The 2007 Identity Fraud Survey Report, released today by Javelin Strategy and Research, shows identity fraud in the United States dropped by $6.4 billion, or an estimated 12 percent, between October 2006 and October 2005. The study also shows that more fraud occurs in the physical world -- such as in-person transactions and by the direct theft of personal data by individuals -- than online.

Identity fraud is defined as access to personal account information that leads to fraud. The third annual Javelin Identity Fraud report, based on an October 2006 survey of 5,000 telephone interviews with consumers, turned up surprising results that challenge common beliefs. This year's survey is co-sponsored by CheckFree, Visa and Wells Fargo & Company.

Highlights fo survey findings include:

• Fraudulent new account openings are down over the previous year with average fraud amounts also dropping significantly. New account fraud dropped from 1.5 percent of all respondents in 2006 to one percent in 2007. Additionally, when fraudulent accounts are opened, many victims caught the fraud more quickly utilizing online channels, such as the viewing of statements, resulting in average fraud amounts dropping from more than $10,000 in 2006 to $7,260 on average in 2007.
• Young adults are at the greatest risk for identity fraud -- Adult victims between the ages of 18 and 24 are least likely to take easy but important safeguards such as shredding documents and using antivirus software and firewalls, resulting in more than five percent of those surveyed falling victim. The overall adult population of the United States reported a fraud rate of 3.7 percent. Younger adults between 18 and 24 reported a much greater incident rate of 5.3 percent. Additionally, more than half of these victims reported knowing their perpetrators, which could include friends, neighbors or in-home employees, as compared to just 23 percent of overall respondents.
• Income results in a fraud detection digital divide -- Americans earning less than $15,000 are least likely to be victims but take the longest to uncover fraud when it happens. They also react differently to fraud than those Americans earning more than $150,000.

The Decline of ID Fraud

Approximately 500,000 fewer adults in the United States fell victim to identity fraud in 2006 than in 2005. Of America’s overall adult population, 3.7 percent were victims, as compared to 4.0 percent in 2005. This demonstrates a continued year-over-year decrease since data was first collected in 2003 when 4.7 percent of the adult population was victimized.

Factors that contribute to this decline include better consumer education and awareness, and the increased usage of online banking and financial sites that allow individuals to more frequently monitor their accounts. As industry and consumers work together to protect sensitive data by adopting online financial services, such as electronic banking and bill paying, further fraud reduction is expected by Javelin.

"While identity fraud is still a serious criminal issue in the United States, Javelin’s new study points to significant identity fraud reduction as a direct result of changes in industry and consumer behaviors," says James Van Dyke, Javelin’s president and founder, who oversaw the Identity Fraud Survey Report for the third consecutive year. "Thanks in part to comprehensive data protection, fraud monitoring, and consumer education, we now have more effective methods to quickly catch -- or even prevent -- fraud before it occurs by utilizing common online technologies such as electronic banking and bill payment."

"The trends revealed in Javelin’s latest comprehensive report on identity fraud are a call to action for more consumer education and show its ability to build trust and confidence in today’s marketplace," said Steve Cole, president and CEO, Council of Better Business Bureaus.

Income a Factor

Americans with the lowest income surveyed -- those earning $15,000 or less -- are least likely to be victims of identity fraud, with only 2.8 percent reporting cases. Americans with incomes of more $150,000 per year are the most likely to be victimized (7.3 percent reporting abuses).

When the lowest income population is victimized, misuse lasts twice as long and the fraud is the hardest to uncover, taking on average 70 percent longer to detect than fraud in higher income populations. These victims spent 75 percent, or 44 hours on average, more time resolving the fraud.

The survey found that fraud victims earning more than $150,000 are two times more likely to turn off paper statements and bills, choosing to adopt electronic alternatives, a technique to help prevent fraud. They are 65 percent more likely to monitor their accounts online, giving them a timely advantage in catching fraud before large incident values build up. In comparison, lower income victims are more than twice as likely to reduce their overall spending, almost three times more likely to avoid online purchases, and are also three times more likely to avoid online banking.

About the market research report

The Javelin Strategy & Research 66-page report, "2007 Identity Fraud Survey Report -- Identity Fraud Is Dropping, Continued Vigilance Necessary" (February 2007), provides a detailed, comprehensive analysis of identity fraud in the United States, in order to help consumers and businesses better understand the effectiveness of methods used for its prevention, detection and resolution. A nationally representative sample of over 5,000 US adults, including 458 fraud victims, is surveyed via a 44-question phone interview to gain insight into this crime and its effects upon its victims. This report is issued as a longitudinal update to the Javelin 2006 Identity Fraud Survey Report, the Javelin 2005 Identity Fraud Survey Report and the Federal Trade Commission’s (FTC) 2003 Identity Theft Survey Report.

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