Pandemic-Related Identity Fraud Crime Victim Impacts; Customer Experience During Period of Identity Fraud

• More than four (4) out of 10 pandemic benefit applicants say they were the victim of pandemic-related identity fraud.
• According to the Identity Theft Resource Center’s (ITRC) data, there is a significant reporting gap between the number of victims and those who report their identity issues to government agencies.
• Most victims say it takes three months or less to resolve an issue. However, one (1) in four (4) complex cases may take a year or longer to resolve.
• Financial impacts are lessening for pandemic-related identity fraud victims; nonfinancial impacts such as feelings of violation and stress remain high, with 70 percent of victims reporting one or more effects.
• Benefit identity fraud, once a low-level form of fraud, is a permanent part of the government risk landscape.

Off to the Races

This year, 2022 is off to a fast start, with a historical number of data breaches occurring in the first quarter. Traditionally, Q1 has the lowest number of data breaches reported each year. With 2022 beginning with the highest number of Q1 data compromises in the past three years, the Identity Theft Resource Center (ITRC) can reasonably conclude that this will be a challenging year for cybersecurity and pandemic-related identity fraud. 

How Big is the Problem?

Research by the ITRC for LexisNexis Risk Solutions shows that 42 percent of people who applied for pandemic-related benefits like unemployment or small business loans reported being victims of pandemic-related identity fraud.

Unemployment Benefits Identity Fraud

According to the data, 45 percent of respondents either received one or more unsolicited unemployment benefit payment cards, received unemployment benefits that they hadn’t applied for, or were denied unemployment benefits entirely due to identity fraud. Even after pandemic-related unemployment benefits have ended for most of the nation, identity criminals are still attempting to scam people and businesses to gain benefits in victims’ names. 

More Money, More Problems

The goal of most scams, including pandemic-related scams, is to steal a victim’s finances. However, they don’t always succeed. The ITRC recently found that 40 percent of pandemic-related scams had no financial impact on their victims in 2021. That’s better than the 27 percent who said they saw no financial impact from pandemic-related scams in 2020.

Financial impacts are not the only concern. Seventy (70) percent of pandemic-related identity fraud victims still report nonfinancial effects that range from feelings of suicide and violation to increased stress and a loss of trust.

Conclusion

While there are fewer cases of pandemic-related scams being reported in 2022, identity criminals continue to apply for benefits long after enhanced benefits have ended. That means increased levels of benefit-related identity fraud are now part of the permanent risk landscape. For example, reports of unemployment benefits identity fraud to the ITRC are currently 778 percent higher than the pre-pandemic rate.

There are two issues identified in the research that need further investigation: 

• Why did 42 percent of benefit applicants self-identify as a victim of identity fraud, but only 26 percent said they reported the crime to a government agency?
• How can we better assist identity crime victims at scale when there are no national or state infrastructures to provide free victim support for complex or serious cases of identity fraud?

Methodology

Who did we survey?

• One thousand ninety-seven (1,097) adults across the U.S.
• A random sample of 142 self-identified pandemic-related identity fraud victims who contacted the ITRC in 2020, 2021 and Q1 2022.