According to Javelin’s 2015 Identity Fraud Report, seniors (individuals over 65) incur the highest level of fraud across all types of fraud. Why is that? Seniors are attractive victims: older individuals have better credit and hold more accounts compared to younger consumers who are just beginning to build their credit profile, and once targeted by a fraudster, seniors are 34% more likely to lose money than victims in their 40’s. Additionally, even if the fraud is caught, a senior victim may avoid reporting the incident due to their belief that it will not make a difference or out of embarrassment over not being able to handle their own affairs, or worse, because the fraudster was a person they knew and trusted.1
To quantify the impact, ID Analytics looked at incurred fraud rates for seniors within the ID Network®. The ID Network is ID Analytics’ cross-industry repository of account applications and performance data that contains over 1 trillion data elements collected over the last 12 years, with 3.3 million confirmed fraud events. We focused our research on the telco, bankcard and retail industries to compare fraud rates by generation. For seniors, we concentrated on applicants in two age groups; applicants between the age of 69-84 and those 85 and older. In this 2014 study, a fraud was determined by the enterprise (issuer or carrier) reporting the account as closed or not booked due to fraud.
We found that applicants between 69 -84 had a fraud rate almost twice that of those under 69. Fraud rate continues to increase as an applicant’s age increases but overall the 69-84 age group was 1.6 times riskier than the younger generations while the 85+ age group is 2.8 times riskier.
We dug a little deeper into the results from the bankcard industry because the differences were more distinct than in telco and retail card. We found that bankcard applications linked to the Personally Identifying Information (PII) of seniors resulted in the highest fraud rates.
- Applicants between 69-84 showed an incurred fraud rate of 1%, which is 2.7 times higher than the rest of the population.
- Applicants, age 85 and up have an incurred fraud rate of 2.3%, which is over 6 times higher than the rest of the population.
- Millennials or applicants between 18-33 are seen to have the lowest fraud rate in the bankcard space. This result is partially due to the Credit Card Act of 2009, which limited applicants under the age of 21 from applying for credit cards2 unless they were able to prove income as well as millennials continued challenges in obtaining credit generally.
So what does this all mean? Seniors are great applicants, given their long-standing credit history and better than average credit default rates, but this also makes them the ideal target for a fraudster. Enterprises should take specific steps to protect seniors from third-party use of their identities including enhanced systemic verification. There are many factors involved in determining if applications may be fraudulent, but age can be a key indicator of the potential for fraud.
Visit our website to learn more about ID Analytics and how we can help provide visibility into potential fraud risk: http://www.idanalytics.com/solutions/fraud-risk-management
Ken Meiser is the Vice President of Identity Solutions for ID Analytics.