Identity Fraud is at an All Time High According to Javelin Strategy and Research's 2010 Identity Fraud Survey Report

CHANTILLY, Va., Feb. 10 /PRNewswire-FirstCall/ -- The newly released Javelin Strategy & Research 2010 Identity Fraud Survey Report reveals that the number of identity fraud victims in the United States has jumped by 12 percent to 11.1 million adults – the  highest increase to-date since the survey started in 2003 – while the total overall fraud amount increased by 12.5 percent to $54 billion.  An increase in non-card frauds and computer-based crimes confirms recent trends of increasingly sophisticated criminal activity.

Intersections Inc. (Nasdaq: INTX) a leading provider of consumer and corporate identity theft prevention services, is a co-sponsor of Javelin's Identity Fraud Survey Report for the second year in a row.  The survey is the nation's longest-running study of identity fraud, with more than 29,000 U.S. respondents over the past seven years.  In November 2009, Javelin conducted telephone interviews with 5,000 U.S. adults to identify and track the methods fraudsters used, the impact of fraud on Americans, and how consumers can most effectively avoid becoming victims of fraud.

"Identity fraud continues on the upswing and we believe it will continue to rise if consumers fail to take proactive steps to prevent fraudsters from taking advantage of their offline and online transactions and their increasingly exposed personal information on social networks.  In addition, consumers need to protect themselves and their computers from sophisticated malware, and well conceived and executed spam and phishing attacks," said Michael Stanfield, Chairman and CEO of Intersections Inc.  "The findings of this Javelin report reinforce what we've been telling consumers for more than a decade – be vigilant with whom you are sharing your personal information and where you are sharing it.  Protect your computer and only transact on confirmed legitimate websites."

Key Findings from the 2010 Javelin Identity Fraud Survey Report:

• Identity fraud continues upward climb.  According to the report, 4.8 percent of the U.S. population was affected by identity fraud in 2009.  The study confirms that the number of identity fraud victims in the U.S. increased 12 percent to 11.1 million adults in 2009, while the total annual fraud amount increased by 12.5 percent (or $6 billion) to $54 billion.
• Existing card misuse is over quickly but new account and existing non-card fraud lingers.  The increase in existing card fraud indicates more computer theft of passwords, usernames, and other entry keys to persons' accounts.  While existing card fraud increased to 2.76 percent compared to 2.53 percent last year, it is being resolved quickly with the support of financial institutions, businesses, and government.  Non-card fraud involving checking accounts and utility accounts, however, is on the upswing.  Non-card fraud is often committed by known perpetrators or through nefarious software, and has much longer detection times than existing card fraud. Such fraud results in higher out-of-pocket consumer costs and much longer detection times of up to one year or more.  The number of fraudulent new credit card accounts valid anywhere increased to 39 percent, up from 33 percent in 2008.  New fraudulently-opened Internet accounts more than doubled over the previous year.
• Technology is helping to detect fraud faster but fraudsters are taking advantage of it to commit crimes. When consumers discover fraud through electronic monitoring, they typically spend less time and money to recover. The study revealed that when consumers wait to find fraud on paper statements, they incur a higher out-of-pocket cost to recover and it takes longer to detect – $274 and 39 days vs. $116 and 30 days for discovering fraud through electronic monitoring.  However, the study found that fraudulent new e-commerce accounts such as eBay and Amazon, and email payment accounts like PayPal, both increased by 12 percent, indicating that fraudsters are targeting online accounts.   In addition, new mobile phone accounts accounted for 29 percent of fraudulent new accounts opened in 2009.
• Younger consumers who conduct more online transactions take longer to detect fraud and are victims for longer periods of time.  The study found that Millennials (ages 18-24) suffered the highest account misuse through social networking.  They also took the longest time to detect fraud (132 days), and were victims for the longest period of time (149 days).  This age group is also more likely to take action after a fraud occurs by switching their banks or credit unions.  
• Small business owners (Small Office/Home Office's in particular) are at greater risk of becoming fraud victims.  They suffer identity fraud at one and a half times the rate of all other adults.  By using their own personal accounts for business transactions, they are at a greater risk of exposing themselves to identity fraud.  

