Tag: fraud prevention
In today’s digital-first environment, fraud threats are growing in sophistication and scope. It’s critical for credit unions to not only understand the specific threats presented by life online, but to also be prepared with a solid fraud detection and prevention plan. Below, we’ve outlined a few fraud trends that credit unions should be aware of and prepared to address. 2021 Trends to Watch: Digitization and the Movement to Life Online Trend #1: Digital Acceleration As we look ahead to the rest of 2021 and beyond, we expect to see adoption of digital strategies nearing the top of credit unions’ list of priorities. Members’ expectations for their digital experience have permanently shifted, and many credit unions now have members using online channels who traditionally wouldn’t have. This has led to a change in the types of fraud we see as online activities increased in volume. Trend #2: First-Party Fraud is On the Rise First party fraud is on the rise – 43% of financial executives say that mule activity is up 10% or more compared to attack rates prior to the pandemic, according to Trace Fooshee, Senior Analyst for Aite Group, and we expect to see this number grow. The ability for credit unions to identify and segregate the “good guys” from “bad guys” is getting more difficult to discern and this detail is more important than ever as credit unions work to create frictionless digital experiences by using digital tools and strategies. Trend #3: Continual Uptick in Synthetic Identity Fraud We expect synthetic identity fraud (SID) to continue to rise in 2021 as cybercriminals become more sophisticated in the digital space and as members continue with their new digital habits. Additionally, fraudsters can use SIDs to bring significant damage and loss to credit unions through fraudulent checks, debit cards, person-to-person and automated clearing house (ACH) transactions. More and more, fraudsters are seen opening accounts and remaining very patient – using an account to build and nurture a trusted relationship with the credit union and then remain dormant for two years before ensuing in any sort of abuse. Once the fraudster feels confident that they can bypass authentication processes or avoid a new product vetting, oftentimes, they will take that opportunity to get easy access to all solutions credit unions have available and will abuse them all at once. There are no signs of fraud slowing, so credit unions will need to stay vigilant in their fraud protection and prevention plans. We’ve outlined a few tips for credit unions to help protect member data while reducing risk. The Fight Against Fraud: Four Key Tips Tip #1: Manage Each Fraud Type Appropriately Preventing and detecting fraud requires a multi-level solution. This can involve new methods for authenticating current and prospective members, as well as incorporating synthetic identity services and identity proofing throughout the member lifecycle. For example, credit unions should consider taking extra verification steps during the account opening process as a preventative measure to minimize SID infiltration and associated fraud losses. As credit unions continue down the path of digitization, it’s also important to add in digital signals and behavior-based verification, such as information about the device a consumer is logging in from to heighten defenses against bad actors. Tip #2: Be Resourceful In the wake of the COVID-19 pandemic, many have asked, “How should credit unions approach fraud prevention tactics when in-person contact is limited or unavailable?” In some cases, you might need to be willing to say no to requests or get creative and find other options. Sometimes, it takes leveraging current resources and using what’s readily available to allow for a binary decision tree. For example, if you’re suspicious of a dormant account that you think could be synthetic, call them, and ask yourself these questions: Did they answer? Was the phone still active? Send the account holder an email – did you get a reply? Is this a new member? Is this a new channel for the member? Could they have logged on to do this instead of calling the call center? Tip #3: Empower Members Through Education Members like to know that their credit unions are taking the necessary steps and applying the right measures to keep their data secure. While members might not want every detail, they do want to know that the security measures are there. Require the use of strong passwords, step-up authentication, and empower members with alerts, notifications, and card controls. Additionally, protect members by providing resources like trainings, webinars, and best practices articles, where they can learn about current cyber trends and how to protect their data. Tip #4: Trust Data Many credit unions rely on an employee’s decision to decide when to take action and what action to take. The challenge with this approach comes when the credit union needs to reduce friction for members or tighten controls to prevent fraud, because it’s extremely hard to know exactly what drove prior actions. A better alternative is to rely on scores and specific data. Tweaks to the scores or data points that drive actions allow credit unions to achieve the desired member experience and risk tolerance – just be sure to leverage internal experts help figure out those policies. By determining what conditions drive actions before the actions are taken (instead of doing it one case at a time) the decisions remain transparent and actionable. Looking for more insights around how to best position your credit union to mitigate and prevent fraud? Watch our webinar featuring experts from around the industry and key credit unions in this Fraud Insight Form hosted by CUES. Watch now Contact us var expChannel = \"Blog\"; var expBUPartner = \"eCom\"; var expBUSegment = \"Insights-Blog\"; var expProductGrp = \"\";
