Published February 20, 2013
As major U.S. companies fall victim of a steady campaign of cyber hacking recently linked to the Chinese government, a new report shows consumers are increasingly battling another problem: identity theft.
The Javelin Strategy & Research’s 2012 Identity Theft Report shows there was a new victim of identity fraud once every three seconds in 2012. What’s more, 1 in 4 consumers who received a data breach notice from a company also became a victim of identity theft.
More than 12 million victims had more than $21 billion stolen over the year, according to the report. Breaches involving Social Security numbers were the most damaging to victims, with those who have their number breached 5X more likely to be a victim of fraud than the average consumer.
The total number of identity theft victims for 2012 was 12.6 million, up more than one million since 2011. The dollar amount stolen also increased to $21 billion.
The increase in security breaches has led consumers to be more selective about where they shop. The report found traffic to small businesses is dramatically impacted after a breach, with 15% of all fraud victims deciding to change their behaviors and avoid smaller online merchants.
Companies are rectifying breach situations more quickly than in the past, shortening the amount of time fraudsters can abuse information, the report also finds. Consumer information was misused for an average of 48 days in 2012, down from 55 days in 2011 and 95 days in 2010.
“We have to keep up with fraudsters faster,” says Jim Van Dyke, CEO of Javelin. “The degree to which new account fraud is up sharply as well, and that is the most damaging form of ID fraud.”
This means fraudsters are using personal information to open new accounts—and it’s hard for consumers to monitor and close accounts they don’t know about. More than 50% of victims were actively detecting fraud using financial alerts, credit monitoring or identity protection services, as well as by monitoring their accounts, according to the report.
“Take any [new] letters or notices as a call for alarm,” Van Dyke says. “People are reacting just the opposite; they think they can rest easy.”
Another reason consumers may miss a blip on their records is because fraudsters are cobbling together bits of data from multiple sources, according to Tim Rohrbaugh, vice president of Information Security for Intersections.
“Synthetic IDs and those combinations are a real problem.” Rohrbaugh says. “When you’ve been notified by an institution that they have lost your information, you’re 4X more likely to be a victim of fraud. This is information consumers should be reacting to.”