The 2016 Identity Fraud Study released by Javelin Strategy & Research, revealed that the number of identity fraud victims increased by 3% (13.1 million consumers) in the US last year, but that the amount stolen decreased by 6% to $15 billion.
The study found that the rise of EMV has already had a significant impact on fraudsters’ behaviour and doubled the incidence of new account fraud. The study also found that many consumers who do not trust their financial institutions are engaging in behaviour that enables fraudsters to use their information for 75% longer.
The 2016 Identity Fraud Study found four significant trends:
- More identity fraud victims, less stolen – The number of identity fraud victims was at its second highest level in six years, but the amount stolen was at its lowest point in the past six years. Identity fraud is a serious issue as fraudsters have stolen $112 billion in the past six years. That equals $35,600 stolen per minute, or enough to pay for four years of college in just four minutes.
- EMV drives a doubling of new account fraud – In 2015 the U.S. switched to EMV, which is designed to reduce in-person fraud and the profitability of counterfeit card operations. Fraudsters have reacted by moving away from existing card fraud to focus on new account fraud. This drove a 113% increase in incidence of new account fraud, which now accounts for 20% of all fraud losses.
- Consumer choices negatively impacting fraud detection – The study found those consumers that do not trust their financial institutions and do not take advantage of the services offered by them are setting the stage for more damage if they become fraud victims. The study found consumers that do not trust their financial institutions are less likely to use transaction monitoring, email alerts, credit freezes and black market monitoring. This results in their information being used for 75% longer by fraudsters and incurring a 185% greater mean consumer expense than those victims that have high trust in their financial institutions.
- U.S. consumer data being used for fraud internationally – Identity fraud is a global issue. The study found that 18% of the identity fraud using US cards, or $2.4 billion, was conducted outside the US. There was an average of $1,585 per incident, although for most consumers there was no out of pocket cost as the major issuers offer $0 liability. Issuers are doing a good job of quickly detecting this type of fraud. They are proactively detecting 69% of these cases.
“Fraud is evolving at a frantic pace although the amount of fraud has been relatively flat over the past four years. This just shows that when the industry cracks down on one type of fraud, criminals quickly shift their attack vector and area of operation,” said Al Pascual, senior vice president, research director and head of fraud & security, Javelin.
“The study this year reinforced that with industry, technology and consumers working in concert, people can best fight back against the fraudsters. The worst thing consumers can do is lose trust in their financial institutions and stop playing an active role in working to detect fraud. Taking a back seat will increase their risk and the damage that occurs if they are fraud victims in the future.”