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Financial Consequences of Identity Theft: Evidence from Consumer Credit Bureau Records

Author

Listed:
  • Nathan Blascak
  • Julia S. Cheney
  • Dubravka Ritter
  • Robert M. Hunt
  • Michael Vogan
  • Vyacheslav Mikhed

    (Federal Reserve Bank of Philadelphia)

Abstract

This paper examines how a negative shock to the security of personal finances due to severe identity theft changes consumer credit behavior. Using a unique data set of consumer credit records and alerts indicating identity theft and the exogenous timing of victimization, we show that the immediate effects of fraud on credit files are typically negative, small, and transitory. After those immediate effects fade, identity theft victims experience persistent, positive changes in credit characteristics, including improved Risk Scores. Consumers also exhibit caution with credit by having fewer open revolving accounts while maintaining total balances and credit limits. Our results are consistent with consumer inattention to credit

Suggested Citation

  • Nathan Blascak & Julia S. Cheney & Dubravka Ritter & Robert M. Hunt & Michael Vogan & Vyacheslav Mikhed, 2019. "Financial Consequences of Identity Theft: Evidence from Consumer Credit Bureau Records," Working Papers 19-2, Federal Reserve Bank of Philadelphia, revised 09 Jan 2019.
  • Handle: RePEc:fip:fedpwp:19-2
    DOI: 10.21799/frbp.wp.2019.02
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    More about this item

    Keywords

    fraud alert; consumer protection; identity theft; credit report; Risk Score;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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