The surge in digital demand over the past year reinforced the deep connection between recognition, fraud prevention and the online customer experience. As businesses transformed their operations to accommodate the rapidly growing volume of digital transactions, consumer expectations for easy, secure interactions increased at an even faster pace. That meant less tolerance for the interruptions caused by security and risk controls. We surveyed more than 9,000 consumers and 2,700 businesses worldwide about this connection for our 2021 Global Identity and Fraud Report. This year’s report dives into: Business priorities for the year ahead Why the digital customer experience remains siloed Consumer preferences that impact the digital customer journey Pandemic-era digital activities that have changed consumer expectations As we move forward into the rest of 2021 it’s crucial that businesses continue to focus on fraud prevention. In order to implement an effective fraud strategy that also makes it easier for customers to engage, businesses need to move away from a one-size-fits-all approach and focus on applying the right level of protection to each and every transaction. Download the report Review your fraud strategy
The sharp uptick in fraud that coincided with the digital evolution made it clear that banks, credit unions, and fintechs need to invest in a strategy that utilizes identity layers to keep their customers and their finances safe. The steady rise in fraud over the last several years spiked—payment fraud rose 70% last year and is expected to increase by 95% in 2021—making it more challenging than ever to address the fraud threat while meeting increasing customer expectations. The rising fraud threat 2020 saw a rapid influx of customers using digital channels and the amount of data flowing into financial systems. There’s been a seismic shift, and we’re not going back. According to a recent study, 80% of consumers now prefer to manage their finances digitally, leaving the door open for fraudsters to take advantage of digital newbies. The increase in online activity corresponded with criminal activity. The rates of synthetic identity, account opening, and account takeover fraud have risen as fraudsters’ tactics have evolved. 80% of fraud losses now come from synthetic identities In 2020 the rate of new account credit card fraud attempts rose 48% Account takeover accounted for 54% of all fraud attacks in 2020 Fraudsters will continue to take advantage of current conditions, moving from stimulus-related fraud back to more traditional forms of financial theft, and financial institutions must adapt in turn with robust identity layers. Resolving the identity threat In our recent white paper, developed in partnership with One World Identity, we explore how businesses can address the fraud threat. It requires a multilayered identity proofing strategy for both onboarding and ongoing authentication. By doing this, financial institutions can gain a holistic view of consumers and their associated risks, decreasing friction while enabling robust fraud protection. To learn more, download our “Improving Fraud by Increasing Identity Layers” white paper. Download white paper
For the last several months, Experian has participated as the only credit bureau in the pilot of the electronic Consent Based Social Security Number (SSN) Verification (eCBSV) service. As we move forward to general rollout and expanded availability later this year, it’s time to review the benefits of eCBSV and how it helps businesses prevent synthetic identity fraud. Service and program overview The eCBSV service combats synthetic identity fraud by comparing data provided electronically by approved financial institutions against the Social Security Administration’s (SSA) database in real time. This service helps financial institutions verify SSNs more efficiently and enables improved experiences for identifying legitimate or possibly synthetic identities applying for your products. The verification process begins with consent from the SSN holder – and with eCBSV this consent is provided electronically rather than via a wet signature. Then, the SSN is checked against the SSA database to validate the SSN, name, and date of birth combination are or are not a match. The verification will also indicate if the SSN is listed as deceased with the SSA. Together, these factors can help flag whether or not an identity is synthetic. By managing this process electronically, it is faster, more secure, and more efficient than before, offering an improved experience for consumers and the financial institutions that service them. Layering solutions While eCBSV is an excellent step forward in the fight against the rising threat of synthetic identity fraud, a layered fraud mitigation strategy is still necessary. It’s only by layering solutions that financial institutions can accurately identify different types of fraud and provide them with the correct treatment, which is especially important when it comes to rooting out fraud when it’s already embedded in a portfolio. To learn more about how Experian is helping to combat synthetic identity fraud and how eCBSV can benefit your financial institution, request a call. Request a call
