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Fewer victims of identity fraud suffer greater losses

A new piece of research, 2008 Identity Fraud Survey Report, released by Javelin Strategy & Research, found that while the value of identity fraud incidents fell 12% compared with the previous year, from $51 billion to $45 billion, the damages per incident increased.

The cost per consumer in 2007 averaged $691, an increase of 25%, over the $554 recorded in 2006. The reason is due “to growing sophistication in criminal fraud techniques, particularly in new accounts fraud,” which results in more high-value cases, according to Javelin.

The most significant new avenue for theft of information in 2007 was the ubiquitous telephone channel, which saw a sharp rise in incidents. Access through mail and telephone transactions rose from 3% of theft in 2006 to 40% in 2007.

The report pointed out the dominant form of telephone fraud was ‘vishing’, a technique in which criminals use telecommunications, Voice over IP (VoIP) and other technologies to obtain information from consumers.

The “2008 Report confirmed what we believe to be true: that while fraud is declining, it is still a concern for the American public,” James Van Dyke, president and founder of Javelin. “The good news is the leadership role many businesses are taking in educating consumers about ID fraud risk factors is paying off.”

Van Dyke warned, however, that fraudsters are getting creative and using new techniques to commit fraud.

The report revealed that 300 000 fewer adults in the US fell victim to identity fraud last year than in 2006 and that 3.58% of the country’s adults were victims of identity fraud, down from 4.25% the year before.

Javelin credited this to consumers becoming savvier in using the web to conduct business transactions, such as checking bank accounts online and updating anti-virus software more frequently. Increased monitoring of personal account information and improvements in systems and practices by companies that manage personal data also contributed to the decline, it believed.

The report showed people between the ages of 18 and 24 who have fallen victim to identity theft are the most likely to put fraud alerts on their credit reports, with 47% of this age group purchasing identity theft fraud insurance, nearly three times as many as any other age group.

Javelin also provided safety tips to consumers. They included monitoring accounts regularly online at bank and credit card websites; reviewing credit information no less than once a year; and never providing sensitive financial information over the phone or the internet, including Social Security numbers, PINs or account numbers, unless the call was placed directly to a verified and trusted location.

The research was funded by Visa and CheckFree and was conducted through telephone surveys of 5000 consumers in October 2007.