A recent study by Javelin suggests identity fraud in the US increased twelve per cent in 2009 at an estimated 11.1 million adults (4.9% of the population). The total cost of identity fraud is estimated to reach US$54 billion with a per person average of $4,841. The US financial industry (much like in the UK and Europe) protects customers with zero-liability laws (Credit Consumer Act in the UK) and government polices.
Of particular interest is the average cost to a victim of identity fraud, which dropped to an 8 year low of $373. The figure of $373 is actually the total cost for someone recovering from identity fraud rather than the total fraud cost (the banks and merchants are actually the victims). One possible reason for the drop in identity fraud recovery cost may well have something to do with more and more individuals using online credit/identity protection services i.e. Equifax; LifeLock; idwatchdog. All of these online services provide database/web monitoring; detection and resolution services which add an additional layer of protection to an individuals profile.
The US, unlike most UK and European countries doesn’t use Credit and Debit card Chip and Pin which may also account for the high identity fraud cost. UK and European countries unfortunately haven’t stopped card fraud (a significant component of identity fraud). One of the fastest growing card crimes is Card Not Present and Card Fraud Abroad. The latter is contributing to higher than average card fraud (especially in the UK) mainly because not every country in the world has adopted Chip and Pin i.e. US, Eastern European countries etc.
Sea of change
The average identity fraud crime in the US takes about 21 hours down from 30 hours in 2008. Mobile phone-account fraud is also on the rise – this is up 29% from 2008. Mobile phone-account fraud is where a fraudster opens a phone contract in an individuals name. Credit monitoring services similar to CIFAS in the UK would help reduce this and most types of identity fraud crime. Protective Registration provides additional protection for individuals and businesses with additional verification checks.
Social engineering using dumpster diving, spam email, spam calling, fake websites/pages, rogue security software and infecting a users computer with malware/spyware are just some of the most popular methods of stealing an individuals personal information. It is unlikely these will ever go away.
Most identity fraud can be stopped and if an individual is a victim as there are now a number of identity fraud recovery services (mostly in the US – they are some 5 years ahead of the UK and Europe) available to enable people to repair their good name. Banks monitor accounts for unusal behaviour and provide telephone transaction protection (if the amount is unusual the bank will call you and confirm your identity and the transaction value) as well as identity insurance. Individuals and business can also play their part by protecting their profiles and assets respectively i.e. avoid publishing on the social web / businesses need to learn to shred and destroy old hard disk drives, which might contain sensitive customer/vendor information.
Lastly, the global recession has also played its part in increasing identity fraud in 2009. When people lose their jobs and struggle to find another job, people have been known to turn to crime. Identity fraud is one such crime that could easily be committed from someone with limited knowledge of fraud and easier still this could be done from sitting at home using a PC!
The year ahead is expected to be difficult for individuals and businesses, especially as we all limp out of the recession. I suggest you start protecting your profile today!
Safe surfing folks!