ID Theft Declines But Losses Increase

SecurityWorkspace

Identity fraud experienced a sharp drop in 2010 after a two year rise, according to new research

In a welcome bit of news a report has revealed that the number of identity fraud victims has dropped in 2010.

However the average out-of-pocket losses have risen, as thieves focus on new account fraud and stealing from people they know.

Total card-related identity fraud in the United States dropped by a third from $56 billion (£35 billion) in 2009 to $37 billion (£23 billion) in 2010, according to the results of a consumer fraud survey by Javelin Strategy and Research.

Victim Decline

The total number of victims nationwide also dropped more than 26 percent, from 11 million in 2009 to 8.1 million in 2010, the report found. The mean fraud amount per victim also declined from $4,991 (£3,106) in 2009 to $4,607 (£2,867) in 2010, Javelin said.

While the number of victims are currently at 2007 levels, the drop between 2009 and 2010 is the largest single-year decrease since Javelin started the survey back in 2003.

While all that sounds like good news, the report noted that victim’s losses, which include the costs of clearing up identity theft and covering some of the charges incurred by thieves, have shot up 63 percent, on average, from $387 (£241) in 2009 to $631 (£393) per incident in 2010, the report found.

“Identity fraud underwent a marked decline and shift over the past year,” said James Van Dyke, Javelin’s president and founder.

Annual incidence rates also fell to 3.5 percent of all card transactions, compared to 4.8 percent in 2009, Javelin said. Identity theft victims account for 3.5 percent of the population in the United States, Javelin found.

The “significant drop” in reported data breaches may have contributed to the decline, Javelin said. There were 404 breaches with 26 million records compromised in 2010, compared to 604 breaches and 221 million records in 2009, according to the research report.

Increased Security

The recovering economy appears to have contributed somewhat to the decline in identity theft, along with increased security measures and stronger law enforcement, according to Van Dyke. As retail sales grow, fraud incidents decrease, indicating a correlation between an individual’s financial condition and the likelihood of perpetuating identity fraud, the report said.

Although all types of fraud declined over the past year, new account fraud was the most damaging, netting scammers $17 billion (£10.6 billion) in 2010, the report found. In this type of fraud, an account is opened in the victim’s name without consent. It was also the costliest for victims, with out-of-pocket losses averaging $1,267 (£789) in 2010, up from $787 (£490) in 2009, according to the report.

This type of fraud also accounted for a greater proportion of all types of identity fraud, at about 46 percent, compared to 38 percent in 2009, the report found.

In contrast, amounts stolen through existing cards, where the thieves had the actual card number or a cloned card, declined by 38 percent to $14 billion (£8.7 billion) in 2010, from $23 billion (£14 billion) in 2009, the report said.

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