SAN FRANCISCO -
The 2007 Identity Fraud Survey Report conducted by Javelin Strategy & Research said it found 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.
The study, in its third year and co-sponsored by CheckFree, Visa and Wells Fargo & Co., found:
Identity fraud dropped in the U.S. by an estimated 12% over the previous year, which translates into a total fraud reduction of $6.4 billion.
* Fraudulent new account openings are down over the previous year with average fraud amounts also dropping significantly.
* 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 anti-virus software and firewalls, resulting in more than 5% 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.
In broader terms, Javelin Strategy & Research said it found that 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% were victims, as compared to 4.0% in 2005. "This demonstrates a continued year-over-year decrease since data was first collected in 2003 when 4.7% of the adult population was victimized," the company said.
In terms of total dollars, Javelin Strategy & Research said identity fraud in this year's report dropped by an estimated 12% over the previous year, from $55.7 billion to $49.3 billion.
In its analysis it said that factors that contribute to the 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. As industry and consumers work together to protect sensitive data by adopting online financial services, such as electronic banking and bill paying, further fraud reduction is expected by Javelin.
"While identity fraud is still a serious criminal issue in the United States, Javelin's new study points to significant identity fraud reduction as a direct result of changes in industry and consumer behaviors," said James Van Dyke, Javelin's president and founder, who oversaw the Identity Fraud Survey Report for the third consecutive year.
In particular, Javelin said the survey found a noticeable reduction in the incidents of new account fraud in the past 12 months. New account fraud takes place when criminals use a victim's personal data to establish a new account using the victim's identity and confidential information. New account fraud dropped from 1.5% of all respondents in 2006 to 1% in 2007. Additionally, when fraudulent accounts are opened, many victims caught the fraud more quickly utilizing online channels, such as the viewing of statements, resulting in average fraud amounts dropping from more than $10,000 in 2006 to $7,260 on average in 2007.
In addition to the reduction in fraud amounts, consumers reported dramatically improved resolution times, decreasing from a typical 25 hours in 2006 to only 5 hours in 2007.
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% reporting cases, Javelin said. Americans with incomes of more $150,000 per year are the most likely to be victimized (7.3% 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% longer to detect than fraud in higher-income populations, the study found. These victims spent twice as long, or 44 hours on average, more time resolving the fraud.
For more info on the study: www.javelinstrategy.com.
