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Federal Reserve Bank of Philadelphia
Working Papers
Financial Consequences of Identity Theft: Evidence from Consumer Credit Bureau Records
Nathan Blascak
Julia S. Cheney
Robert M. Hunt
Vyacheslav Mikhed
Dubravka Ritter
Michael Vogan
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


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Nathan Blascak & Julia S. Cheney & Robert M. Hunt & Vyacheslav Mikhed & Dubravka Ritter & Michael Vogan, Financial Consequences of Identity Theft: Evidence from Consumer Credit Bureau Records, Federal Reserve Bank of Philadelphia, Working Papers 19-2, 09 Jan 2019.
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Keywords: identity theft; fraud alert; Risk Score; consumer protection; credit report
DOI: 10.21799/frbp.wp.2019.02
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