Preventing fraud losses requires an understanding of each individual fraud type—including third-party, first-party, synthetic identity, and account takeover fraud—and how they differ from one another. It’s only with a multi-layered fraud strategy that businesses can adequately detect and treat each type of fraud while maintaining the customer experience. When’s the last time you reviewed your existing fraud strategy? Download infographic Review your fraud strategy
It’s obvious that 2020 was a year of unprecedented change and created brand new opportunities for fraud. In 2021, fraudsters will continue to iterate on new and old methods of attack, requiring businesses to remain flexible and proactive to prevent losses. We created the 2021 Future of Fraud Forecast to help businesses anticipate new types of fraud and prepare and protect consumers on the road ahead. Here are the trends we expect to see over the coming year: Putting a Face to Frankenstein IDs: Synthetic identity fraud will start to rely on “Frankenstein faces” for biometric verification. “Too Good to Be True” COVID Solutions: The promise of at-home test kits, vaccines and treatments will be used as means for sophisticated phishing and social engineering schemes. Stimulus Fraud Activity, Round Two: Fraudsters will take advantage of additional stimulus funding by using stolen data to intercept payments. Say ‘Hello’ to Constant Automated Attacks: Once the stimulus fraud attacks run their course, hackers will increasingly turn to automated methods. Survival of the Fittest for Small Businesses: In 2021, businesses with lackluster fraud prevention tools will suffer large financial losses. To learn more about how to protect your business and customers, download the Future of Fraud Forecast and check out Experian’s fraud prevention solutions. Future of Fraud Forecast Request a call
Enterprise Security Magazine recently named Experian a Top 10 Fraud and Breach Protection Solutions Provider for 2020. Accelerating trends in the digital economy--stemming from stay-at-home orders and rapid increases in e-commerce and government funding--have created an attractive environment for fraudsters. At the same time, there’s been an uptick in the amount of personally identifiable information (PII) available on the dark web. This combination makes innovative fraud and breach solutions more crucial than ever. Enterprise Security Magazine met with Kathleen Peters, Experian’s Chief Innovation Officer, and Michael Bruemmer, Vice President of Global Data Breach and Consumer Protection, to discuss COVID-19 digital trends, the need for robust fraud protection, and how Experian’s end-to-end breach protection services help businesses protect consumers from fraud. According to the magazine, “With Experian’s best in class analytics, clients can rapidly respond to ever-changing environments by utilizing offerings such as CrossCore® and Sure ProfileTM to identify and prevent fraud.” In addition to our commitment to develop new products to combat the rising threat of fraud, Experian is focused on helping businesses minimize the consequences of a data breach. The magazine noted that, “To serve as a one-stop-shop for data breach protection, Experian offers a wide range of auxiliary services such as incident management, data breach notification, identity protection, and call center support.” We are continuously working to create and integrate innovative and robust solutions to prevent and manage different types of data breaches and fraud. Read the full article Contact us
In the wake of unprecedented unemployment fraud since the start of COVID-19, Experian announced it was selected as the exclusive partner for identity and fraud verification for the Unemployment Insurance (UI) Integrity Center’s centralized Identity Verification (IDV) capability. IDV is available to state agencies at no cost through UI Integrity Center, which is operated by the National Association of Workforce Agencies (NASWA) in partnership with the U.S. Department of Labor. With the Federal Bureau of Investigations (FBI) reporting a spike in fraudulent unemployment insurance claims complaints related to COVID-19, it’s more important than ever for state agencies to use innovative solutions to verify identities that are applying for unemployment insurance to protect consumers. If improper unemployment insurance payments are made to fraudsters, the efforts of the CARES Act could be largely wasted. The IDV capability leverages Experian’s Precise IDTM to provide a centralized identity verification and proofing solution. Precise ID combines identity analytics with advanced fraud risk models to distinguish various types of fraud, which can help state agencies maximize time and resources. When state agencies submit claims, the IDV solution will return ID theft scoring and associated cause codes, enabling them to assess whether a claim may be fraudulent. “Due to the COVID-19 health crisis, unemployment is high, with over roughly 60 million Americans filing for unemployment since March,” said Robert Boxberger, president of Experian’s Decision Analytics in North America. “At Experian, we’re proud to have a strong culture dedicated to continuous innovation that helps protect consumers’ financial