Working Paper

Does Experience Matter? Past Fraud Experiences, Data Compromises, and Credit Market Behavior

Abstract: We study how past experiences with fraud affect individuals’ likelihood of taking precautionary action in credit markets when faced with a new shock that raises their fraud risks. We focus on two kinds of past experiences with fraud: direct experience with fraud and a “near-miss” experience that increased fraud risk but did not directly lead to fraud. Using the 2017 Equifax data breach announcement, we show that individuals with either type of prior experience with fraud were more likely to take a precautionary action — freezing their credit report — than individuals with no prior experience with fraud. We also find that individuals with past direct experience with fraud were more likely to freeze their credit report than individuals who had a past near-miss experience. The individuals who froze their credit report had fewer total accounts and credit inquiries than those who did not, but this reduction in credit did not reduce their credit scores.

JEL Classification: D14; D80; G51;

https://doi.org/10.21799/frbp.wp.2026.10

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Working Papers

Publication Date: 2026-02-19

Number: 26-10

Note: The Paper SUPERCEDES WP22-36