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Identity Theft - some stats and suggestions

I got a comment from the folks at Metrics 2.0 asking about stats on Identify Theft (something about which I have blogged a couple of times - here and here). I asked around and got some information. According to Javelin Strategy & Research, Identity Theft affected about 9.3 million people in 2004, causing $52.6 billion in losses in the U.S. alone. This was reported on in BusinessWeek. Since then Javelin has updated the report for 2005 and losses climbed to $56.6B (a fairly slow rate of climb). This compares with some $3 billion in losses for credit and debit cards combined for the US. The huge difference between these numbers has led some to criticize the Identity Fraud numbers but remember it does include things like mortgage fraud, utilities fraud, telecom fraud, auto loans, HELOC, etc. One identity theft can result in lots of losses across these different channels. That said I suspect the real identity fraud number is lower than $50B but still much higher than the credit/debit card losses.

So if you are worried about Identity Theft, and you probably should be, what can you do?

For companies

  • Think about automating identity theft protection - the combination of business rules and predictive analytics can be very effective at eliminating or reducing this kind of fraud
    To see how effective this approach can be, take a look at how well it worked in reducing credit card fraud in the US - down by over 65% since the introduction of Falcon Fraud Manager, which uses rules and analytics to detect and manage credit card fraud.
  • Remember that many feel that identity theft losses are overstated - don't get distracted from other problems just because Identity Theft is "hot". Think about fraud more holistically - this is the basis for Fair Isaac's approach with Falcon One.
  • Think about all aspects of how you manage fraud identification decisions - see this post for additional thoughts.
  • Remember also that fraudsters will go where you are not watching - push down in one place (with better procedures, more technology) and they will pop up somewhere else. This is a war not a battle.

For individuals

  • Don't Panic! The number of cases is declining and more than 2/3 of victims do not incur any out of pocket expenses.
  • Most victims know how their data was stolen and it happens offline, not online so worry about losing your personal details everywhere not just online.
  • There are some more good tips on the BBB site or you can go to Identity Theft Resource Center, the government's site or sign up for a service like the myfico Identity Theft product

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