health. We’re taking that same consumer focus and helping make the unemployment insurance application process more efficient and safer for constituents.” The Integrity Data Hub (IDH) is a robust, multi-state data system that contains a continuously expanding set of sources to provide advanced cross-matching and analytic capabilities to states. It is designed to be easily implemented by any state Unemployment Insurance agency, regardless of claim volume, technology, or access to internal resources. The IDH was designed and built using the latest National Institute of Standards and Technology IT security standards, including the use of asymmetric encryption and other techniques to ensure the security of sensitive data. “We’re excited to partner with Experian and utilize its Precise ID solution to assist states in mitigating fraud during these unprecedented times,” said Scott Sanders, NASWA Executive Director. “States are finding this to be a very valuable tool and we are pleased that we can offer this solution to states through our partnership with the U.S. Department of Labor.” Read Press Release Learn More About Precise ID
Synthetic identity fraud, otherwise known as SID fraud, is reportedly the fastest-growing type of financial crime. One reason for its rapid growth is the fact that it’s so hard to detect, and thus prevent. This allows the SIDs to embed within business portfolios, building up lines of credit to run up charges or take large loans before “busting out” or disappearing with the funds. In Experian’s recent perspective paper, Preventing synthetic identity fraud, we explore how SID differs from other types of fraud, and the unique steps required to prevent it. The paper also examines the financial risks of SID, including: $15,000 is the average charge-off balance per SID attack Up to 15% of credit card losses are due to SID 18% - the increase in global card losses every year since 2013 SID is unlike any other type of fraud and standard fraud protection isn’t sufficient. Download the paper to learn more about Experian’s new toolset in the fight against SID. Download the paper
The CU Times recently reported on a nationwide synthetic identity fraud ring impacting several major credit unions and banks. Investigators for the Federal and New York governments charged 13 people and three businesses in connection to the nationwide scheme. The members of the crime ring were able to fraudulently obtain more than $1 million in loans and credit cards from 10 credit unions and nine banks. Synthetic Identity Fraud Can’t Be Ignored Fraud was on an upward trend before the pandemic and does not show signs of slowing. Opportunistic criminals have taken advantage of the shift to digital interactions, loosening of some controls in online transactions, and the desire of financial institutions to maintain their portfolios – seeking new ways to perpetrate fraud. At the onset of the COVID-19 pandemic, many financial institutions shifted their attention from existing plans for the year. In some cases they deprioritized plans to review and revise their fraud prevention strategy. Over the last several months, the focus swung to moving processes online, maintaining portfolios, easing customer friction, and dealing with IT resource constraints. While these shifts made sense due to rapidly changing conditions, they may have created a more enticing environment for fraudsters. This recent synthetic identity fraud ring was in place long before COVID-19. That said, it still highlights the need to have a prevention and detection plan in place. Financial institutions want to maintain their portfolios and their customer or member experience. However, they can’t afford to table fraud plans in the meantime. “72% of FI executives surveyed believe synthetic identity fraud to be more challenging than identity theft. This is due to the fact that it is harder to detect—either crime rings nurture accounts for months or years before busting out with six-figure losses, or they are misconstrued as credit losses, and valuable agent time is spent trying to collect from someone who doesn’t exist,” says Julie Conroy, Research Director at Aite Group. Prevention and Detection Putting the fraud strategy discussion on hold—even in the short term—could open up a financial institution to potential risk at time when cost control and portfolio maintenance are watch words. Canny fraudsters are on the lookout for financial institutions with fewer protections. Waiting to implement or update a fraud strategy could open a business up to increased fraud losses. Now is the time to review your synthetic identity fraud prevention and detection strategies, and Experian can help. Our innovative new tool in the fight against synthetic identity fraud helps financial institutions stop fraudsters at the door. Learn more
