Identity Fraud Protection Services: Double Digit Growth to Continue, Yet Confusion and Usability Issues Threaten Market Share

SUMMARY

Overview

Due to the confusion and fear of consumers, identity fraud protection services are a marketer's dream: three out of four consumers believe that identity fraud is on the rise, despite steady declines in the crime over the past three years. The industry has responded to this growing awareness and concern with an array of direct-to-consumer services, such as credit monitoring, fraud alerts, data mining and most recently, credit freezes. This report provides a comprehensive assessment of the primary identity safety services, building upon robust consumer survey data on preferences, behaviors and attitudes. Leveraging qualitative data from in-depth vendor interviews, an analysis of the leading identity protection service providers is also featured, including, among others, Equifax, Experian, TransUnion, Fair Isaac, LifeLock, Debix, FraudStop (Identity Safeguards), Identity Guard (Intersections) and TrustedID.

Primary Questions

• What are the five factors that will determine success in this market space?
• What are the overall measures of impact of new accounts fraud?
• How many consumers are using credit monitoring services, fraud alerts and credit freezes?
• Which services provide the best value, both for consumers and for financial institutions from the partnership perspective?
• Which vendors are major players in the identity fraud protection services market, and what is the competitive differentiation for each provider?

TABLE OF CONTENTS

• Overview
• Primary Questions
• Findings and Analysis
• Consumer Perceptions Drive Adoption of Identity Protection Services
  • Five Factors to Gain Market Share
  • New Accounts Fraud Incurs the Highest Losses, Victim Impact
  • Credit Cards are Most Targeted for New Accounts Fraud
• The Propagation of Consumer-facing Solutions to Fight New Accounts Fraud
  • Consumers Express Strong Liking for New Data Mining Services
  • Consumers Want Convenient, Web-based Access to their Credit Data
  • One out of Four Buy from Issuers-But Half Receive Credit Monitoring for Free
• State of the Union: Identity Fraud Protection Services Industry
  • Credit Monitoring Renewal Rates Mirror Purchase Rates, But Need Improvement
  • Fraud Alerts: The "Middle-Ground" Approach to Identity Fraud Protection
  • Data Mining: Popular New Offering Needs Refinement to Realize Full Potential
  • Credit Freezes: The Next Frontier in Identity Fraud Protection
• Identity Protection Services Overview
  • Fraud Alerts: Vendor Overview
  • Resolution-Oriented Services: Vendor Overview
  • Data Mining/Scanning: Vendor Overview
  • Credit Monitoring Services Overview
• Partnership Opportunities for Financial Institutions
• Child Identity Fraud Protection
• Related Research
• Methodology
• Appendices
  • Appendix A: Three out of Ten Have Used a Credit Monitoring Service
  • Appendix B: Most Consumers View their Credit Report Infrequently
  • Appendix C: Almost One in Five (18%) Has Used Identity Theft Insurance
  • Appendix D: One out of Three Consumers Wants FI-Provided Identity Insurance
  • Appendix E: One of every Four Fraud Victims Purchases Credit Monitoring
  • Appendix F: Almost Three-fourths of Issuers Offer Credit Reports or Monitoring

Table of Figures

• Figure 1: Identity Fraud Protection Market Size
• Figure 2: Comparisons of Incidence Rates and Average Fraud Amounts
• Figure 3: Types of Fraudulent New Accounts Opened
• Figure 4: Definitions of Identity Fraud Protection Services
• Figure 5: Fraud Protection Services that Consumers Are Most Likely to Purchase
• Figure 6: Preferred Features for Potential Purchasers of Identity Safety Services
• Figure 7: Consumer Sources of Credit Monitoring Services
• Figure 8: Analysis of Consumer Fraud Protection Services, by Category
• Figure 9: Credit Monitoring Subscribers' Likelihood of Renewal
• Figure 10: Consumer Usage of Fraud Alerts
• Figure 11: Analysis of Identity Protection Services
• Figure 12: Fraud Alerts Features by Vendor
• Figure 13: MyTruston Features
• Figure 14: Data Mining Features by Vendor
• Figure 15: Credit Monitoring Features by Vendor
• Figure 16: Credit Monitoring Services Offered by Banks
• Figure 17: LifeLock for Kids and Family
• Figure 18: Child Identity Fraud Protection Services
• Figure 19: Consumer Usage of Credit Monitoring
• Figure 20: Frequency of Credit Report Access
• Figure 21: Consumer Usage of Identity Theft Insurance
• Figure 22: Consumer Preferences for FI-provided Identity Safety Features
• Figure 23: Consumer Behavior Changes after Fraud Victimization
• Figure 24: Percentage of Issuers Meeting Javelin Criteria for Identity Fraud Detection