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Prior Fraud Exposure and Precautionary Credit Market Behavior


  • Nathan Blascak
  • Ying Lei Toh


This paper studies how past experiences with privacy shocks affect individuals’ take-up of precautionary behavior when faced with a new privacy shock in the context of credit markets. We focus on experiences with identity theft and data breaches, two kinds of privacy shocks that either directly lead to fraud or put an individual at an elevated risk of experiencing fraud. Using the announcement of the 2017 Equifax data breach, we show that individuals with either kind of prior fraud exposure were more likely to freeze their credit report and close credit card accounts than individuals with no prior exposure immediately after the announcement. We also find that prior victims of identity theft, a more serious type of exposure, were more likely to take precautionary actions than individuals who were victims of a previous data breach.

Suggested Citation

  • Nathan Blascak & Ying Lei Toh, 2022. "Prior Fraud Exposure and Precautionary Credit Market Behavior," Working Papers 22-36, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:94965
    DOI: 10.21799/frbp.wp.2022.36

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    References listed on IDEAS

    1. Howard Kunreuther, 2006. "Disaster Mitigation and Insurance: Learning from Katrina," The ANNALS of the American Academy of Political and Social Science, , vol. 604(1), pages 208-227, March.
    2. Colin F. Camerer & Howard Kunreuther, 1989. "Decision processes for low probability events: Policy implications," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 8(4), pages 565-592.
    3. Mikhed, Vyacheslav & Vogan, Michael, 2018. "How data breaches affect consumer credit," Journal of Banking & Finance, Elsevier, vol. 88(C), pages 192-207.
    4. Sasha Romanosky & Rahul Telang & Alessandro Acquisti, 2011. "Do data breach disclosure laws reduce identity theft?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(2), pages 256-286, March.
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    More about this item


    Equifax data breach; consumer credit; credit freeze;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • G50 - Financial Economics - - Household Finance - - - General

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