Intersections' Insights & Recommendations

The economic downturn is partially to blame for the rise in identity theft, and identity thieves are increasingly using more sophisticated and varied methods to obtain the personally identifiable information (PII) of consumers.  Fraudsters are becoming more sophisticated and more aggressive, and their organized approach to online fraud through a myriad of threats and scams makes it harder to detect.  Fraudsters are also increasingly targeting – and taking over – multiple accounts of their victims, collectively going after checking accounts, credit card accounts, mobile phone accounts, and Internet accounts in one full sweep.  

Using a combination of sophisticated malware, keystroke logging, and phishing attacks, fraudsters are able to use organized crime to steal identities.  And social networking has introduced yet another means for consumers to exposure their personal information to wider audiences, providing another avenue for fraudsters to conduct their scams.

Consumers need to invest in automated, proactive identity theft prevention solutions. The more aggressive the fraudsters are, the more difficult it is to detect an identity theft threat.  Paper and traditional electronic monitoring tools do not give consumers a thorough view of their credit posture and cannot catch fraud fast enough.  To address Internet and computer-based threats more aggressively, consumers should expand monitoring beyond credit to monitoring of credit applications, banking accounts, Social Security numbers, and public records.  Stanfield added "Most importantly, consumers need to learn how to use tools to protect their computers and online accounts from keyloggers, phishers, and other criminals whose purpose is to steal consumers' data and use it to steal money.  Consumers have an obligation to stop giving the key to their account to the criminals."

Millennials lead all age groups in using technology to resolve identity fraud, but only after a fraudulent incident has occurred – they are not proactively protecting themselves before a fraud occurs.  While this younger generation is more Internet-savvy, they need to do a better job of being proactive in monitoring their credit reports, online bank accounts, and other account information.  Small businesses are more at risk and need to implement safety precautions online and offline, and should consider employee background screening checks as a precautionary measure.

"This annual report is a valuable tool for all consumers to understand that identity fraud is very real and can have devastating effects," said James Van Dyke, president and founder of Javelin Strategy & Research.  "The more we know about identity fraud and the perpetrators, the more we can work with consumers to protect their personal information and minimize their risk of being adversely affected by it."  

To view a full copy of the report, please visit: www.IDSafety.net

About Intersections

Intersections Inc. (Nasdaq: INTX) is a leading global provider of consumer and corporate identity risk management services. Its premier identity theft, privacy, and consumer solutions are designed to provide high-value opportunities to its marketing partners, including leading financial institutions, Fortune 100 corporations, and other businesses. Intersections also markets full identity theft protection solutions under its brand, Identity Guard® (www.identityguard.com). Intersections' consumer identity theft protection services have protected more than 30 million consumers.

To address the growing threat of corporate fraud, Intersections and its subsidiaries provide cutting-edge identity management solutions including security breach remediation; pre-employment background screening; and corporate brand protection.

For advice, opinions, and the latest news on identity theft for consumers, visit http://www.IDGuardian.com. Twitter handle: IDGuardian. For educational tools and resources on breach readiness for businesses, visit http://www.BreachCenter.com. Twitter handle: BreachCenter

About Javelin Strategy & Research

Javelin is the leading independent provider of quantitative and qualitative research focused exclusively on financial services topics. Based on the most rigorous statistical methodologies, Javelin conducts in-depth primary research studies to pinpoint dynamic risks and opportunities. Javelin helps its clients achieve their initiatives through three service offerings, including syndicated research subscriptions, custom research projects and strategic consulting. Javelin's client list includes some of the largest banks, credit unions, card issuers, and technology enterprises in the financial services industry.

SOURCE Intersections Inc.