Losses From Stolen Identities Skyrocketed 79% to $24 Billion in 2021, a Javelin Study Finds

Payments providers are increasingly resuming business-as-usual as the pandemic eases, but so are criminals. Losses from identity-fraud schemes, in which fraudsters use stolen payment credentials for their own gain, soared 79% last year to $24 billion, according to a study released Tuesday by Javelin Strategy & Research. Moreover, this so-called traditional ID fraud victimized more than 15 million people, up more than 50%, according to the report.

The results show that whatever relief the chaos of the pandemic may have brought about is long over with. “Criminals reverted to pre-pandemic tactics in 2021 by focusing on virtual attack vectors such as bots, malware, and a variety of identity-fraud scams,” said John Buzzard, lead fraud and security analyst at Javelin and author of the report, in a statement. “Further, the 2021 data has shown criminals will change strategies to evade detection and maximize the amount of information they can extract from victims.”

To add to the pain, another sort of ID fraud—schemes in which fraudsters gull victims into giving up personal information—totaled another $28 billion in losses, bringing the overall toll to $52 billion, according to the study. Some 27 million U.S. adults were hoodwinked in this way, which means the total number of victims last year came to 42 million.

Indeed, the latest Javelin study, the 19th the consultancy has produced on ID fraud, found several disturbing trends in how ID thieves are operating. Both account takeovers and fraud on new accounts saw “huge increases,” according to Javelin. The former saw a 90% increase last year in dollar losses; the latter, in which fraudsters open several accounts using stolen consumer data, grew fully 109%. The unauthorized accounts can include credit cards and even merchant accounts, Javelin says.

To address the problem, consumers expect their primary financial institution to take the lead, according to the study. Some 54% of the victims said they’d like to see their bank set up a “fraud-prevention resource center” to help them resolve the multiple problems caused by ID theft, the study says.

Such a resource, in fact, could be a competitive advantage for banks, given the huge increase in this fraud, say some observers. “Considering that one in twenty Americans were victims of fraud in 2021, offering an efficient, quick, and transparent recovery process is a valuable differentiator and critical to retaining customers,” said Linda D’Evelyn, senior director of product at Equifax, a platinum sponsor of the study, in a statement.

Without measures to address the problem, it will only grow worse, sponsors of the study argue. “Fraudulent account creation and takeover are likely to rise again in 2022 unless significant, targeted efforts go into safeguarding consumer information as they live full, digitally inspired lives,” said Erik Kraus, vice president of fraud, risk, and compliance solutions at FIS Inc., also a platinum sponsor of the study, in a statement.

Altogether, some eight companies sponsored the Javelin research, including also AARP, Iris Powered by Generali, BioCatch, Neustar, Experian, and TransUnion.