Prior Fraud Exposure and Precautionary Credit Market Behavior

We focus on experiences with identity theft and data breaches, two kinds of privacy shocks that either directly lead to fraud or put an individual at an elevated risk of experiencing fraud. Using the announcement of the 2017 Equifax data breach, we show that individuals with either kind of prior fraud exposure were more likely to freeze their credit report and close credit card accounts than individuals with no prior exposure immediately after the announcement. We also find that prior victims of identity theft, a more serious type of exposure, were more likely to take precautionary actions than individuals who were victims of a previous data breach.