Identity theft has become a defining threat in the virtual sphere and with the rate cybercrime is surging things may only get worse for unsuspecting victims.
Over the past two years, cybersecurity has evolved at a break-neck pace, in step with the emergent cyber threats thriving during the pandemic. This evolution is likely to continue in 2022. Identity theft in particular has become a defining threat in the virtual sphere, as recent statistics highlight.
Since the outbreak of the COVID-19 pandemic, cybercrime has flourished, taking full advantage of the necessity of shifting business operations online in the context of remote work. According to a report by the US-based Identity Theft Resource Center (ITRC), the first three quarters of 2021 saw a 17% rise in the number of businesses experiencing data breaches. These breaches are one of the prime sources of identity theft.
Unsurprisingly, public awareness of the hazards of cybercrime has risen in parallel with its incidence. A recent survey found that for the majority of US respondents (87%), cybersecurity is a bigger concern for their future than either COVID-19 or the climate crisis.
But to gain insights into where the level of threat from identity theft currently lies for consumers, what businesses can do about it, and how the cybersecurity market responds, it is first necessary to gain a comprehensive overview of the latest statistics. Here it is.
Rising Incidence of Identity Theft
One of the most comprehensive sources on identity theft in the US is the Federal Trade Commission’s Consumer Sentinel Network (CSN). The CSN collects all complaints made to the FTC throughout the year. Each year, the FTC releases a CSN Data Book summarizing the actual complaints it received, which allows an analysis of trends grounded in fact rather than estimates, as many other sources do.
Overall, FTC complaints jumped 46% from 2019 to 2020, a trend that likely continued in 2021. Identity theft is the main reason by far for FTC complaints, accounting for 29.39% of all cases.
Other sources also indicate that identity thefts have increased sharply, both globally and in the US specifically. According to figures released by the Aite Group, 47% of US citizens experienced financial identity theft in 2021.
The group’s report further estimates that the total cost of damages related to identity theft increased by 42% between 2019 and 2020, rising from $502.5 billion to $712.4 billion in 2020. Furthermore, losses are expected to increase by another $10 billion in 2021.
Different Types of Identity Fraud
However, estimates of the frequency with which identity fraud happens in the US and abroad, as well as the financial impact it creates, vary considerably depending on how the term is delineated.
For instance, the 2021 Identity Fraud Study by fintech research company Javelin, cosponsored by Visa, draws a distinction between traditional identity fraud and identity fraud scams.
In the former, cybercriminals gain personally-identifying information (PII) indirectly, either through a breach or dark web data brokers.
In the latter, criminals directly contact their victims to extract information such as social security numbers, either via calls, text messages, or email, using various phishing techniques. This approach provides them with a low-effort, low-risk path to financial gain.
Overall, the study estimates that identity fraud cost Americans a total of $56 billion in 2021, with 49 million consumers becoming the victims of cybercriminals.
Statistical Consequences of Identity Theft
According to the 2021 Aftermath Study of the Identity Theft Resource Center, the impacts of identity theft on victims are severe. Almost a third (32%) of victims experienced finance-related issues. All of these were contacted by debt collectors, often aggressively, and 83% were turned down for credit or loans – which left many unable to rent an apartment or find housing.
A similarly high number (29%) reported problems related to government-issued personal credentials, such as state-issued drivers’ licenses.
A further 10% of victims found themselves involved in criminal issues as a consequence of identity theft. 57% of these reported that their identity was used to commit a crime, with warrants for their arrest issued by law enforcement.
Finally, 8% of identity theft victims had issues related to medical treatments, receiving bills for services they never received.
Most damningly, the numbers also reveal that identity theft carries a large risk of recurrence. 29% of people filing complaints with the ITRC have been victims of identity theft in the past. Most people can’t tell if their identity has been stolen, and don’t even know how to check. This is one reason why identity fraud is often recurring.
In general, younger people report losing money to fraud more frequently, with 44% of complaints being filed by people aged 20-29. However, their resulting median financial loss is far lower than that of people in older age groups ($324 for ages 20-29 vs. $1,300 for ages over 80).
Identity Theft Protection: A Dynamic Market Development
As a consequence of the developments outlined above, investing in identity theft protection has become a priority for many consumers and businesses alike. According to the Global Identity and Fraud Report 2021 by Experian, 40% of US-based companies, and 47% of global businesses are prioritizing investments in advanced analytics and fraud detection software.
Globally, the identity theft protection services market size was estimated at USD 8.94 billion in 2020. Throughout the year it grew by 12.9% over 2019. By the end of 2021, the market is expected to expand to 10.11 billion. By 2028, a market expansion to a total size of 24.90 billion is projected, at a CAGR of 13.7%.
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