Identity theft on the rise, merchants and banks hardest hit
Amid the slew of high profile cyberattacks, an oft forgotten aspect of online theft has made recent headlines, as findings from a new report by Javelin Strategy and Research show that identity fraud increased for the second consecutive year.
According to the report, the number of identity fraud incidents increased by one million more consumers over the past year, and the dollar amount stolen increased to $21 billion. The fraud totals represent a three-year high, though it should be noted that the amount stolen is less than half the all-time high recorded in 2004. It has been determined that the increase was driven in part by a dramatic jump in account takeover fraud, the practice where cybercriminals obtain account details through data breaches or malware attacks.
Relatively few individual identity theft victims lost big sums of money, said Cnet in an analysis of the Javelin report, but it was the merchants and banks that absorbed the majority of losses. Other deficiencies were less tangible, but still felt, as 15 percent of all fraud victims avoided smaller online merchants and altered their buying behaviors, a much greater percentage than those choosing to avoid gaming sites or big box retailers.
Data breaches occur most commonly when unencrypted or poorly maintained encryption methods are exploited by malware. In a Financial Services Information Sharing and Analysis Center survey that asked respondents what solutions they had implement that effectively reduced account takeover fraud, the top four answers were customer education (91.7 percent), followed by installing a different multi-factor authentication solution (66.7 percent), shutting down the customer's online access to commercial system once anomalous activity is detected (58.3 percent), and modifying existing multi- factor authentication solution to improve effectiveness (50 percent).