Abstract
Overview
Income levels significantly predict the pattern of consumers' individual fraud cases. This report shows how companies can improve the effectiveness of fraud-fighting efforts by customizing them to the individual' s income levels, protecting their bottom lines and that of their customers. This report analyzes nationally-representative income-related fraud data, using identity fraud incidence rates, consumer costs, fraud amounts, and consumer behaviors for different income groups-namely the lower, middle, and higher income segments to give specific recommendations. Javelin has uncovered what is, in effect, an identity fraud economic divide, based on quantitative data from the most nationally representative, up-to-date study of identity fraud in the US of over 5,000 US adults, including 458 fraud victims.
Primary Questions
- How do identity fraud incidence rates, consumer costs, and fraud amounts differ for lower, middle, and higher income segments, and why?
- How do victims among distinct income groups respond to identity fraud differently?
- What behaviors changes do consumers affect after becoming identity fraud victims?
- How can certain income segments be targeted in order to enhance identity fraud prevention and detection?
Table of Contents
- Overview
- Primary Questions
- Findings and Analysis
- Methodology and Definitions
- Recommendations
- Lower Income Segment
- Higher Income Segment
- Higher Income Has Highest Fraud Rates at 5.37%, But Lowest Consumer Costs
- Lower Income Has Lowest Fraud Rates, but Highest Consumer Costs at $603
- Lower Income Hindered by Disinclination to Transact Online, Not
Necessarily Lack of Access
- Some 57% of Lower Income Access Web Versus 69% of all Consumers
- Victims Who Switch FIs and Forms of Payment May Have Greatest Impact
- After Identity Fraud: Lower-Income Victims Avoid Online Banking while Upper-Income Victims Increase Online Monitoring
- Debit Card Fraud More Prevalent for Lower Income
- Credit Card Fraud More Common Among Middle and Upper Income Segments
- For Lower Income Individuals, Fraud Takes Longer to Detect
- Time from Compromise to Misuse Significantly Shorter for Middle to Upper Income
- Higher- and Middle-Income Groups Victimized More Often with New
Store-branded Credit Cards
- Lower Income More Often Defrauded with New Telephone Accounts
- Highest Income Level Suffers Highest Rates of Existing Card Fraud at 4.54%
- Existing Card Fraud Higher for All Levels of Income
- Appendix
- Higher Income Consumers $100K-$149K Pay Higher Average Consumer Costs
($709)
- Income Breakdown Shows Resolution Time Grows as Income Shrinks
- After Fraud, Different Income Groups React in Opposite Ways
- Higher Income Turns to Online Monitoring; Lower Income Turns Away from Online Channel
- Consumer Education Needed
- Some 68% Access Internet but only 60% Use Anti-Malware
- Highest Average Fraud Amounts and Consumer Costs Experienced by Upper
Income Asians despite Fast Resolution Times
- African Americans Suffer Highest Rates but Lowest Fraud Amounts of any Ethnicity
- Middle Income Victims More Likely to Experience Fraud from a Purchase or
Transaction
- Family Members Are Frequent Fraud Sources for Upper and Lower Income Victims
- Regardless of Income Level, Half of All Fraud Victims Monitor their
Accounts Online More Frequently
- Two-thirds of Victims Avoid Online Registration of Personal Information
- Nearly Half of Existing Non-Card Fraud Victims are Lower Income Individuals
- Middle Income Consumers Comprise 30% of Existing Non-Card Victims
- Misuse Duration Is Significantly Shorter for Most Middle- and
Higher-Income Consumers
- Almost 16% of Lower Income Consumers Report Misuse that Lasts One Year or More
- Lower-Income Victims Engaging In More Traditional Fraud Protection
Activities Prior to Information Compromise (By Income Group)
- Online Bill Pay Is Low among Fraud Victims from All Income Groups
- The Lower the Income Level, the Longer the Fraud Detection Times
- Over Half of Middle- and Upper-Income Victims' Frauds Are Detected Within One Week
Table of Charts
- Chart 1: Incidence Rates, Fraud Costs, and Resolution Times (by Income Level)
- Chart 2: Consumer Behaviors among Individuals with Internet Access (By Income Level)
- Chart 3: Impact of Identity Fraud on Consumer Behaviors (by Income Level)
- Chart 4: Existing Credit Card versus Existing Debit Card Fraud (by Income Level)
- Chart 5: Fraud Lifecycle and Resolution Time (by Income Level)
- Chart 6: Prevalence of New Account Fraud (By Income Level)
- Chart 7: Table of One-year Fraud Incidence Rates (by Income Level)
- Chart 8: Incidence Rates and Average Fraud Costs (by All Income Levels)
- Chart 9: Changed Behaviors of Highest Income and Lowest Income Adults Due to ID Fraud
- Chart 10: Consumer Financial Behaviors (All Consumers)
- Chart 11: Table of Incidence Rates and Average Fraud Costs (by Ethnicity)
- Chart 12: Source of Theft of Personal Information (by Income Level)
- Chart 13: Consumer Behavior Changes after Fraud Victimization (All Fraud Victims)
- Chart 14: Breakdown of Existing Non-Card Fraud Victims (by Income Level)
- Chart 15: Duration of Misuse (By Income Level)
- Chart 16: Consumer Financial Behaviors (By Income Level)
- Chart 17: Fraud Detection Times from Misuse to Discovery (By Income Level)
