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US identity fraud losses fell sharply last year, bucking a long-running trend.

The number of fraud victims decreased 28 per cent in 2010 from 11 million to 8.1 million. The total value of fraudulent losses also fell from $56bn in 2009 to $37bn in 2010, according to an annual study by Javelin Strategy & Research. Javelin reports the figures for losses are the lowest it has seen in the eight years it has run the study.

Javelin reckons a significant drop in reported data breaches goes some way towards explaining the decline in identity fraud. Around 26 million records were exposed in 404 reported breaches during 2010, compared to 221 million records in 604 breaches during 2009.

More stringent checks by lenders to "authenticate users and determine credit risk" as well as improved consumer awareness of ID fraud risks and the use of account monitoring tools are also credited in the decline.

“Economic conditions also appear to have contributed to this year-over-year decline, as well as increased security measures and some significant law enforcement successes," said James Van Dyke, president and founder of Javelin Strategy & Research.

The market research outfit doesn't say this but we can't help thinking the credit crunch, while tough on small business and homeowners, has contributed towards pushing fraud losses down by making it more difficult to obtain loans or fresh lines of credit without rigorous check.

New account fraud, in which accounts are opened without the victim’s knowledge, resulted in losses of $17bn last year, the biggest single source of fraud. Existing card fraud declined by 38 per cent from $23bn in 2009 to $14bn in 2010. Fraudsters commonly carry out this type of fraud by either adding their name as a registered user on an account or changing the physical address of the account.

Fraud perpetrated by people known to victims, such as a relative or roommate, increased seven per cent last year, one of the very few categories to see an increase.

Javelin reports that the amount of fraud in retail environments is inversely proportional to the value of sales, a non-intuitive finding that means the fraud decreases as sales increase.

The study, based on telephone interviews with more than 5,000 US adults as well as online research, was sponsored by Fiserv, Intersections and Wells Fargo. ®

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