Every few months we hear in the news about a fraud ring that has been busted here in the U.S. or in another part of the world. In May, I read about a fraud ring based in Georgia and Louisiana that bought 13,000 stolen identities of children who were on the Louisiana Medicaid program and billed the government for services not rendered. This group defrauded the Medicaid program of more than $500,000. This is just one of many stories that we hear about fraud rings, and given the rapidly changing economic environment, now is the time for businesses to think about how to protect against fraud rings. There are a number of challenges that organizations may have when it comes to sharing trends and collaborations, understanding the ways to tie fraud rings together, creating treatments for identifying fraud rings and ways to store and catalogue fraud ring experiences so they can be easily recognized. The trouble with identifying fraud rings It’s important to understand the challenges that organizations have because they see the fraud rings through their own internal lens. Here are a few of the top things businesses should work on: Think like a fraudster. This will help businesses become more creative in their approach to fraud prevention. Facilitate internal collaboration. Share with in-organization partners. Sometimes this can be difficult due to organizational structure. Promote external collaboration. Intel-sharing groups are a great way for businesses to network within their industries and learn about the fraud that others are seeing. An organization that I’ve worked with in the past is the National Cyber Forensic and Training Alliance (NCFTA). Putting the pieces together How do businesses identify a fraud ring? There are three steps to get started. The first is reviewing and understanding the data. Fraudsters are lazy and want to replicate the process over and over again, and because of this there is always some piece of information that is repeated. It could be a name, an email address, device fingerprint, or similar. The second step is tying the fraud ring together. This is done by creating rules to help identify the trends. Having rules in place to identify fraud rings allows businesses to easily pull stats together for their leadership. Lastly, applying an acronym or name to the particular fraud ring and adding comments to the cases associated with a particular ring will help with post-investigation analysis. Learning from the past Before I became a consultant, I remember identifying a fraud ring that was submitting events with the same language pack and where the device fingerprint was staying consistent. Those events were being referred out for review and marked with the same note. At a post-mortem review, I was able to talk to the fraud ring we had seen, and it was easy to pull all events associated with this fraud ring because my team had marked the events with the same comments. Another fraud ring example happened a few years ago. A client called me and said that they were under a fraud attack and this fraud ring was rotating the email handle. I reviewed the data and came up with a rule to catch this activity. Fraud rings will use email handle rotation to help them keep track of accounts that are opened or what emails they used in the past. By coupling the email handle rotation with an email verification service like Emailage, this insight could be very telling. I would assume that when fraud rings use email handle rotation these emails are new and have just been created. These are just a few of the many fraud rings that I’ve encountered over the course of my career and I’m sure there will be a lot more in the years to come. The best advice I can give to anyone that reads this post is to understand the data that you are reviewing, look for anomalies within the data, ask questions and test your theories by running queries on the data that you’re reviewing. I would love to hear about the different fraud rings that you’ve encountered over your career. Stay safe. Contact us
Experian’s own Chris Ryan and Bobbie Paul recently joined David Mattei from Aite to discuss the latest research and insights into emerging fraud schemes and how businesses can combat them in light of COVID-19 and the resulting economic changes. Between them, Chris, Bobbie, and David have more than 60 years of experience in the world of fraud prevention. Listen in as they discuss how businesses can shape their fraud prevention plan in the short term, including: The impacts of the health crisis and physical distancing The rise of e-commerce and consumer digital engagement Changes in criminal activity Fraud attack vectors 2020 fraud loss projections Critical next steps for the 30-60 day time frame Experian · Make Your Fraud Plan Recession-Ready: 2020 Fraud Trends
The COVID-19 pandemic and resulting rush to transition to a remote lifestyle made it clear that many businesses need a refreshed digital authentication and fraud prevention strategy that includes an investment in technology and provides consumer assurance. This is particularly important when it comes to identity, as many of the standard in-person verification methods and tools are currently unavailable. The meaning of identity is growing and shifting Technology trends are intersecting with social trends to create heightened awareness, and a whole new public conversation has emerged around customer trust and privacy. Attitudes and ideas are changing—even to the point of what we mean by “identity.” An identity is no longer just a name, date of birth, and SSN. Now, there are digital manifestations everywhere you look: screen names, email addresses, mobile phone numbers, device identifiers, and the other “exhaust” we leave behind as we travel the internet. This leads to concerns about what an identity is, who owns it, and who manages and protects it. Businesses have to be able to prove to their ability to protect their customers’ identities through investment in technology and a robust fraud strategy. Consumer attitudes are changing Several years ago, consumers were excited by all the new digital