According to New Javelin Strategy & Research Study
For First Time Ever More Social Security Numbers Stolen than Credit Card Numbers
Online Credit Card Fraud is 81 percent More Likely Than Point of Sale
SAN FRANCISCO, February 9, 2018 – The 2018 Identity Fraud Study released by Javelin Strategy & Research, and sponsored by Identity Guard, found that the number of identity fraud victims grew to 16.7 million U.S. victims. This is an 8 percent increase from last year and a record high since Javelin Strategy & Research began tracking identity fraud in 2003.
The study showed that despite industry efforts to prevent identity fraud, identity thieves successfully netted 1.3 million more victims in 2017, with the amount stolen rising to $16.8 billion. With the adoption of EMV or embedded chip cards and terminals, the types of identity fraud continued to move online and away from physical stores. Fraud is also getting more complicated – criminals are opening more new accounts to compromise accounts consumers already have.
This last year saw a notable change in how fraud is committed. While credit card accounts remained the most likely targets for new account fraud, there was significant growth in new intermediary accounts, such as email payments (e.g. PayPal or Venmo) and other internet accounts (e.g. e-commerce companies like Amazon) by fraudsters. These account types are not as easily traded for cash, but are invaluable in helping criminals transfer funds from their victims.
The study also found three big changes in data breaches in 2017:
- Nearly a third (30 percent) of U.S. consumers were notified of a breach in the past year, up from 12 percent in 2016.
- For the first time ever, Social Security numbers (35 percent) were compromised more than credit card numbers (30 percent) in breaches.
- Data breaches are causing consumers to lose trust in institutions. These trends combined are causing consumers to see companies and businesses mainly responsible for preventing fraud and securing their data.
“2017 was a runaway year for fraudsters, and with the amount of valid information they have on consumers, their attacks are just getting more complex,” said Al Pascual, senior vice president, research director and head of fraud & security, Javelin Strategy & Research. “Fraudsters are growing more sophisticated in response to industry’s efforts to implement better security. Fortunately, there are a variety of digital tools that consumers can leverage to stay better informed on the status of their identities and accounts, and to ultimately stay better protected.”
The annual 2018 Identity Fraud Study is a comprehensive analysis of identity fraud trends, independently produced by Javelin Strategy & Research and made possible by Identity Guard, a provider of identity risk management and privacy protection services for consumers and businesses. The study is in its fifteenth consecutive year, and is the nation’s longest-running study of identity fraud, with 74,000 respondents surveyed since 2003.
The 2018 Identity Fraud Study found four significant trends:
- Identity fraud at record high – In 2017, 6.64 percent of consumers became victims of identity fraud, an increase of almost one million victims from the previous year. This increase was driven by growth in both existing non-card fraud and account takeover (ATO).
- Account takeover grew significantly – Account takeover tripled over the past year, reaching a four-year high. Total ATO losses reached $5.1 billion, a 120 percent increase from 2016. Account takeover continues to be one of the most challenging fraud types for consumers with victims paying an average of $290 in out-of-pocket costs and spending 16 hours on average to resolve. That’s enough time for someone to binge watch the first and second seasons of Stranger Things.
- Online shopping presents the greatest fraud opportunity – Because of the changes to credit cards, Card Not Present Fraud is now 81 percent more likely than point of sale fraud, the greatest gap Javelin has observed.
- Fraudsters are getting more sophisticated – Fraudsters are getting smarter about their attacks, and using more complicated methods to steal money. One and a half million victims of existing account fraud had an intermediary account opened in their name. This is 200 percent greater than the previous high.
New this year, the 2018 Identity Fraud Study examined the impact of constant news coverage about data breaches is having on consumers. With cases of fraud rising and extensive media coverage of the Equifax breach, the number of consumers who are concerned about fraud rose from 51 percent in 2016 to 69 percent in 2017. Breaches rank at the top of identity-related threats facing consumers according to those surveyed. Javelin found that 63 percent of consumers report that they are ‘very’ or ‘extremely’ concerned about the threat of breaches, but many are unsure of how to effectively protect themselves. Cynicism about breach notifications rose dramatically, with 64 percent of breach victims indicating they believe that breach notifications do little to help protect them and are more about providing legal cover for the breached company. Bottom line: consumers are the seeing the responsibility for preventing fraud shift onto businesses storing their data instead of themselves.
Five Safety Tips to Protect Consumers
Javelin believes that consumers who exercise good online security habits can minimize their risk and impact of identity fraud. The following are five recommendations for consumers to follow:
- Turn on two-factor authentication wherever possible – Enabling two-factor authentication on sites that have that capability can make it more difficult for someone to take over your accounts. For sites without two-factor authentication, use strong passwords or a password manager to secure accounts.
- Secure your devices –Criminals have shifted their focus to digital devices because of the access they can provide into accounts and personal information. Secure online and mobile devices by instituting a screen lock, encrypting data stored on the devices, avoiding public Wi-Fi and/or using a VPN, and installing anti-malware.
- Place a security freeze – If you are not planning on opening new accounts in the near future, a freeze on your credit report can help prevent others from opening one in your name – which is especially important if you have been a victim of data breach that has exposed sensitive information. You can place credit freezes with all three credit bureaus to prevent everyone except for existing creditors and certain government agencies from accessing your credit report. Costs vary per state, but are typically below $20. If you need to open an account requiring a credit check, the freeze can be lifted through the credit bureaus.
- Sign up for account alerts everywhere – A variety of financial organizations, like your bank, let you set up alerts about suspicious activity – other types of businesses, such as email and social media providers have similar services. These notifications can be sent through email or text message.
- Help protect yourself from unauthorized online transactions –Some financial institutions will send you alerts about online transactions, will let you place limits on online transactions, or offer advanced security controls through 3-D Secure (e.g., Verified by Visa, SecureCode from Mastercard, etc.). These can help you quickly detect and even prevent online fraud from occurring.
For more safety tips, visit www.identityguard.com/news-insights
Additional Consumer Resources
To report incidents of suspected fraud or identity theft, visit the FTC online at:
About Identity Guard
Identity Guard is a proactive identity theft protection service that delivers premium solutions to help busy families and individuals take control over their personal and private information. Identity Guard services help educate and empower individuals to protect themselves from the growing threat of identity theft with premier identity protection and credit monitoring solutions. Identity Guard is provided by Intersections Inc. (NASDAQ: INTX), which, since 1996, has protected more than 47 million consumers. To learn more, visit www.identityguard.com.
About Javelin Strategy & Research
Javelin Strategy & Research, a Greenwich Associates LLC company, is a research-based advisory firm that helps its clients to make better-informed business decisions in a digital financial world. Our analysts offer unbiased, actionable insights and unearth opportunities that help financial institutions, government entities, payment companies, merchants, and other technology providers sustainably increase profits.
All trademarks are the property of their respective owners.