Identity theft can cause big problems for consumers. If you become a victim, you will spend a large amount of time closing compromised accounts, opening new accounts and fixing credit records. There can be out-of-pocket expenses related to clearing your name. You could be denied loans and jobs because of identity theft.
Identity fraud is defined as the unauthorized use of another person’s personal information to achieve illicit financial gain. Identity fraud can range from simply using a stolen payment card account, to making a fraudu
lent purchase, to taking control of existing accounts of opening new accounts.
According to the 2018 Identity Fraud Study released last month by Javelin Strategy & Research, the number of identity fraud victims increased by eight percent in the last year, rising to 16.7 million U.S. consumers. This is a record high since Javelin Strategy & Research began tracking identity fraud in 2003. The study found that despite industry efforts to prevent identity fraud, fraudsters successfully adapted to net 1.3 million more victim
s in 2017, with the amount stolen rising to $16.8 billion. With the adoption of embedded chip cards and terminals, the types of identity fraud continued to shift online and away from physical stores. The complexity of fraud is also on the rise as criminals are opening more new accounts as a means of compromising accounts consumers already have.
2017 saw a notable change in how fraud is being committed. While credit card accounts remained the most prevalent targets for new account fraud, there was significant growth in the opening of new intermediary accounts, such as email payments (e.g. PayPal) and other internet accounts (e.g. e-commerce merchants such as Amazon) by fraudsters. Although not as easily monetized alone, these account types are invaluable in helping fraudsters transfer funds from the existing accounts of their victims.
The study also found significant changes in data breaches in 2017. Nearly 30 percent of consumers in our country were notified of a breach in the past year, up from 12 percent in 2016. For the first time ever, Social Security numbers (35 percent) were compromised more than credit card numbers (30 percent) in breaches. Finally, data breaches are causing consumers to shift the perceived responsibility for preventing fraud from themselves to other entities, such as their financial institution or the companies storing their data.
2017 was not a good year for consumers because fraudsters gained so much valid information on consumers and their attacks became more complex. Fraudsters are growing more sophisticated in response to industry’s efforts to implement better security. Fortunately, there are a variety of digital tools that consumers can leverage to stay better informed on the status of their identities and accounts, and to ultimately stay better protected.
Five safety tips to protect consumers
Consumers who exercise good online security habits can minimize their risk and impact of identity fraud. The following are recommendations to follow:
1. Turn on two-factor authentication whenever possible — Enabling two-factor authentication on sites that have capability, where a separate action must be taken beyond providing a user name and password to access an account, can make it significantly more difficult for fraudsters to take over your accounts. For sites without two-factor authentication, use strong passwords or a password manager to secure accounts.
2. Secure your devices — With consumers increasingly relying on their digital devices to obtain goods and services, making purchases and sharing personal information, criminals have shifted their focus to these devices for the access they can provide to accounts and the information they store or transmit. Secure online and mobile devices by instituting a screen lock, encrypting data stored on the devices, avoiding public Wi-Fi and/or using a VPN, and installing anti-malware.
3. Placing a security freeze — If you are not planning on opening new accounts in the near future, a freeze on your credit report can prevent anyone else from opening one in your name — which is especially important if you have been a victim of data breach that has exposed sensitive personally identifiable information. Credit freezes must be placed with all three credit bureaus and prevents everyone except for existing creditors and certain government agencies from accessing your credit report.
The free credit freeze with Equifax has been extended until June 30. In Mississippi, credit freezes with Experian and TransUnion cost $10 each. Should you need to open an account requiring a credit check, the freeze can be lifted through the credit bureaus.
4. Sign up for account alerts everywhere — A variety of financial service providers, including banks and credit card issuers, provide their customers with the option to receive notifications of suspicious activity — as do businesses in other industries, such as email and social media providers.
These notifications can often be received through email or text message, making some notifications immediate, and some go so far as to allow their customers to specify under which they want to be notified, so as to reduce false alarms.
5. Protect yourself from unauthorized online transactions — As EMV (embedded chip) makes fraud at physical stores more challenging, fraudsters are moving to target online merchants.
Some financial institutions offer alerts for online transactions, the ability to institute limits on online transactions, or even advanced controls through 3-D Secure (e.g., Verified by Visa, SecureCode from Mastercard, etc.). These can help quickly detect and even prevent online fraud from occurring.
