The Javelin Identity Fraud Survey Report provides consumers and businesses an in-depth and comprehensive examination of identity fraud in the United States. Its purpose is to help readers understand the causes and incidence rates of identity fraud and the success rates of methods used for its prevention, detection and resolution.

This report builds on Javelin’s annually published Identity Fraud Survey Report and the Federal Trade Commission’s 2003 Identity Theft Survey Report.

Survey Questionnaire

The set of questions and underlying methodology used for this report were identical to or highly similar to those in the 2010, 2009, 2008, 2007, 2006, 2005, 2004 and 2003 surveys. Therefore, Javelin is able to provide longitudinal trends on various subjects, such as incidence rates and detection methods.

In addition, to more deeply explore the significance of past responses and to identify the lasting impact of identity fraud on victims, Javelin added a number of discrete new questions. These expanded on the behaviors of consumers after personal information was compromised and/or misused. In particular, Javelin sought to gain a better understanding of identity fraud through social networking and added questions to obtain this data.

Some questions from the previous surveys were modified to improve the accuracy of estimates. Previously, questions used to measure the fraud amounts, consumer cost and resolution hours asked for ranges of responses. In the 2010, 2009, 2008, 2007 and 2006 reports, these questions were changed to collect exact amounts.

Survey Respondents

In all, 5,004 consumers, representative of the U.S. population, were interviewed via a standardized 49-question telephone survey to develop accurate and actionable insight into this pervasive and costly crime.

The polling yielded interviews with 466 fraud victims. After Javelin weighted the responses to standardize them to national demographics*, the 2010 survey’s computed number of victims interviewed was 470. For comparison, the numbers of victims in previous years are provided below, before and after weighting:

 

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Survey Data Collection

Javelin employed Opinion Access for this survey’s data collection. Opinion Access, one of the nation’s leading data collection providers, is recognized as a reputable data collection service firm with over 15 years of experience in the industry. Opinion Access was responsible for collecting the data and Javelin was responsible for the survey design, data weighting, data analysis and reporting. Previous studies employed Harris Interactive, Discovery and Synovate for all phases of data collection using computer-assisted telephone interviewing (CATI) via random-digit dialing (RDD).

The study was conducted through interviews administered by telephone with 5,004 U.S. adults over age 18 and a sample that is representative of the U.S. census demographics distribution. Data collection began Sept. 24, 2010, and ended Nov. 4, 2010.

Margin of Error

For questions answered by all 5,004 respondents, the maximum margin of sampling error is +/- 1.4% at the 95% confidence level. For questions answered by all 470 identity fraud victims, the maximum margin of sampling error is +/- 4.5% at the 95% confidence level. For questions answered by a proportion of all identity fraud victims, the maximum margin of sampling error varies and is greater than +/- 4.5% at the 95% confidence level.

Categories of Fraud

With one exception, this report continues to classify fraud in the three categories originally defined by the Federal Trade Commission (FTC). For 2005 and beyond, debit card fraud has been recategorized as existing card accounts fraud** instead of existing non-card accounts fraud.*** Javelin believes that this change reflects a more accurate representation of debit card fraud because its means of compromise, fraudulent use and detection methods more closely parallel those of credit cards.

The categories of fraud are listed below from least to most serious:

Many consumers are victims of identity fraud in more than one of these categories. In reporting the overall incidence rates of the three categories or types of accounts, the victims of crimes to more than one type of account are categorized based on the most serious problem reported (as designated by the FTC). Thus, victims who reported that fraudsters had opened new accounts using their information and also that their existing credit cards had been misused would be placed in the new accounts and other frauds classification, not in the existing card accounts classification. This categorization is applicable only for reporting the rates of the three types of fraud.

Reported Years of Findings

This report labels longitudinal findings according to the year the data was collected, in contrast to the method in previous years when longitudinal findings were labeled according to the year the report was published. Most notably, the current year of the data in this report is labeled 2010 because the data collection was finished in November 2010.

Calculations

Comparison of Annual Numbers

To create a more accurate understanding of the costs of identity fraud, Javelin has departed from using ranged brackets (e.g., $0 to $50) to measure the fraud amount, consumer cost and hours spent resolving fraud. This change in methodology leads to a lower estimate of the average fraud amount.