capabilities and the speed, ease, and convenience they provided. Last year, Experian found that consumers still wanted those things, with 70% willing to provide more information to businesses if there was a perceived benefit. However, they also wanted more security in the balance. In Experian’s most recent Global Identity and Fraud Report, we found that 74% of consumers say that security is the most important factor when deciding to engage with a business. Consumers are particularly more tolerant of friction during the enrollment process—as a means of building trust. But, when they return to the app or website, they want to be recognized. This means achieving a balance by using layered technologies, some of which are active and visible to the consumer, and some of which are invisibly working in the background to confirm the identity of returning consumers. Consumer attitudes vs. regulatory pressure The drivers behind the business changes are twofold: shifting consumer attitudes and regulatory changes. While regulations are becoming stricter on a national and global level, they’re not keeping pace with technology and social change. The digital world is evolving at a rapid pace, opening up more new ways for companies to collect information about consumers and use it to identify and verify, and also to target goods and services. With all of this data available, it’s important for businesses to use the tools in the market to help protect identity information. Next steps in technology The bottom line is, businesses can’t wait for regulations to dictate how best to protect information. Instead, they should be looking to technologies like physical and behavioral biometrics to help provide identity authentication and protection – layering those solutions with information from the user and from third parties to give a holistic consumer view. Businesses should adopt a platform approach for identity and fraud in order to be able to adapt quickly, whether to incorporate new kinds of technology or to prevent emerging types of fraud. By investing in technology now, even in the midst of the COVID-19 pandemic, businesses can build the flexibility needed to respond to future crises and help offset future fraud losses. In turn, those fraud-loss savings can then be used to help grow the business in the future. Learn more about Experian’s commitment to helping businesses maximize their investment in technology to safeguard against fraud. Learn more
For the last several years, as the global economy flourished, the opportunities created by removing friction and driving growth guided business strategies governing identity and fraud. The amount of profitable business available in a low-friction environment simply outweighed the fraud that could be mitigated with more stringent verification methods. Now that we’re facing a global crisis, it’s time to reconsider the approach that drove the economic boom that defined that last decade. Recognizing how economic changes impact fraud At the highest level, we separate fraud into two types; third party fraud and first party fraud. In simple terms, third party fraud involves the misuse of a real customer’s identity or unauthorized access to a real customer’s accounts or assets. First party fraud involves the use of an identity that the fraudster controls—whether it’s their own identity, a manipulated version of their own identity, or a synthetic identity that they have created. The important difference in this case is that the methods of finding and stopping third party fraud remain constant even in the event of an economic downturn – establish contact with the owner of the identity and verify whether the events are legitimate. Fraud tactics will evolve, and volumes increase as perpetrators also face pressure to generate income, but at the end of the day, a real person is being impersonated, and a victim exists that will confirm when fraud is taking place. Changes in first party fraud during an economic downturn are dramatically different and much more problematic. The baseline level of first party fraud using synthetic, manipulated and the perpetrator’s own identity continue, but they are augmented by real people facing desperate circumstances and existing “good” customers who over-extend while awaiting a turn-around. The problem is that there is no “victim” to confirm fraud is occurring, and the line between fraud (which implies intent) and credit default (which does not) becomes very difficult to navigate. With limited resources and pressures of their own, at some point lenders must try to distinguish deliberate theft from good customers facing bad circumstances and manage cases accordingly. The new strategy When times are good, it’s easier to build up a solid book of business with good customers. Employment rates are high, incomes are stable, and the risks are manageable. Now, we’re experiencing rapidly changing conditions, entire industries are disrupted, unemployment claims have skyrocketed and customers will need assistance and support from their lenders to help them weather the storm. This is a reciprocal relationship – it behooves those same lenders to help their customers get through to the other side. Lenders will look to limit losses and strengthen relationships. At the same time, they’ll need to reassess their existing fraud and identity strategies (among others) as every interaction with a customer takes on new meaning. Unexpected losses We’ve all been bracing