Magazine article CRM Magazine

Companies Face a Consumer Trust Crisis: As Identity Fraud Hits an All-Time High, the Burden Is Shifting to Companies to Protect Customer Data

Magazine article CRM Magazine

Companies Face a Consumer Trust Crisis: As Identity Fraud Hits an All-Time High, the Burden Is Shifting to Companies to Protect Customer Data

Article excerpt

Identity fraud is definitely on the rise in the United States, and consumers are losing trust in companies as a result, according to Javelin Strategy & Research's "2018 Identity Fraud Study" released in early February.

The number of identity fraud victims in the United States reached 16.7 million in 2017, representing 6.6 percent of all consumers. Those numbers reflect an 8 percent increase in the past year, affecting roughly 1 million more victims than in 2016. That is a record high since Javelin began tracking identity fraud in 2003.

The study also found that despite industry efforts to prevent identity fraud, fraudsters successfully adapted to net 1.3 million more victims in 2017, while the amount stolen reached $16.8 billion.

Last year also saw a notable change in how fraud is being committed. While credit card accounts remained the most prevalent targets, fraudsters increasingly opened new intermediary accounts, such as those offered by PayPal, and other internet accounts with e-commerce merchants like Amazon. Although not as easily monetized by themselves, these types of accounts can be used to help fraudsters transfer funds from the existing accounts of their victims. In 2017, 1.5 million people were victims of this type of fraud, up 200 percent from the previous high.

Part of the reason for the prevalence of identity fraud, according to Linda Sherry, director of national priorities at Consumer Action, is that Americans' privacy rights are dictated by "a spotty patchwork of federal and state laws that are inadequate to ensure that consumers are protected and have a say as to what's done with their personal information." These include specific rules or laws about credit-related data, under the Fair Credit Reporting Act (FCRA), medical data under the Health Insurance Portability and Accountability Act (HIPAA), and children's data under the Children's Online Privacy Protection Act (COPPA).

And as the number of identity fraud cases increases, so too does the number of corporate data breaches. The Javelin research found that nearly a third (30 percent) of all U.S. consumers were notified of breaches in 2017, up from 12 percent in 2016. …

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