Consumers expect to have limited liability exposure related to financial fraud regardless of whether it is payment fraud or the more intrusive identity theft. At the same time, credit providers are motivated to provide such coverage to encourage these same consumers to apply for loans and, particularly as it relates to credit cards, to use the credit product.

With respect to identity theft, consumers' direct financial liability is ultimately limited, but in reality, victims face significantly higher overall financial costs. These costs take several forms, including actual dollar loss (clean-up cost), credit score deterioration, forgone investment, and sacrificed leisure time.   These additional costs are a result of the presumption that the identity theft victim is "guilty until proven innocent" as opposed to, for example, the victim of payment fraud, who is considered "innocent until proven guilty."

In terms of identity theft, the requirement to prove fraud leads to a delay before action can be taken to control the fraud exposure. This delay is crucial because it provides more time for thieves to continue the fraud associated with the stolen identity and, as a result it increases the total losses realized.

Consumers are also impacted by higher prices companies charge to offset the loss of theft via financial fraud. Credit card companies and many businesses that ultimately lose financing funds to theft that they cannot recover from the original identity holders are then passed on to all other customers via indirect charges built into pricing and overhead.