for a recession for a while. But no one expected it to show up quite like it did. Consumers who have been model customers are suddenly faced with a complete shift in their daily life. A job that seemed secure may be less so, investments are less lucrative in the short term, and small business owners are feeling the pressure of a change in day-to-day commerce. All of this can lead to unexpected losses from formerly low-risk customers. As this occurs, it becomes more critical than ever to identify and help good customers facing grim circumstances and find different ways to handle those that have malicious intent. Shifting priorities When the economy was strong, many businesses were able to accept higher losses because those losses were offset by immense growth. Unfortunately, the current crisis means that some of those policies could have unforeseen consequences. For instance – the loss of the ability to differentiate between a good customer who has fallen on hard times and someone who’s been a bad actor from the start. Additionally, businesses need to revise their risk management strategies to align with shifting customer needs. The demand for emergency loans and will likely rise, while loans for new purchases like cars and homes will fall as consumers look to keep their finances secure. As the need to assist customers in distress rises and internal resources are stressed, it’s critical that companies have the right tools in place to triage and help customers who are truly in need. The good news The tools businesses like yours need to screen first party fraud already exist. In fact, you may already have the necessary framework in place thanks to an existing partnership, and a relatively simple process could prepare your business to properly screen both new and existing customers at every touchpoint. This global crisis is nowhere near over, but with the right tools, your business can protect itself and your customers from increased fraud risks and losses of all sorts – first party, stolen identities, or synthetic identities, and come out on the other side even stronger. Contact Experian for a review of your current fraud strategy to help ensure you’re prepared to face upcoming challenges. Contact us
Last month, Kenneth Blanco, Director of the Financial Crimes Enforcement Network, warned that cybercriminals are stealing data from fintech platforms to create synthetic identities and commit fraud. These actions, in turn, are alleged to be responsible for exploiting fintech platforms’ integration with other financial institutions, putting banks and consumers at risk. According to Blanco, “by using stolen data to create fraudulent accounts on fintech platforms, cybercriminals can exploit the platforms’ integration with various financial services to initiate seemingly legitimate financial activity while creating a degree of separation from traditional fraud detection efforts.” Fintech executives were quick to respond, and while agreeing that synthetic IDs are a problem, they pushed back on the notion that cybercriminals specifically target fintech platforms. Innovation and technology have indeed opened new doors of possibility for financial institutions, however, the question remains as to whether it has also created an opportunity for criminals to implement more sophisticated fraud strategies. Currently, there appears to be little evidence pointing to an acute vulnerability of fintech firms, but one thing can be said for certain: synthetic ID fraud is the fastest-growing financial crime in the United States. Perhaps, in part, because it can be difficult to detect. Synthetic ID is a type of fraud carried out by criminals that have created fictitious identities. Truly savvy fraudsters can make these identities nearly indistinguishable from real ones. According to Kathleen Peters, Experian’s SVP, Head of Fraud and Identity, it typically takes fraudsters 12 to 18 months to create and nurture a synthetic identity before it’s ready to “bust out” – the act of building a credit history with the intent of maxing out all available credit and eventually disappearing. These types of fraud attacks are concerning to any company’s bottom line. Experian’s 2019 Global Fraud and Identity Report further details the financial impact of fraud, noting that 55% of businesses globally reported an increase in fraud-related losses over the past 12 months. Given the significant risk factor, organizations across the board need to make meaningful investments in fraud prevention strategies. In many circumstances, the pace of fraud is so fast that by the time organizations implement solutions, the shelf life may already be old. To stay ahead of fraudsters, companies must be proactive about future-proofing their fraud strategies and toolkits. And the advantage that many fintech companies have is their aptitude for being nimble and propensity for early adoption. Experian can help too. Our Synthetic Fraud Risk Level Indicator helps both fintechs and traditional financial institutions in identifying applicants likely to be associated with a synthetic identity based on a complex set of relationships and account conditions over time. This indicator is now available in our credit report, allowing organizations to reduce exposure to identity fraud through early detection. To learn more about Experian’s Synthetic Fraud Risk Level Indicator click here, or visit experian.com/fintech.
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