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Fraud and cybersecurity are two of the biggest risks challenging organizations and the economy today. Fraud has become its own industry, to the tune of $500 billion in estimated losses annually to the global economy. Increasingly, the public seems resigned to the idea that such compromises are the new normal. An estimated 1.9 million records are compromised every day, and news of breaches seems to break constantly. All of this produces a kind of fraud fatigue that may be lowering consumers’ expectations for identity and online security. Still, businesses must continue their efforts to prevent fraud attacks to protect all parties’ interests. The rapid growth of fraud-related activity only reinforces the need for aggressive fraud prevention strategies and the adoption of new technology to prepare for the latest emerging cybersecurity threats. These challenges highlight the need to improve the effectiveness of current processes and future technology roadmaps.  The good news is that we know the elements needed to strengthen fraud risk strategies already exist. The question most often asked is how to utilize them, so I’ve put together those I think are most important: First, a multi-layered authentication and risk-based approach is the best method to prevent fraud. Take a comprehensive approach to identity with true customer intelligence. Avoid silos and recognize the value of combining your solutions into one platform Want to learn more?  You can read the full article below or here. _______________________________________________________ Technology-Sharing Is Critical in Preventing Fraud by Adam Fingersh | November 14, 2016 at 6:00 am Fraud and cybersecurity are two of the biggest risks challenging organizations and the economy today. Fraud has become its own industry, to the tune of $500 billion in estimated losses annually to the global economy. Increasingly, the public seems resigned to the idea that such compromises are the new normal. An estimated 1.9 million records are compromised every day, and news of breaches seems to break constantly. All of this produces a kind of fraud fatigue that may be lowering consumers’ expectations for identity and online security. Still, businesses must continue their efforts to prevent fraud attacks to protect all parties’ interests. The rapid growth of fraud-related activity only reinforces the need for aggressive fraud prevention strategies and the adoption of new technology to prepare for the latest emerging cybersecurity threats. Many businesses understand that combining data and technology to strengthen their fraud risk strategies can help reduce losses. Ever-evolving fraud schemes, changes in regulatory requirements and the advent of new digital initiatives make it difficult for businesses to manage all of the tools needed to keep up with the relentless pace of change. The systems used internally by businesses have become increasingly complex, expensive, and difficult to integrate and manage. This complexity tests an organization’s ability to scale in response to new risks quickly and causes too much friction for customers, often resulting in a bad customer experience. These challenges highlight the need to improve the effectiveness of current processes and future technology roadmaps. The good news is that we know the elements needed to strengthen fraud risk strategies already exist. The question most often asked is how to utilize them, so I’ve put together strategies that I think are most important. First, a multi-layered authentication and risk-based approach is the best method to prevent fraud. This aligns with the National Institute of Standards and Technology’s efforts to establish standards and guidelines for identity-proofing and credential management for consumers. The most successful companies in this mission are those that take a comprehensive approach with true customer intelligence. Rather than rely on a single data point, these companies ensure they use multiple sources and types of data, for examples, combining personally identifiable information (PII) with digital identity or device intelligence. The combination of these seemingly disparate types of data not only offers a better picture of the customer but also makes it easier to identify when a fraudster has compromised the identity. Those same companies are now able to frustrate criminals by broadening from a focus solely on the accuracy of an identity to looking at the use patterns associated with that identity as well. This strategy does two important things: Determine which identities—or pieces of identities—are potentially in use by someone other than their true owner Isolate those identity attributes that a criminal must re-use because changing them every time is too costly and complicated Fraud-detection algorithms that analyze use patterns have long focused on the re-use of data elements through link analysis to identify common phone numbers and addresses. This represents a fairly basic approach to detecting fraud, but the sophistication of this type of analysis is evolving. Newer solutions on the market can link a wide variety of data elements in a user-driven manner within the customer’s enterprise so it is both dynamic and focused on fraud trends that impact a specific business. Companies have also learned to avoid silos or have at least figured out how to build a bridge between silos so information can not only be shared but also leveraged in order to protect both the business and the customer while providing a better overall experience. Lastly, organizations are recognizing when they are not getting full value out of the many fraud systems and products they use, and are making the strategic decision to rectify it through shared technology platforms that improve efforts to detect and respond to emerging threats. Combining all new and existing fraud solutions into one platform lets companies quickly respond to new threats, which means less fraud and more confidence in transactions. By creating true customer intelligence, sharing it across the organization and then leveraging all of their available systems and tools, the most successful companies take a more open approach, which allows them to create greater operational efficiency by getting more out of existing fraud and identity systems. They also are able to deploy new fraud detection capabilities effectively and decrease the time it takes to go to market with new tools and strategies. Keeping more control in the hands of the fraud team to adapt and deploy strategies that match the pace of fraud also reduces the burdens on IT and data science teams. The cycle of fraud loss and deterioration of the customer experience characterizes life in today’s globally connected digital world. With crime rings stepping up the scale, sophistication, and velocity of their attacks, it’s likely that such threats will persist and even increase in the foreseeable future. The evolution of fraud prevention has shifted, allowing for users to create intelligence across an enterprise connected to internal applications and third-party solutions. This evolution strengthens fraud risk strategies and improves compliance. The link between data and technology ultimately determines the impact on overall fraud losses.

