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Millions of words have been written about the financial cost of identity fraud, for both the financial institution and the victim – and for good reason. In 2021 identity fraud cost U.S. businesses an estimated $52 billion, according to Javelin Strategy & Research.
But victims pay an additional price, as well, that credit unions should keep in mind as they look beyond the dollars and cents. A recent survey by the Identity Theft Resource Center (ITRC) took a deep dive into the emotional, physical and physiological effects on fraud victims, and the data show that victims are increasingly dealing with nonfinancial ramifications – from sleep problems to severe mental health effects.
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The report reflects the responses of 120 victims who contacted the ITRC, a nationally recognized non-profit organization established to support victims of identity crime, between April 2021 and March 2022. The number of victims reporting negative feelings or emotions from an identity crime is on the rise, from 79% in 2021 to 87% in 2022. Victims reported a wide gamut of emotions, from anxiety (80%), anger (72%) and loss of trust (55%) to shame or embarrassment (40%), guilt (33%) and even suicidal feelings (10%).
Victims reporting physical problems increased, as well, from 44% in 2021 to 68% in 2022. Sleep problems (92%) and stress (88%) were the top-reported physical issues, which also included persistent aches and pains (42%) and new unhealthy or addictive behaviors (17%).
Perhaps it's no wonder that victims of identity fraud often blame their bank or credit union, which can result in customer attrition. A 2020 Aite Group survey found that some consumers are unlikely to do future business with a bank or credit union where a checking account, credit card or loan was opened in their name. And customers flee their banking relationship more definitively depending on how unsatisfied they were with the financial institution's level of assistance. Twelve percent of people said they'd switch to a new financial institution, even if they were satisfied with the response to credit card fraud. That number leaps to 42% among people who were unsatisfied with the financial institution's response.
So, what should credit unions be doing to mitigate the issues fraud victims deal with? For starters, acknowledge that members can suffer an emotional and physical toll that can impact all areas of their lives – and their relationship with their financial institution.
Second, focus more on preventing fraud in the first place rather than dealing with the often costly and complicated aftermath. That could mean reassessing your fraud-protection solutions and adding additional elements or data. In a recent survey of frontline fraud fighters by my company Kevari and About-Fraud, more than a third of respondents (34%) cited new tools or services as the single most important investment an organization could make to manage fraud more effectively.
Acknowledging the human cost of fraud and bolstering your fraud systems and controls can reduce fraud losses and prevent reputational damage, while protecting your members – and your relationships.
Adam Elliott Adam Elliott is the Founder and President of Kevari, formerly ID Insight, a Minneapolis-based firm helping credit unions, banks, financial services companies and businesses fight identity fraud.
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