Consumer Fraud Costs Increasing

By: Absolute Team | 3/25/2011

The 2011 Identity Fraud Survey Report from Javelin Research indicates that, despite a decrease in identity fraud victims and overall costs, the out-of-pocket costs for consumers actually rose significantly.

The 2010 phone survey of 5,004 adults found that identity fraud victims decreased by 28% to 8.1 million adults. On a positive note, total annual fraud decreased from $56 billion to $27 billion, the smallest amount in the past 8 years of the study. The mean fraud amount per victim declined from $4,991 in 2009 to $4,607. One factor contributing to these declines was the drop in data breaches reported during 2010.

The mean consumer out-of-pocket cost due to identity fraud increased 63 percent from $387 in 2009 to $631 per incident in 2010. The tactics used by criminals has changed and this is potentially leading to the increase in costs. According to the report, new account fraud (when new accounts are opened without the victim's knowledge) accounted for the greatest fraud amount - $17 billion in 2010. This type of fraud is hard to detect and is quite costly to victims.

The research also suggests that economic uncertainty has led to an increase in "friendly fraud" - fraud committed by people known to the victim.


Financial Services