As ID Fraud Ensnares More Victims, More Fraudsters Get Caught

The number of identity-fraud victims increased by 12% last year to 11.1 million from 9.9 million in 2008 and was 37% higher than in 2007, and the estimated amount of fraud hit $54 billion, the highest since 2006. That's according to Javelin Strategy & Research's 2010 Identity Fraud Survey Report. Losses per victim, however, held steady, and more fraudsters are getting caught. The Pleasanton, Calif.-based research and consulting firm's seventh annual fraud study also found that the number of fraudulently opened credit card accounts increased to involve 39% of all ID-fraud victims last year, up from 33% in 2008. Javelin based its findings on a telephone survey of 5,000 U.S. adults in November 2009. Identity fraud is the misuse of another person's identifying information and arises out of a commonly confused crime, identity theft, or the act of stealing someone's identifying information. Javelin's study does not measure ID theft. The number of ID-fraud victims was the highest such number since Javelin started the survey in 2003, as was the percentage of victims among the adult population, 4.81%. Losses rose 12.5% from $48 billion in 2008 but were still well below the $60 billion in 2004, the highest the survey ever found. Javelin president and founder James Van Dyke attributes last year's fraud increase to hard times, saying the Gross National Product and fraud levels have an inverse relationship. “We believe at the top level it's an economic condition,” Van Dyke tells Digital Transactions News. But he adds that more data breaches added to the total, and that technological evolution, particularly the growth of electronic commerce, makes for new opportunities for fraudsters on the hunt for other people's data. The tendency of many people to put personal data on social-network Web sites also can aid fraudsters, Van Dyke says. In fact, the spike in new-account fraud, which Van Dyke calls “a very troubling area” in which a fraudster opens an account in another person's name, got a boost in part from the online channel. The number of new online accounts opened fraudulently more than doubled last year, and the number of new e-mail payment accounts, such as PayPal, increased 12%, Javelin says. The survey for the first time asked about new-account fraud through mobile phones and found that 29% of new-account fraud victims reported that new mobile-phone accounts were opened in their names. Overall, the mean total amount of fraud per victim last year was $4,841, little changed from 2008's mean of $4,858. The median fraud amount per victim held steady at $750. With credit card issuers and banks usually covering all or most of victims' account losses, the mean out-of-pocket victim expense last year was $373, down from $498 in 2008. Javelin arrived at those figures by estimating victims' direct financial losses as well as their time lost from work spent fixing ID-fraud problems, and legal expenses. Another bright spot was a decline in the time needed to resolve fraud-related problems, which fell to a mean of 21 hours in 2009 from 30. The median resolution time, however, has remained steady at five hours throughout the survey's history, which means some victims spend very long hours getting their affairs back in order. While most identity fraudsters get away with their crimes, their chances of escaping justice are decreasing?with consumers getting much of the credit. The number of fraud victims reporting that no legal action was taken in their cases (excluding those who did not know or refused to answer the question), fell from 56% in 2008 to 49% last year. Forty-nine percent of victims filed a police report last year, up from 39% in 2008, and 12% said an arrest was made, up from 6%. Eight percent of victims said their cases resulted in a conviction, double 2008's rate. Five percent said a civil suit was filed in their cases, up from 2% in 2008. Javelin's survey co-sponsors were Fiserv Inc., Intersections Inc., Wells Fargo & Co., and the Identity Theft Assistance Center (ITAC).