By converting the data collected into the 2005 ‘‘bracketed’’ year’s methodology, Javelin has found that the means derived from the former bracketed methodology overstate the average losses by almost 20% (with the exception of the final category, where the bracketed fraud amount lowered the average fraud amount of the victims by 13%). By adopting this change, Javelin has created a more accurate picture of the impact of identity fraud in the U.S.

 

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To allow for comparisons to previous years, it is necessary to rebracket the actual amounts, which has been done. In the future, access to these actual (vs. bracketed) numbers will allow for comparisons of like figures through use of the more accurate actual numbers.

Due to rounding errors, the percentages on graphs may add up to 100% plus or minus 1%.

To ensure consistency in comparing year-to-year changes, historical figures for average fraud amounts were adjusted for inflation through the Consumer Price Index (CPI). 2009 survey numbers were adjusted by 1.9%, 2008 survey numbers were adjusted by 1.6%, 2007 survey numbers were adjusted by 5.5%, 2006 survey numbers were adjusted by 8.5%, 2005 survey numbers were adjusted by 12%, 2004 survey numbers were adjusted by 15.8% and 2003 numbers not adjusted to normalize the value of currency to 2010 dollars.****

Data Smoothing Techniques

Javelin smoothed 2005, 2006, 2007, 2008, 2009 and 2010 total dollar cost estimates by taking a moving three-year average of the victim’s fraud amount. Time series data smoothing techniques are used to eliminate “noise” created by random data fluctuations and uncover real trends. Fraud data by state is estimated via a three-year moving average.

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Calculation of Mean and Median Values

Where responses pertained to a range in value (e.g., “one day to less than one week”) the midpoint of the range, rounded up to the nearest whole unit, was used to calculate the median or mean value.

For example: If the response selected for fraud amount was one day to less than one week, the assigned value would be the median of one day and seven days, inclusive, or four days.

Deviation from FTC and 2003 Methodology and Reporting

When the report cites victims’ average financial damages or resolution times in dollars or hours, the entire amount of damages or losses is placed into every type of fraud the victims suffered. For example, for a victim who reports that a total of $100 is obtained for both new accounts and other frauds category and existing card accounts, the $100 is counted in both categories. This method of reporting costs by types of fraud will not change the overall total costs of fraud across all three categories, but the average in dollars or time associated in the three types of fraud should not be summed because the result will be overlapping amounts.
In the 2003 report, responses to the question about new accounts and other frauds (Q13) were modified based on respondents’ subsequent answers to question 18. Question 20 for 2010 is slightly modified from 2003’s question, thus avoiding the possibility of needing to adjust responses to question 13 to maintain the longitudinal integrity. 2010’s responses to question 20 are reported as they were by the victims.

Also, 2010’s detection time question (Q22) is categorized differently from the question in the 2003 study. Whereas the 2003 study provided 13 answers from which victims could choose, the 2006 study contained only nine such responses. Javelin merged similar response categories that contained few replies in 2003 into single categories, allowing the data to be cross-tabbed with larger numbers and reporting fewer categories for a more robust calculation.

On several other questions, longitudinal comparisons are performed with numbers that Javelin calculated using 2003 raw data instead of 2003 reported figures. This was done to avoid inserting rounding errors or methodology differences.

Contributing Organizations

The survey was made possible in part by Fiserv, Intersections, Inc. and Wells Fargo. To preserve the project’s independence and objectivity, the sponsors of this project were not involved in the tabulation, analysis or reporting of final results. The Better Business Bureau (BBB) also contributed.

We augmented the main sample with a Hispanic sample via RDD to minimize under-representation of Hispanic Americans.


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* Responses were adjusted to be nationally representative based on respondents’ age, gender, income level and race/ethnicity as reported by U.S. Census on Dec. 11, 2006. http://www.census.gov/prod/www/abs/statab2001_2005.html, accessed Dec. 11, 2009.
** Formerly titled “Existing Credit Card Accounts” in the 2003 and 2005 reports
*** Formerly titled “Existing Non-Credit Card Accounts” in the 2003 and 2005 reports
**** Dollar costs were adjusted using the Consumer Price Index (CPI-U, Base 1982-1984=100) issued by the Bureau of Labor Statistics, ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt accessed Dec. 3, 2009.