Survey: ID theft on the rise again, card victims jump by 2 million annually
Identity thieves have regained the upper hand, suggests a new survey
released Wednesday by fraud research firm Javelin Strategy & Research. The
firm's annual survey of 5,000 consumers suggests a rise in the rate of ID
theft during 2011, reversing a drop in identity-related that was found in
last year's survey. The main cause of the new increase: A return to
old-fashioned credit card fraud.
"There's been a rebound. . ID thieves have bounced back," said Javelin
President James Van Dyke, explaining that meant about 7.7 million Americans
were hit with credit and debit card fraud in 2011, or about 2.2 million more
than in the previous year.
The survey estimates that 11.6 million Americans were hit by ID theft in
2011, compared to 10.2 million in 2010. Put another way, 4.9 percent of the
U.S. adult population -- roughly 1 in 20 adults -- was affected by
identity-related fraud last year, compared to 4.35 percent of the population
in 2010.
Javelin, like the Federal Trade Commission, uses a fairly broad definition
for identity theft: any time a transaction occurs using a victim's name or
account information without authorization.
Nearly all the increase can be attributed to sharp rise in credit-card
fraud, the survey found. Last year, 2.3 percent of all adults found
unauthorized charges on their cards, compared to 1.4 percent in 2010.
A recent rise in credit card fraud has also shown up in previously
unpublished research by security firm Gartner. Analyst Avivah Litan shared
the data with msnbc.com.
Her survey found that, of all adults who say they've been hit by credit card
fraud at some point, 29 percent said the most recent incident had occurred
in the 12 months preceding September, when her survey was conducted. That
compares to just 18 percent who said the most recent incident hit 13-24
months earlier.
"Our data says the same thing (as the Javelin data)," Litan said. "It is
worth noting that increases in fraud rates are even more pronounced on the
small business and corporate side, which Javelin didn't survey."
Javelin's 2011 survey is the seventh time the firm has queried American
adults looking for ID fraud trends. The survey, which has a maximum margin
of error of 1.7 percent, was sponsored by several financial services
companies, but Van Dyke said the sponsors weren't allowed to interfere with
the research methodology or the publication of the resulting report.
What would cause a rise in old-fashioned card data theft? Numerous factors,
Van Dyke said.
"It's probably partly an issue of where the gains (the banks) had made
couldn't be sustained," Van Dyke said. "Also, the economy also plays a part.
We've done this long enough to see a correlation between the state of the
economy and this kind of fraud."
The recession has made life a bit harder for banks' back-end fraud
prevention systems, too. Some consumers have simply stopped using credit
cards, but maintain open accounts. These dormant cards are ripe for fraud.
Meanwhile, the recession has also dramatically altered some consumers'
buying patterns, throwing banks' pattern-recognition efforts off.
There is good news within Javelin's results, however. The rate of new
account fraud -- when a criminal uses a victim's personal information and
good credit to open up new accounts -- has dropped slightly, according to
survey takers. New account fraud is much more of nightmare for victims, and
more costly to financial institutions..
"In fact, the overall amount lost to identity fraud is down slightly," Van
Dyke said, from an estimated $20 billion to $18 billion.
The survey also hints at some other larger trends in identity security.
Smartphone users are about 30 percent more likely to report being hit by ID
fraud. Surprisingly, 62 percent say they do not use a screen password to
protect their devices.
"People aren't protecting their devices," Van Dyke said.
Some 36 million Americans, or roughly 15 percent of U.S. adults, say they
received a data breach notification in 2011 from a company indicating it had
lost their personal information. Those who say they received such a notice
were more than nine times as likely to also report being fraud victims.
"This is a trend we see spanning four years now, yet we haven't been able to
generate any meaningful public awareness around it," Van Dyke said. Many
consumers don't even sign up for free credit monitoring services when they
are offered by companies that have leaked data, he said.
Even so, more Americans detected ID fraud through electronic monitoring of
accounts -- such as through online banking -- than through paper statements,
the first time that has happened, according to the survey. Such monitoring
leads to earlier detection and lower financial losses for both banks and
consumers.
Finally, the survey suggests some connection between active use of social
networks and ID theft. Slightly more than 10 percent of LinkedIn users say
they were hit (10.1 percent), while 7 percent of Google+ users and 6.3
percent of Twitter users reported being victims -- all three above average.
Facebook users, at 5.7 percent, were barely above the national average of
4.9 percent.
Those with public profiles often confessed to being careless with data: 45
percent share their birth date and year; 63 percent shared their high
school; 18 percent shared their phone number; and 12 percent shared their
pet's name.
"We still have a significant education problem," Van Dyke said. "Consumers
are having trouble being able to grasp what is sometimes conflicting advice
in the marketplace. In fact, sometimes it's impossible to follow the
patchwork advice they are given."
http://redtape.msnbc.msn.com/_news/2012/02/21/10471719-survey-id-theft-on-th
e-rise-again-card-victims-jump-by-2-million-annually
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