One in four US consumers impacted by identity theft in 2021, Aite-Novarica consumer survey finds, with people often targeted through BNPL payments or who suffered a fraudulent P2P transfer.
Aite-Novarica, a research and advisory firm, has announced a new Impact Report commissioned by GIACT, a Refinitiv company, that details excessively high rates of identity theft – including application fraud and account takeover – and its impact on US consumers along with virtually every type of financial product, commercial platform and government subsidy program.
GIACT commissioned the report to highlight the persistent and widespread nature of identity theft and its impact on consumers and businesses alike.
The report, US Identity Theft in 2021: Adapting and Evolving, tracks the evolution and movement of identity theft throughout different age groups, account types and payments methods. The report also follows customer sentiment around identity theft and remediation.
Report highlights include:
- Identity theft shifts attention back to consumer financial products. After chasing government stimulus payments in 2020 and early 2021, identity theft again turned its attention back to consumer financial products. 25 per cent of US consumers were impacted by identity theft in 2021 – slightly down from a record high 27 per cent in 2020, primarily due to an ending of government subsidy programs and disruptions related to the COVID-19 pandemic.
- Identity theft against those aged 55 and above increases. According to the report, 25 per cent of US consumers 55 or older were impacted by identity theft in 2021 – a sharp rise from 12 per cent in 2020 as this group created new digital accounts and may have been more unprepared to protect their data against identity theft scams.
- Identity theft finds a new target in buy now, pay later. While checking accounts, credit cards and mobile phone accounts represent the most common targets of application fraud, a new target emerged: buy now, pay later (BNPL). The report found that 23 per cent of those impacted by application fraud schemes were targeted through BNPL payments. – Identity theft continues to hammer peer-to-peer (P2P) payments. 25 per cent of those impacted by account takeover experienced a fraudulent P2P transfer – the second most common account takeover response. And unlike credit cards, significantly less consumers were satisfied with P2P recovery process (82 per cent were satisfied with credit card recovery; 63 per cent were satisfied with P2P recovery).
- Consumers become less tolerant of fraud. Identity theft is creating more reputational risk as consumers have become less tolerant of financial institutions that allow fraud to take place. For example, 41 per cent of consumer loan application fraud victims said that they were unlikely or extremely unlikely to do business with the financial institution that allowed the fraud to take place – up from 20 per cent in 2020. Meanwhile, 31 per cent of account takeover victims claimed that they moved their account to another financial institution as a result of account takeover.
“The methods fraudsters use to commit identity theft continue to evolve and grow more sophisticated,” said Shirley Inscoe, strategic advisor at Aite-Novarica Group and author of the new report. “Firms should review and enhance current application controls and Know Your Customer processes to protect customers against identity theft. This will help reduce fraud losses and improve regulatory compliance as well.”
“The findings in the 2021 report send further alarming signals about the evolution of identity theft where one-quarter of the US population has likely been impacted by fraud in just the past year,” said James Mirfin, global head of digital identity and fraud solutions at Refinitiv. “Financial institutions, businesses and government entities must act now to manage identity risk, with sophisticated tools and data that can stay ahead of fraud’s unrelenting advancements. This continues to be an arms race and the customers are losing out. We thank Aite-Novarica for developing this important report and look forward to meeting the challenge of identity theft head-on.”