I'm not sure what causes it. It seems like it is worse when they overpopulate an area.
I believe that it causes death for the fox and will spread fairly easy. I try and kill them when I see one that has it. It seems like we have an over abundance around here. I saw two more this morning, one mangey and one healthy. Mating season is here so they are being seen in pairs a lot. Here's a better look at the last one I killed.