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IDENTITY THEFT AS A TEACHABLE MOMENT

Nathan Blascak (), Julia Cheney, Robert Hunt (), Vyacheslav Mikhed, Dubravka Ritter and Michael Vogan
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Vyacheslav Mikhed: Federal Reserve Bank of Philadelphia
Michael Vogan: Moody's Analytics

No 16-27, Working Papers from Federal Reserve Bank of Philadelphia

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 report; Fair and Accurate Credit Transactions Act (FACTA) (search for similar items in EconPapers)
JEL-codes: D14 D18 G02 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ict
Date: 2016-10-24
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Working Paper: Identity theft as a teachable moment (2014) Downloads
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