Identity theft has reached a three-year high. In the U.S. last year, more than 12.5 million Americans had their identity stolen. That's up from 4.9 percent in 2011 and 4.35 percent in 2010. Incidents of identity fraud affected 5.26 percent of U.S. adults last year, according to the survey, which included 5,249 people in 2012. However, according to the study, at least half of those victims did not bear the cost of the fraud. Of those who did, the mean cost rose to $365 in 2012, from $354 in 2011. Financial institutions (FIs), merchants, and other businesses are the ones that absorbed the majority of the fraud losses.
The survey found that one of the largest hikes in identity theft generated from new-account fraud. This is where criminals collect personal data and then open, for example, a new credit card account. According to the study, new-account fraud climbed to 1.22 percent last year, from 0.82 percent in 2011. More than half of the new-account fraud involved applying for general-use and store-branded credit cards. The study concluded that new-account fraud losses doubled from 2011, to $9.8 million.
According to the report, Social Security Numbers (SSNs) were most likely obtained through data breaches. Interestingly, consumers who knew their SSN had been breached were 14 times more likely to be a victim of new-account fraud. This indicates consumers are not taking the warnings and notifications from breached companies seriously enough. On the other hand, it may also indicate that victimized companies need to step up their communication and recovery efforts following a breach.
The study also reported a significant hike in account takeover incidents, which were up from 0.36 percent in 2011 to 0.60 percent in 2012. Account details were most likely acquired through data breaches or malicious software attacks.
The most financially damaging fraud in the account takeover category was Automated Clearing House (ACH) and wire transfer fraud, which had the highest mean fraud figure at a whopping $5,138 per incident.
The report also found a particularly unfortunate effect identity theft has on small businesses. According to the study, fraud victims became more cautious about using credit cards with smaller online businesses, but weren’t concerned about big retailers like Amazon.
In light of these alarming statistics, now is a good time to remind your customers of the importance of remaining proactive and vigilant in protecting their personal information, and ultimately their identities. To demonstrate your FI’s commitment to helping them, you may also consider adding a product like ID TheftSmart by SHAZAM.