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Most ID Fraud Victims Get Some Warning

March 5, 2015
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Two-thirds of America’s 12.7 million identity fraud victims last year “had previously received a data breach notification” but still fell prey to criminals, according to Javelin Strategy & Research. While ID fraud crimes surprisingly declined in 2014, the study highlights a potentially dangerous trend among consumers: data breach fatigue.

Previous studies have shown that a sizable number of credit and debit card users shrug off warnings that they may be at risk of ID theft and fraud.

“More than one-third of consumers reported they ignored data breach notification letters, taking no action to protect themselves from fraud,” Experian, the big credit reporting company, said in a recent report, citing a 2014 study by the Poneman Institute. “After 62% of consumers reported they had received at least two data breach notifications involving separate incidents in the past two years, perhaps surprisingly the most frequent response was inaction.”

Students tend to be the most blasé, according to Javelin, a financial services consultancy. Almost two-thirds of students said they “were not very concerned about fraud,” the company’s research shows. Often, students find out they’ve been victimized only when they are contacted by debt collectors or denied credit.

Javelin found that the number of people affected by ID fraud fell 3% last year, the first decline since at least 2010. Fraud-related losses dropped 11% to $16 billion.

Even so, the effects of ID theft and fraud can be devastating. You may be able to avoid the headaches, though especially if you act quickly when warned that you may be at risk.

Steps to take

People can fall victim to identity fraud in a number of ways, from having a debit card stolen to seeing their information compromised by a hacker’s attack. The measures you can take to protect yourself are as varied as the types of fraud.

If you have access to your bank information on your smartphone, make sure to update the device’s software regularly to keep its security in tune. Also, make sure you have strong passwords for these accounts, and change them from time to time.

Ask your financial services providers about credit and debit cards with EMV chips, which make copying your data much more difficult. Also, you may be able to use payment systems that essentially eradicate the threat of card skimming by hackers trying to steal your account information.

Take advantage of alert systems provided by banks and credit unions. You’ll be notified if any unusual activity is detected in your account. The sooner you respond to potential breaches, the better, as federal law says that anyone who reports unauthorized purchases within 60 days cannot be held liable for more than $50.

Also, if you’re warned that your information may have been compromised, consider asking a credit bureau such as Experian to place a fraud alert in your credit file, which will prevent any new accounts from being opened in your name without your direct authorization. When you ask for an alert at one of the three big credit bureaus, it will share the information with the other two.

Although financial institutions have bolstered their security to try to thwart potential breaches, it’s still up to you to defend yourself against fraudsters.

Tony Armstrong is a staff writer covering personal finance for NerdWallet. Follow him on Twitter @tonystrongarm and on Google+.

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