The 2007 Identity Fraud Survey Report -- released by Javelin Strategy & Research -- provides compelling new information about the reduction of identity fraud across the United States, while also identifying important risk differentiators between age and income demographics. In a key finding, the report identified a significant reduction in fraudulent new account openings using a person's private information, traditionally one of the most common types of fraud. It also confirmed that more fraud occurs in traditional physical channels, such as in-person transactions and by the direct theft of personal data by individuals, rather than online.
Identity fraud is defined as access to personal account information that leads to fraud. In October 2006, a sample size of 5,000 telephone interviews with consumers turned up surprising results that challenge common beliefs.
- Identity fraud is dropping in the United States -- Down by an estimated 12 percent over the previous year, which translates into a total fraud reduction of $6.4 billion.
- Young adults are at the greatest risk for identity fraud -- Adult victims between the ages of 18 and 24 are least likely to take easy but important safeguards such as shredding documents and using antivirus software and firewalls, resulting in more than five percent of those surveyed falling victim.
- A fraud detection digital divide -- Americans earning less than $15,000 are least likely to be victims but take the longest to uncover fraud when it happens. They also react differently to fraud than those Americans earning more than $150,000.
Approximately 500,000 fewer adults in the United States fell victim to identity fraud in 2006 than in 2005. Of America's overall adult population, 3.7 percent were victims, as compared to 4.0 percent in 2005. This demonstrates a continued year-over-year decrease since data was first collected in 2003 when 4.7 percent of the adult population was victimized.
In terms of total dollars, identity fraud in this year's report dropped by an estimated 12 percent over the previous year, from $55.7 billion to $49.3 billion.
Factors that contribute to this decline include better consumer education and awareness, and the increased usage of online banking and financial sites that allow individuals to more frequently monitor their accounts.
"The trends revealed in Javelin's latest comprehensive report on identity fraud are a call to action for more consumer education and show its ability to build trust and confidence in today's marketplace," said Steve Cole, president and CEO, Council of Better Business Bureaus.
Young Adults Most at Risk
Younger American adults between the ages of 18 and 24 are more at risk of ID fraud. The survey found that victims in this age group are less likely to utilize the most basic precautions, such as shredding documents or using antivirus, anti-spyware software or firewalls. These are some of the most important prevention techniques available to consumers today.
Members of this age group were the most likely to fall victim to fraud in the past 12 months when compared to all other age groups. The overall adult population of the United States reported a fraud rate of 3.7 percent. Younger adults between 18 and 24 reported a much greater incident rate of 5.3 percent. Additionally, more than half of these victims reported knowing their perpetrators, which could include friends, neighbors or in-home employees, as compared to just 23 percent of overall respondents.
Income a Factor
Americans with the lowest income surveyed -- those earning $15,000 or less -- are least likely to be victims of identity fraud, with only 2.8 percent reporting cases. Americans with incomes of more $150,000 per year are the most likely to be victimized (7.3 percent reporting abuses).
When the lowest income population is victimized, misuse lasts twice as long and the fraud is the hardest to uncover, taking on average 70 percent longer to detect than fraud in higher income populations. These victims spent 75 percent, or 44 hours on average, more time resolving the fraud.
The survey found that fraud victims earning more than $150,000 are two times more likely to turn off paper statements and bills, choosing to adopt electronic alternatives, a technique to help prevent fraud. They are 65 percent more likely to monitor their accounts online, giving them a timely advantage in catching fraud before large incident values build up. In comparison, lower income victims are more than twice as likely to reduce their overall spending, almost three times more likely to avoid online purchases, and are also three times more likely to avoid online banking.
