‘First-person’ ID fraud spikes — sign of coming recession, firm claims

USA.Gov

Identity theft targeting family members is soaring, as is what I’ll call “desperation fraud” — opening credit accounts with no intention of paying, and little effort to disguise the fraud. These are two very bad signs for the economy, according to a firm that studies ID theft on a wide scale.

ID Analytics, which for years has provided the de facto annual report of identity theft data, is out early with some disturbing data. The firm sent it to me Tuesday afternoon.

Desperation fraud — ID Analytics considers it identity theft and calls it first-party fraud — was up 14 percent in the first quarter of 2019 compared to the year earlier, the firm says. The majority of the increase came in the wireless and online lending industries.

“First-party fraudsters knowingly apply for these forms of credit and services with an understanding that their long-term creditworthiness may decline precipitously when they default, but they want the money now and do not worry about the long-term consequences,” the firm said.

We already knew that friendly fraud — using intimate knowledge of family members’ of friends’ personal information to commit fraud — had skyrocketed recently.  In Javelin’s end-of-year report last year, the overall rate of friendly fraud doubling from 7% of fraud victims in 2017 to 15% in 2018.

“The 14 percent year-over-year rise we have seen in first-party fraud is very concerning. This is the type of fraud (that increases) when people are in dire financial straits, such as in a recession or when there is significant unemployment. People are sacrificing long-term financial stability for short term funds,” said Kevin King, Vice President of Marketing for ID Analytics.

There are plenty of potential explanations for a rise in desperation fraud. One that strikes me immediately — perhaps word is out that consequences are unlikely.  Or screening standards have been loosened as companies try to avoid false positives and gain market share.

But ID Analytics’ proposed explanation — that this is a canary in a coal mine for the economy — is as reasonable as any.

“We aren’t economists and don’t have models to show definitively that fraud types predict a recession. But we can say that if we are seeing such a marked increase in first-party fraud before the economy enters a downturn, financial institutions and retailers should be prepared for a tidal wave increase in this type of fraud when it does in the future,” King told me. “This is particularly troubling for the knowledge of how to commit and monetize these crimes has become increasingly common over the past few years.”

About Bob Sullivan 1370 Articles
BOB SULLIVAN is a veteran journalist and the author of four books, including the 2008 New York Times Best-Seller, Gotcha Capitalism, and the 2010 New York Times Best Seller, Stop Getting Ripped Off! His latest, The Plateau Effect, was published in 2013, and as a paperback, called Getting Unstuck in 2014. He has won the Society of Professional Journalists prestigious Public Service award, a Peabody award, and The Consumer Federation of America Betty Furness award, and been given Consumer Action’s Consumer Excellence Award.

4 Comments

  1. Due to data breaches criminals can now obtain personal details of anyone of us online from the dark web. This will drastically increase fraud, particularly identity fraud because we rely on outdated signatures on all face to face transaction documents despite of knowing that in the event of crime signatures don’t even expose fraudster’s gender.

    Foolproof simple system to make signature reliable is to personalise it with ID sticker which in the event of crime we’ll expose fraudster’s photo and thumbprint. Similarly we can personalise PIN by storing it in thumbprint activated smart key size memory stitch. Call this personalised electronic PIN EPIN which will change to new vale after every transaction. Use this EPIN as password and this will provide us personalised password. Fraud and cyber crimes will automatically stop if we personalise signature, PIN and passwords to the individuals so criminals cannot obtain and misuse them the way they are doing now.

  2. When companies lose enough money that it hits their bottom lines,they will do something to stop this.Government doesn’t care,since they’re a monopoly with no consequences of actions.

  3. So many interesting facts and critical instances that I am astonished and extremely pleased with the data you give us.

    The issue is burning as well, therefore I propose I
    will read it twice.

  4. The article is well arranged. I visit the author has a
    true knack for this topic. I like that subject,
    and I’m in constant search of new pieces and the latest news.

    I truly loved that one, because it is full of interesting facts and it’s a kind of
    easygoing article. I spent only a couple of minutes reading, and due to well-structured text,
    I know it completely. Thanks!

Leave a Reply

Your email address will not be published.


*


This site uses Akismet to reduce spam. Learn how your comment data is processed.