Identity Theft as a Teachable Moment

Posted: 24 Sep 2014  

Julia S. Cheney

Federal Reserve Bank of Philadelphia

Robert M. Hunt

Consumer Finance Institute, Federal Reserve Bank of Philadelphia

Vyacheslav Mikhed

Federal Reserve Bank of Philadelphia

Dubravka Ritter

Federal Reserve Bank of Philadelphia

Michael Vogan

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Multiple version iconThere are 2 versions of this paper

Date Written: September 2014

Abstract

This paper examines how instances of identity theft that are sufficiently severe to induce consumers to place an extended fraud alert in their credit reports affect their risk scores, delinquencies, and other credit bureau variables on impact and thereafter. We show that for many consumers these effects are relatively small and transitory. However, for a significant number of consumers, especially those with lower risk scores prior to the event, there are more persistent and generally positive effects on credit bureau variables, including risk scores. We argue that these positive changes for subprime consumers are consistent with the effect of increased salience of credit file information to the consumer at the time of the identity theft.

Keywords: Inattention, Identity theft, Fraud alert, Consumer protection, Credit report, Fair and Accurate Credit Transactions Act (FACTA), Propensity score matching

JEL Classification: D14, D18, G02

Suggested Citation

Cheney, Julia S. and Hunt, Robert M. and Mikhed, Vyacheslav and Ritter, Dubravka and Vogan, Michael, Identity Theft as a Teachable Moment (September 2014). FRB of Philadelphia Working Paper No. 14-28. Available at SSRN: https://ssrn.com/abstract=2499742 or http://dx.doi.org/10.2139/ssrn.2499742

Julia S. Cheney (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Robert M. Hunt

Consumer Finance Institute, Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States
215-574-3806 (Phone)
215-574-7101 (Fax)

Vyacheslav Mikhed

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Dubravka Ritter

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Michael Vogan

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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