ID Fraud Study – Theft Increases by 13 Percent

For nine years, Javelin Strategy & Research has conducted an annual analysis of identity fraud trends.  The latest report is named: The 2012 Identity Fraud Report: Social Media and Mobile Forming the New Fraud Frontier.  The survey was conducted in October 2011 with 5,011 U.S. consumers, who were selected based on their address. The purpose of the survey was to identify important findings about the impact of fraud, uncover areas of progress, and identify areas in which consumers must exercise continued vigilance.

Four Fraud Trends

The study found four overall fraud trends:

1. Identity fraud incidents increased while amount stolen remained steady. Identity fraud increased by 13 percent or 1.4 million adults in 2011 compared to 2010.  Javelin defined identity fraud “as the unauthorized use of another person’s personal information to achieve illicit financial gain”.  Surprisingly, the total amount lost did not change; consumer out-of-pocket costs have decreased by 44 percent since 2004.

2. Social behaviors put consumers at risk.  LinkedIn, Google+, Twitter and Facebook users had the highest incidence of fraud.  They shared more personal information: 68 percent of people with public social media profiles shared their birthday information (45 percent shared month, date and year); 63 percent shared their high school name; 18 percent shared their phone number; and 12 percent shared their pet’s name. These are examples of personal information a company would use to verify your identity.

3. Smartphone owners experienced greater incidence of fraud. Seven percent of smartphone owners were victims of identity fraud, which is one-third higher than the general public.  This may be based upon their behavior with their phones.  Thirty-two percent of smartphone owners do not update to a new operating system when it becomes available; 62 percent do not use a password on their home screen, which enables anyone access to their information if the phone is lost; and 32 percent save login information on their device.

4. Data Breaches are increasing and are more damaging. Data breaches was one of the key factors that contributed to the fraud increase, with 67 percent more impacted by data breaches in 2011 compared to 2010. Consumers receiving a data breach notification were 9.5 times more likely to become a victim of identify fraud.  According to the survey the three most common items exposed during a data breach are:  credit card number, debit card number and Social Security number.

Eight Safety Tips to Protect Consumers

Javelin Strategy & Research recommends that consumers follow a three-step approach to minimize their risk and impact of identity fraud: Prevention, Detection and Resolution™.

Prevention

1. Keep personal data private.  Secure your personal and financial records locked up or behind a password. Use online bill payment on a secure Internet access (not a public Wi-Fi hotspot) instead of mailing checks to pay bills.  Sign up to have your payroll checks directly deposited into your checking account. .

2. Be social and be responsible. Do not put your personal information on any social network.

3. Use mobile devices responsibly. Be aware of the applications you download, the data you share over public Wi-Fi and where you leave your devices.

4. Ask questions. Before providing any information on mobile phones, social media sites or transactions sites, ask questions such as whom, why, what, and how.

Detection

5. Take control. Monitor your accounts by going online, reviewing statements and setting up alerts.

6. Learn about methods to protect your identity. These include credit monitoring, fraud alerts, credit freezes and database scanning. These services can detect potentially fraudulent information from credit reports, public records, and online activity that are difficult to track on your own.

Resolution

7. Report problems immediately.  The quicker you contact your financial institution and law enforcement, the likelihood of reducing costs and catching the fraudsters increases.

8. Take any data breach notification seriously. Accept the free offer for monitoring.

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Credit Monitoring, Credit Report, Identity Theft, Money & Identity

This post was written by John Ulzheimer