Identity theft is the attempted or successful misuse of an existing account, such as a debit or credit card account, the misuse of personal information to open a new account or the misuse of personal information for other fraudulent purposes, such as obtaining government benefits or providing false information to police during a crime or traffic stop.
In 2014, the most common type of identity theft was the unauthorized misuse or attempted misuse of an existing account—experienced by 16.4 million persons. Victims may have experienced multiple types of identity theft. An estimated 8.6 million victims experienced the fraudulent use of a credit card, 8.1 million experienced the unauthorized or attempted use of existing bank accounts (checking, savings or other) and 1.5 million victims experienced other types of existing account theft, such as misuse or attempted misuse of an existing telephone, online or insurance account.
Most identity theft victims discovered the incident when a financial institution contacted them about suspicious activity (45 percent) or when they noticed fraudulent charges on an account (18 percent). The majority of identity theft victims did not know how the offender obtained their information, and 9 in 10 identity theft victims did not know anything about the offender.
The Cost of Identity Theft
According to a study by Javelin Strategy & Research, identity theft cost $16 billion in 2014 in the U.S.
Two-thirds of identity theft victims reported a direct financial loss. About 14 percent of identity theft victims experienced an out-of-pocket loss of $1 or more. Of those, about half suffered losses of $99 or less and 14 percent lost $1,000 or more. Victims whose personal information was misused or who had a new account opened in their name experienced greater out-of-pocket financial losses than those who had an existing credit card or bank account compromised.
In addition to the financial costs, identity theft has other costs. Resolving problems associated with identity theft takes time. Most victims (52 percent) were able to resolve any problems associated with the incident in a day or less, while about 9 percent spent more than a month. Identity theft victims spend an average of 50 to 175 hours restoring their name and credit history, according to data from California Public Interest Research. Among identity theft victims who spent six months or more resolving financial and credit problems due to the theft, 29 percent experienced severe emotional distress, while 4 percent who spent a day or less experienced such distress.
Offering your employees identity theft protection can help reduce the financial and physical toll of dealing with identity theft. Identity theft benefits can help your employees cover the cost of repairing their credit, including phone calls, postage and photocopies. Most don’t cover the cost of lost work time. Some provide legal assistance.
Perhaps more importantly, identity theft benefits can put your employees in touch with experts who can guide them through the process, as well as services that can detect suspicious activity sooner.
Most programs will pay for credit monitoring services. These services monitor a participant’s credit report for suspicious activity and notify the participant when any suspicious activity occurs. However, new activity doesn’t show up on credit reports for at least 30 days. During this time, an identity theft can wreak havoc with a victim’s credit rating and finances. A program that detects suspicious activity in real time, by analyzing activity such as credit card and mortgage applications and wireless accounts, provides better protection.