Neil O’Farrell, Intersections Consumer Security Adviser is back today with insights about the 2011 Identity Fraud Survey from Javelin Strategy and Research.
In case you haven't heard the good news, identity theft is not just down, it's down dramatically. According to the annual Identity Fraud Survey Report just released by Javelin Strategy & Research, the number of identity thefts in the United States in 2010 totaled 8.1 million, the fewest since 2007 and down from 11.1 million victims in 2009. The cost of identity theft overall also dropped dramatically, from $54 billion in 2009 to an estimated $37 billion last year.
So why the surprise drop? There are likely a number of factors and many theories:
- The significant drop in reported data breaches in the last year meant fewer stolen or compromised records were making it into the hands of criminals.
- Banks are getting steadily better at security, and credit card companies are spotting potential fraud much faster.
- Consumer education and awareness are improving, and more customers seem to be taking the right steps to protect themselves.
- Cautious banks have tightened lending, so it has become much harder for everyone, including thieves, to open new credit card accounts.
But not all the news was good. Out-of-pocket costs for victims are ticking up again from $387 in 2009 to $631 per incident in 2010. This has been attributed to a focus by thieves on debit card fraud over credit card fraud.
Losses from new account fraud are still substantial and are likely to continue that way. Victims often lose more to new account fraud than fraud to existing accounts because they simply don't know the new accounts exist until it's far too late.
And "friendly fraud" is also on the rise, increasing by seven percent last year. I've mentioned a few times in the past year how fraud by family and friends seems to be on the rise, as consumers who fall into financial difficulties start abusing the financial information of those closest to them in order to dig themselves out of a hole.
Family and friends often assume that if uncovered, the victim will never turn them in to authorities. But the reality is that victims are often hit harder and suffer greater losses. Someone with insider knowledge, with access to things like a Social Security number, birth certificate, and family and work information, can do greater damage must faster than a stranger. And the victim is left feeling betrayed when they discover the thief is someone they trusted.
If the latest report overall is accurate, it's obviously great news. But don't get too excited. 8 million is still a lot of victims, and if it's roughly the same number as the year we thought identity theft had peaked, then maybe we haven't made that much progress.
It's also worth pointing out that many identity thefts don't involve fraud and so may not appear in these statistics. They may involve the theft and abuse of Social Security numbers, criminals giving a victim's identity when arrested, imposters using a stolen identity to get a job or make a tax return, and a myriad of other crimes that may have a terrible impact on victims but may not be reflected in these studies.
Security experts are also concerned that organized crime gangs understand how the financial systems work. So while they're still stealing as much personal information as ever, they're sitting on it longer, waiting for the optimum moment to strike.
Whatever the numbers, this is not the time to declare victory or drop your guard. As Javelin put it "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."
Identity-theft statistics look better, but you still don’t want to be one.