Javelin Strategy & Research Examines the Very Real Connection between Data Breaches and Identity Fraud
San Francisco, CA, June 5, 2013. Contemporary research on the financial impact of data breach events has focused on costs to businesses and institutions, but largely ignored their effect on the consumers whose personally identifiable information (PII) is compromised. Today, Javelin Strategy & Research (@JavelinStrategy) released the firm’s first ever 2013 Data Breach Fraud Impact Report: Mitigating a Rapidly Emerging Driver of Fraud, which demonstrates the real connection between data breach and consumer fraud. A single massive data breach can result in billions of dollars in consumer fraud losses.
Data breach victimization has been increasingly correlated with fraud incidence over the past three years. Over 50% of fraud victims in 2012 were also data breach victims. Fraudsters are improving at mining large data sets at the same time as businesses and institutions of all types are facing an onslaught of data breaches. The Open Security Foundation reports an all-time high of 1,611 breaches in 2012, a 48% increase over 2011.
“Current data protection standards are often insufficient to prevent a data breach event—and worse, they are sometimes altogether neglected”, said Al Pascual, Senior Industry Analyst – Security, Risk & Fraud at Javelin Strategy & Research.“Organizations can promote consumer confidence and loyalty by instituting better protections against the event of a data breach and by mitigating criminals’ ability to use stolen data to defraud consumers.
Javelin analyzed several data breach case studies, including the South Carolina Department of Revenue (SCDOR) to project the fraud losses to consumers and institutions over the life of this breach. This breach is one of the largest ever faced by the U.S. Secret Service — the Social Security numbers of 3.6 million South Carolinians and 16,000 payment card numbers were exposed. Javelin estimates the total resulting fraud losses at $5.2 billion for this breach alone, and $776 in out of pocket expenses for each affected consumer that suffers identity fraud.
Javelin Strategy & Research’s 2013 Data Breach Fraud Impact Report: Mitigating a Rapidly Emerging Driver of Fraud, provides businesses, financial institutions, government agencies, and other organizations a view of how the theft of personally identifiable information in a data breach affects consumers. The report contains 24 pages and 13 graphs. It also features four data breach case studies from 2012, including South Carolina Department of Revenue, Global Payments, Utah Department of Health , and Northwest Florida State College . For each of these data breaches, Javelin estimates the total fraud cost, resolution hours, and consumer out-of-pocket costs.
Related Javelin Research
- 2013 Identity Fraud Report: Data Breaches Becoming a Treasure Trove for Fraudsters
- 2013 Banking Identity Safety Scorecard: Changing Tactics in the Face of Growing Account Takeover and New Account Fraud
About Javelin Strategy & Research
Javelin Strategy & Research, a Greenwich Associates LLC company, provides strategic insights into customer transactions, increasing sustainable profits for financial institutions, government, payments companies, merchants and other technology providers. Javelin’s independent insights result from a uniquely rigorous three-dimensional research process that assesses customers, providers, and the transactions ecosystem.