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Financial Fraud Through the Lens of Extended Fraud Alerts

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Abstract

We use extended fraud alerts in anonymized credit reports to examine how identity theft, and subsequent clean-up, affects consumers’ credit outcomes. The immediate effects of fraud for these consumers are negative, relatively small, and transitory. After placing an alert, these consumers experience persistent declines in delinquencies and a 12-point increase in credit scores, and 11 percent of filers become prime consumers. Many of these consumers take advantage of their improved creditworthiness and obtain additional credit. Although alert filers have larger balances, their performance on loans is as good as better than before fraud, suggestive of a change in behavior following fraud.

Suggested Citation

  • Nathan Blascak & Julia S. Cheney & Robert M. Hunt & Vyacheslav Mikhed & Dubravka Ritter & Michael Vogan, 2025. "Financial Fraud Through the Lens of Extended Fraud Alerts," Working Papers 25-29, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:101886
    DOI: 10.21799/frbp.wp.2025.29
    Note: This paper supersedes 21-41
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    File URL: https://www.philadelphiafed.org/-/media/FRBP/Assets/working-papers/2025/wp25-29.pdf
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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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