2010 Identity Fraud Study: Threats and Trends

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Identity fraud crimes expanded at a 12% rate in 2009. What can we expect to see in 2010?

Javelin Strategy & Research is out with its latest Identity Fraud Study. For insight on the study results and what they mean to organizations across industry, James VAN DYKE of Javelin discusses:

• Headlines from this year's study;
• Trends and threats to watch;
• What organizations and individuals can do to better protect themselves.

Van Dyke is founder and president of Javelin Strategy & Research. Javelin is the leading provider of independent, quantitative and qualitative research for payments, multi-channel financial services, security and fraud initiatives. Javelin's clients include the largest financial institutions, card issuers and technology vendors in the industry.

TOM FIELD: Javelin Strategy and Research is out with its 2010 identity fraud survey. What are the headlines? Hi, this is Tom Field, Editorial Director with Information Security Medical Group. I am talking today with James VAN DYKE, head of Javelin Strategy and Research, talking about the study. Jim, thanks so much for joining me again.

JAMES VAN DYKE: Tom, it's great to be here.

FIELD: Jim, just a little background on the study, please. I know you've done this for a number of years now, but maybe you can tell us what's gone into this, and then we can go into some of the headlines from this year's survey.

VAN DYKE: Yeah, thanks, and I appreciate being here. It's about identity fraud; frankly, a few years ago we thought we wouldn't be doing this anymore. We set up to take this project over from the Federal Trade Commission back in 2003, when they broke the story that identity theft was the nation's fastest growing white collar crime, and we thought maybe we would do this for a year or two because we would get some sponsors together and deploy what is the most rigorous study on this very costly subject. We thought this would run its course, maybe, after a couple of years of running it. But what has actually ended up happening, particularly as the economy has worsened, criminals have just found out that they can make more people victims than ever before. And in fact we are now announcing there are more victims than ever before to the tune of over eleven million people -- adults that were victims of identity fraud had transactions committed in their name without their authorization last year.

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FIELD: Jim, what do you say the biggest headlines are from the survey?

VAN DYKE: You know, with more people become victimized, it continues to be a multi-channel crime because people are going after more of both a combination of new establishment of fraudulent new accounts as well as accessing existing accounts. Of course, year in and year out there is more -- there are a lot of credit card transaction -- but what we're seeing is more of these particularly damaging new account fraud cases. We are also seeing an interesting trend with individuals using more legal means, so this empowerment message, this partnership message, it's getting out there, and yet we just can't get it out enough, meaning that identity crimes are really unique because they represent a criminal or a group of connected criminals targeting two different types of entities if you will. Not to sound too academic, but the point here is that you've got someone who is being impersonated, the honest individual, they're a victim. They pay on average $373 out of pocket. Now the good news is that has never been lower. That out of pocket cost, even while you have more victims than ever before, and the typical victim doesn't pay anything due to zero liability provisions. But you've got more victims than ever before, more establishments of new accounts, those are on the rise. You've got more data breeches. You've certainly got wilier cyber criminals, so it is just a mess and industry is really carrying more of the load, the financial burden than they ever have before.

FIELD: Jim, when I think back on the news of the past year since we spoke about the previous year's study, I think of the Heartland Data Breach, I think of the ACH fraud attacks that we've seen starting the middle of the year. In your study, what do you see as the biggest changes since last year?