The 2020 Identity Fraud Report, released by Javelin Strategy & Research, reveals financial institutions’ methods to identify and respond to fraud are no match for criminals’ high-tech schemes to hijack consumer accounts. Fraud losses grew 15 percent in 2019 to $16.9 billion even as instances of fraud fell from 14.4 million in 2018 to 13 million in 2019, which resulted in consumers facing $3.5 million in out-of-pocket costs last year as criminals shifted their focus from card fraud to opening and taking over accounts.
"These findings should be a wake-up call for financial institutions, the payments industry, businesses and consumers across America," said Krista Tedder, Head of Fraud with Javelin Strategy & Research. "The data is proof of what we’ve long known — the full weight of identity fraud lies not only in counterfeit credit cards and magnetic stripes but in full account takeover and new account fraud. Now it’s time to elevate our understanding of what security, detection and resolution really mean."
The study found account takeovers — identity theft where a criminal gains unauthorized access to an online account belonging to somebody else — are trending at the highest loss rate, up a staggering 72 percent over prior year. This is due in large part to technological advancements that have made it easier for criminals to manipulate and socially engineer information, while making it harder to detect account takeovers without additional security infrastructure. And criminals work quickly — 40 percent of all fraudulent activity associated with an account takeover occurs within a day.