Identity Theft as a Teachable Moment

49 Pages Posted: 27 Oct 2016 Last revised: 18 Jun 2022

See all articles by Nathan Blascak

Nathan Blascak

Federal Reserve Bank of Philadelphia

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 Banks - 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: October, 2016

Abstract

SUPERCEDES 14-28. 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 linked consumer credit data and alerts indicating identity theft, we show that the immediate effects of fraud on consumers 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 (indicating lower default risk). We argue that these changes are consistent with increased salience of credit file information to the consumer at the time of severe identity theft.

Keywords: inattention, salience, identity theft, extended fraud alert, risk score, consumer protection, credit reports, Fair and Accurate Credit Transactions Act (FACTA)

JEL Classification: D14, D18, G02

Suggested Citation

Blascak, Nathan and Cheney, Julia S. and Hunt, Robert M. and Mikhed, Vyacheslav and Ritter, Dubravka and Vogan, Michael, Identity Theft as a Teachable Moment (October, 2016). FRB of Philadelphia Working Paper No. 16-27, Available at SSRN: https://ssrn.com/abstract=2859366

Nathan Blascak (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Julia S. Cheney

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 Banks - 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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