With all the media emphasis on Internet-related fraud and identity theft,
one might think the Internet is a dangerous place for commerce.
As it turns out, though the Internet certainly has its risks, incidents
of fraud and identity theft from other more traditional means outnumber
If recent stats are to be trusted, incidents of fraud from
Internet-based means may well be on the decline.
According to a report set to be released tomorrow from Javelin Strategy
and Research, in cases where the source of the identity theft was known, only
9 percent were reported to have come from hacking, viruses and phishing.
In contrast, a lost or stolen wallet or credit/debit card was the cause of 30
percent of the incidents.
The study also found that fraudulent activity is mostly (over 70 percent)
conducted offline via phone or mail.
That’s not to say that there isn’t a nefarious angle to online fraud.
Average losses results from Internet-related identity theft fraud have
ballooned over the last year to $6,432, up from $2,897.
In the same period losses from ID theft taken from the garbage or mail have declined by 14 percent.
Also of note is the fact that phishing in particular was reported to have
the highest average length of misuse at 173 days. In comparison, data
taken by friends, acquaintances, relatives or in-home employees was used for
134 days and lost or stolen credit cards for only 75 days.
“With the appropriate security and consumer education, phishing on
existing accounts can be minimized,” Rubina Johannes, research analyst at
Javelin Strategy & Research told internetnews.com. “However, to stop
phishing on new accounts is more difficult.”
Johannes added that, “fraudsters are becoming more and more savvy in
garnering seemingly innocuous pieces of personal information, which can then be used to open new, fraudulent accounts in the victims’ names.”
Consumers are far from being helpless, though, when it comes to preventing
identity fraud. Johannes notes that 63 percent of potential identity fraud
is under the primary control of consumers.
“Too often the message in the media and elsewhere has been ‘there’s
nothing you can do, so beware it will happen to you,'” Johannes said.
“Javelin has found that to be patently false, and a dangerous message to
send to the consumer.”
In terms of overall fraud, according to recently released 2005 data from
the U.S. Federal Trade Commission (FTC), Internet auctions were the leading
complaint category at 12 percent of all complaints, down from 16 percent in 2004.
In 2005, fraudsters used Internet solicitations (e-mail and Web) as the
initial point of contact in 55 percent of reported cases, down from 57
percent in 2004.
Overall, the FTC reported that 46 percent of all reported fraud complaints
with losses of over $335 were Internet-related, down from 52 percent in 2004.