vs. Debit

Figure 15: Mean Fraud and Consumer Costs for Store- and Network-Branded Credit Cards

Figure 16: Existing Non-Card Accounts Total Annual Fraud for 2006-2008

Figure 17: Types of Existing Non-card Accounts Misused 2007-2008

Figure 18: Account Takeover Methods 2007-2008

Figure 19: New Accounts Fraud Total Annual Cost and Incidence Rates 2006-2008

Figure 20: Fraudulent New Accounts Opened

Figure 21: Personally Identifiable Information Obtained by Fraudsters

Figure 22: Percentages of Financial Institutions Meeting Safety Criteria by Category

Figure 23: Means of Access

Figure 24: Percentage of Victims Who Know How Their Information Was Obtained

Figure 25: Incidence Rates of Transactional Fraud by Type

Figure 26: Average Fraud Amount by Means of Access (Inflation-Adjusted)

Figure 27: Mean Fraud Duration and Detection Times by Self- and External Detection

Figure 28: Average Fraud Lifecycles by Type

Figure 29: How Long After Compromise Did Misuse Start? (2005-2008)

Figure 30: Means of Misuse

Figure 31: Mean Days of Misuse by Fraud Types Longitudinally for 2006-2008

Figure 32: Average Length of Misuse by Method of Access

Figure 33: Days to Detect Fraud by Detection Method

Figure 34: How Is Identity Fraud Detected?

Figure 35: Average Fraud Amounts by Detection Method for 2007 and 2008

Figure 36: Self- Versus Non-Self-Detection by Fraud Type

Figure 37: Average Consumer Costs by Detection Method (Inflation-Adjusted)

Figure 38: Methods of Detection for Existing Credit and Debit Card Fraud

Figure 39: Average Dollar Consumer Cost by Detection Time

Figure 40: Average Number of Hours to Resolve Fraud

Figure 41: Types of Legal Actions Taken

Figure 42: Incidence Rates and Average Fraud Costs by Gender

Figure 43: Incidence Rates by Gender

Figure 44: Beginning of Misuse by Gender of Victim

Figure 45: Incidence Rates and Mean Fraud Costs by Income Levels

Figure 46: Victims Who Knew Their Perpetrators Personally By Income Level

Figure 47: Victims Who Knew Their Perpetrators Personally By Age

Figure 48: Incidence Rates and Average Fraud Costs by Age

Figure 49: Incidence Rates and Average Fraud Costs by Ethnicity

Figure 50: Percentages of New Accounts Fraud Victims by Ethnicity

Figure 51: Consumer Financial Behaviors

Figure 52: Consumer Behavior Changes After Fraud Victimization

Figure 53: Changes in Fraud Victims’ Financial Behavior

Figure 54: Responses to Fraud by Age for 18- to-24-Year-Olds Versus All Victims

Figure 55: Numbers of Victims Before Weighting by Year

Figure 56: Mean Dollar Value of Misappropriated Funds

Figure 57: Three-Year Averaging of Fraud Amounts

Abstract

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