Let’s play word association. When I say holiday season, what’s the first thing that comes to mind? Childhood memories. Connecting with family. A special dish mom used to make. Or perhaps it’s budgeting, debt and credit card spend. The holidays can be a stressful time of year for consumers, and also an important time for lenders to anticipate the aftermath of big credit card spend. According to a recent study by Experian and Edelman Intelligence: 48 percent of respondents felt thoughtful when thinking about the season 30 percent felt stressed 24 percent felt overwhelmed. Positive emotions are up across the board this year, which may be a good sign for retailers and bankcard lenders. And if emotion is an indicator of spending, 2016 is looking good. But while the holly-jolly sentiment is high, 56 percent of consumers say holiday shopping puts a strain on their finances. And, 43 percent of respondents said the stress of holiday shopping makes it difficult to enjoy the season. Regardless of stress, consumers are seeking ways to spend. Nearly half of respondents plan to use a major credit card to finance at least a portion of their holiday spending, second only to cash. With 44 percent of consumers saying they feel obligated to spend more than they can afford, it’s easy to see why credit cards are so important this time of year. Bankcard originations have fully rebounded from the recession, exceeding $104 billion in the third quarter of 2016, the highest level since the fourth quarter of 2007. While originations have rebounded, delinquency rates have remained at historic lows. The availability of credit is giving consumers more purchasing power to fund their holiday spending. But what happens next? As it turns out, many consumers resolve to consolidate all that holiday debt in the new year. Experian research shows that balance transfer activity reaches annual highs during the first quarter as consumers seek to simplify repayment and take advantage of lower interest rates. Proactive lenders can take advantage of this activity by making timely offers to consumers in need. At the same time, reactive lenders may feel the pain as balances transfer out of their portfolio. By identifying consumers who are most likely to engage in a card-to-card balance transfers, lenders can anticipate these consumer bankcard trends. The insights can then be used to acquire new customers and balances through prescreen campaigns, while protecting existing balances before they transfer out of an existing lender portfolio. With Black Friday and Cyber Monday behind us, the card balances are likely already rising. Now is the time for lenders to prepare for the January and February consolidations. Those hefty credit card statements are coming soon.

Happy holidays! It’s the holiday season and a festive time of year. Colorful lights, comfort food and holiday songs – all of these things contribute to the celebratory atmosphere which causes many people to let their guards down and many businesses to focus more on service than on risk. Unfortunately, fraudsters and other criminals can make one of the busiest shopping times of the year, a miserable one for their victims. The nature of the stolen data has the potential to create long-term headaches for the organization and tens of millions of individuals. Unlike a retailer or financial breach, where stolen payment cards can be deactivated and new ones issued, the theft of permanent identity information is, well, not easily corrected. You can’t simply reissue Social Security numbers, birth dates, names and addresses. For individuals, we need to internalize this fact: our data has likely been breached, and we need to become vigilant and defend ourselves. Sign-up for a credit monitoring service to be alerted if your data or ID is being used in ways that indicate fraud. Include your children, as well. A child’s identity is far more valuable to a fraudster as they know it can be several years before their stolen identity is detected. The good news is, in addition to the credit bureau, many banks and auto clubs now offer this as a service to their customers. For organizations, the focus should be on two fronts: data protection and fraud prevention. Not just to prevent financial theft, but to preserve trust — trust between organizations and consumers, as well as widespread consumer trust.  Organizations must strive to evolve data protection controls and fraud prevention skills to minimize the damage caused by stolen identity data. There are dozens of tools in the industry for identifying that a consumer is who they say they are – and these products are an important part of any anti-fraud strategy.  These options may tell you that the combination of elements is the consumer, but do you know that it is the REAL consumer presenting them? The smart solution is to use a broad data set for not only identity verification, but also to check linkage and velocity of use.  For example: Is the name linking to other addresses being presented in the past week? Is the phone number showing up to other addresses and names over the past 30 days? Has the SSN matched to other names over the past 90 days? Since yesterday the address matches to four phone numbers and two names – is this a problem? And it must be done in ways that reinforce the trust between consumers and organizations, enhance the customer experience, and frustrate criminals.  Click here to learn more about Experian’s products and services that can help. As we go walking in the winter wonderland, remember, the holiday season is a time for cheer… and vigilance!