New Report Reveals Increase in Identity Fraud and Theft Ahead of Tax Season

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02/24/2022 - 09:00 AM

Allstate Identity Protection launches “Identity Fraud in Focus” to inform the public about emerging online threats

NORTHBROOK, Ill.--(BUSINESS WIRE)-- Now more than ever, life happens online. But, with greater connectedness comes enhanced risk. Millions of Americans fall victim to identity theft and fraud each year, resulting in billions of dollars in losses.

“In today’s digitally connected world, cyber fraud and identity theft have become the ultimate crimes of opportunity: as quickly as vulnerabilities are detected and protected against, new ones emerge. Yet, few resources exist to help Americans, experts and the news media understand digital fraud and the latest attacks,” says Emily Snell, President of Allstate Identity Protection.

To help solve for this, Allstate Identity Protection is launching Identity Fraud in Focus, a quarterly report designed to shine a light on the latest lines of attack being utilized by identity fraudsters.

Key Takeaways from Q4 2021:

Between October and December 2021, AIP’s total identity theft and fraud cases increased by 11%, led by rapid spikes in instances of fraudulent credit and/or loan account creation, inquiries, and applications.

Fraudulent creation of new credit and loan accounts grew by 61% from 2020 to 2021. By December 2021, this type of fraud accounted for over half of our total identity theft cases. Another 42% of cases from October to December 2021 were instances of credit and loan applications.

“Stories from our members are a constant reminder that identity theft and fraud come in all shapes and sizes. From fraudulent online purchases of $100,000 luxury vehicles to new accounts at banks they’ve never once set foot in, we see it all and pride ourselves on the powerful fraud-catching tools we offer to provide peace of mind,” says Allstate Identity Protection VP of Product Lewis Bertolucci.

Be on the Lookout for Disability Fraud

After defrauding the government agencies that handle unemployment fraud, scammers may be turning to the state-level agencies that oversee disability benefits. Between November and December 2021, AIP saw open cases involving false disability insurance claims in California double compared to previous months.

As this year’s tax season gets underway, AIP recommends Americans watch out for signs of disability fraud. Victims may receive a letter related to disability benefits for which they did not apply, or an employer may notify the victim that someone has filed for disability in their name.

Unemployment Fraud on the Decline

AIP continues to see reports of unemployment and tax fraud on the decline, with both constituting just 1% and 0.6%, respectively, of total remediation efforts between October 1, 2021 and December 31, 2021. Fueled by the pandemic, unemployment fraud at one point accounted for nearly three-quarters of all AIP remediation cases.

By resolving these unemployment fraud cases, AIP helped members save nearly $17 million in taxes they would have been on the hook for last quarter.

“Though steep drop-offs in unemployment and tax fraud are encouraging, we expect to see both on the rise again this tax season, as many victims of these types of fraud do not realize they have been targeted until they file taxes,” Bertolucci added.

For more detailed findings and insights from AIP experts, please visit the full Identity Fraud in Focus report.