New Study Illustrates Rise in Fraud
June 12, 2017
Identity fraud is on the rise.
Overall fraud last year rose 16 percent from the year prior, affecting 15.4 million U.S. consumers. That was up from 5.3 percent in 2015. It impacted more than 2 million additional people. And it’s the highest annual incidence of fraud on record.
Fraud related to online transactions is an important part of that trend. This type of fraud, called card-not-present fraud, is increasing by 40 percent. Meanwhile, the incidence of fraud related to point of sale transactions has remained pretty flat since 2015. But as new technology has enabled more point of sale terminals to become more secure, fraudsters have turned to fraudulently opening accounts.
This data all comes from a study commissioned by LifeLink Inc. and conducted by Javelin’s Advisory Services. The report is called 2017 Identity Fraud: Securing the Connected Life.
While fraud is never good, there is one statistic here that could be viewed as somewhat positive news. That is that the resulting losses increased by $700 million. Javelin Advisory Services calls that loss “relatively modest.” But it goes on to note that the growing prevalence of fraud challenges financial institutions’ and issuers’ ability to build profitability.
The study also breaks down the risk of fraud based on four individual personas.
One of those personas, called the offline consumer, is an individual who is exposed to less risk. But these individuals also tend to incur higher losses than other fraud victims because it takes them longer to realize that fraud has occurred.
Users of social networks are another of the personas noted in the study. Social networkers, the study indicates, are at 46 percent higher risk of account takeover fraud than people who do not share their social lives on digital platforms.
Another persona, this one referred to in the study as the e-commerce shopper, is at higher risk of fraud compared to other segments. But, the study indicates, 78 percent of e-commerce shoppers detected fraud quickly. The study defines quickly as within a week of it occurring.
The fourth persona mentioned in the study is the digitally connected consumer. This individual is a frequent online shopper and shares that activity on social networks. Most of the individuals who are defined as digitally connected consumers, the study indicates, are female. According to the study, people who are digitally connected consumers are 30 percent more likely to be victims of fraud.
Edited by Alicia Young
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