According to a recent study by Javelin Strategy & Research, the number of identity fraud victims in the United States increased by more than 1 million from 2011 to 2012 while the total dollar amount stolen grew by nearly $3 million.
2012 marked the most U.S. identity fraud victims and highest dollar losses since 2009 as the second consecutive year the number of identity fraud victims increased. The Javelin study found that there were 12.6 million identity fraud victims in the United States in 2012, which works out to be a new victim every three seconds. The total dollar losses resulting from identity fraud was estimated to be $20.9 million for the year.
Identity fraud refers to any unauthorized use of another’s personal information for illicit activities and financial gain, which includes third-party fraud using a victim’s payment credentials for making purchases online, account takeover and opening new fraudulent accounts in another’s name. The prevalence of identity fraud in the U.S. underscores the importance of being able to establish trust in an identity in the online channel through means of authentication and verification. With the large volume and high availability of personal information and payment credentials, fraudsters have had few issues obtaining such information to use for fraud as identity fraud victims and resulting dollar losses have increased.
Other findings from the Javelin study indicate the impact of compromised data and being able to recognize identity fraud early on. Consumers implicated in a data breach are much more likely to be victims of identity fraud as nearly 25 percent of consumers that were affected by a data breach and received a breach notification letter became a victim of identity fraud in 2012. Another interesting point is that the average number of days the consumer information was misused continues to decline from 95 days in 2010 down to 48 days in 2012. This means that consumers, banks and business are getting better at identifying and stopping the fraud in a more timely fashion, but because the number of identity fraud victims increased so did the dollar losses, even though the misused identities cannot be used for as long. While anomaly detection, velocity checks and other techniques can detect abnormal or high use of someone’s personal information or payment credentials, the high availability of this information makes it important for online businesses to be able to catch this right away, because there is plenty of identity and payment information out there for fraudsters to use.
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