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

Author

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

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 & Robert M. Hunt & Vyacheslav Mikhed & Dubravka Ritter & Michael Vogan, 2019. "Financial Consequences of Identity Theft: Evidence from Consumer Credit Bureau Records," Working Papers 19-2, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:19-2
    DOI: 10.21799/frbp.wp.2019.02
    Note: Superceded by 20-33
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    More about this item

    Keywords

    fraud alert; consumer protection; identity theft; credit reports; Risk Score;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection

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