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

46 Pages Posted: 14 Jan 2019 Last revised: 29 Apr 2020

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 Bank of Philadelphia

Michael Vogan

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Date Written: 2019-01-09

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

Keywords: identity theft, fraud alert, Risk Score, consumer protection, credit report

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, Financial Consequences of Identity Theft: Evidence from Consumer Credit Bureau Records (2019-01-09). FRB of Philadelphia Working Paper No. 19-2, Available at SSRN: https://ssrn.com/abstract=3314572 or http://dx.doi.org/10.21799/frbp.wp.2019.02

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 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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