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Spoiler alert: Gen AI is everywhere, including the top of Experian’s list of fraud trends 2024. “The speed and complexity of fraud attacks due to new technology and sophisticated fraudsters is leaving both businesses and consumers at risk in 2024,” said Kathleen Peters, chief innovation officer at Experian Decision Analytics in North America. “At Experian, we’re constantly innovating to deliver data-driven solutions to help our customers fight fraud and to protect the consumers they serve.” To deter fraudulent activity in 2024, businesses and consumers must get tactical for their fraud fighting strategies. And for businesses, the need for more sophisticated fraud protection solutions leveraging data and technology is greater than ever before. Experian suggests consumers and businesses watch out for these big five rounding out our fraud trends 2024. Generative AI: Generative AI accelerates DIY fraud: Experian predicts fraudsters will use generative AI to accelerate “do-it-yourself” fraud ranging from deepfake content – think emails, voice and video – as well as code creation to set up scam websites. A previous blog post of ours highlighted four types of generative AI used for fraud, including fraud automation at scale, text content generation, image and video manipulation and human voice generation. The way around it? Fight AI fraud with AI as part of a multilayered fraud prevention solution. Fraud at bank branches: Bank branches are making a comeback. A growing number of consumers prefer visiting bank branches in person to open new accounts or get financial advice with the intent to conduct safer transactions. However, face-to-face verification is not flawless and is still susceptible to human error or oversight. According to an Experian report, 85% of consumers report physical biometrics as the most trusted and secure authentication method they’ve recently encountered, but the measure is only currently used by 32% of businesses to detect and protect against fraud. Retailers, beware: Not all returns are as they appear. Experian predicts an uptick in cases where customers claim to return their purchases, only for the business to receive an empty box in return. Businesses must be vigilant with their fraud strategy in order to mitigate risk of lost goods and revenue. Synthetic identity fraud will surge: Pandemic-born synthetic identities may have been dormant, but now have a few years of history, making it easier to elude detection leading to fraudsters using those dormant accounts to “bust out” over the next year. Cause-related and investment deception: Fraudsters are employing new methods that strike an emotional response from consumers with cause-related asks to gain access to consumers’ personal information. Experian predicts that these deceptive cause-related methods will surge in 2024 and beyond. How businesses and consumers feel about fraud in 2024 According to an Experian report, over half of consumers feel they’re more of a fraud target than a year ago and nearly 70% of businesses report that fraud losses have increased in recent years. Business are facing mounting challenges – from first-party fraud and credit washing to synthetic identity and the yet-to-be-known impacts generative AI may have on fraud schemes. Synthetic identity fraud has been mentioned in multiple Experian Fraud Forecasts and the threat is ever growing. As technology continues to enhance consumers’ connectedness, it also heightens the stakes for various fraud attacks. As highlighted by this list of fraud trends 2024, the ways that fraudsters are looking to deceive is increasing from all angles. “Now more than ever, businesses need to implement a multilayered approach to their identity verification and fraud prevention strategies that leverages the latest technology available,” said Peters. Consumers are increasingly at risk from sophisticated fraud schemes. Increases in direct deposit account and check fraud, as well as advanced technologies like deepfakes and AI-generated phishing emails, put consumers in a precarious position. The call to action for consumers is to remain vigilant of seemingly authentic interactions. Experian can help with your fraud strategy To learn more about Experian’s fraud prevention solutions, please visit https://www.experian.com/business/solutions/fraud-management.  Download infographic Watch Future of Fraud webinar

As a community bank or credit union, your goal is to provide personalized care and attention to your customers and members while effectively managing regulatory requirements and operational efficiency. By incorporating tools such as income and employment verification, you can streamline the approval process for both account holders and prospects. With the ability to validate their information in seconds, you'll be able to make well-informed decisions faster and accelerate conversion. In this blog post, we will explore the empowering impact of income and employment verification on financial institutions. Better Data, Better Decisions Choosing a verification partner with an instant employer payroll network allows financial institutions to access reliable and up-to-date income and employment information for confident decision-making. With accurate and timely data at their fingertips, you can gain a deeper understanding of your account holders’ capacity to pay, a critical component to assessing overall financial health. This not only helps mitigate risk but also helps you serve your customers and members more effectively. There are additional benefits to partnering with a verification solution provider that is also a Credit Reporting Agency (CRA) offering FCRA-compliant technologies. These organizations are well versed in compliance matters and can help you more effectively mitigate risk. Streamline Approval Times and Remove Friction When developing your verification process, it is advantageous to adopt a waterfall or multi-step approach that encompasses instant verification, permissioned verification, and, as a last resort, manual verification. This tiered approach will significantly reduce approval times, manage costs effectively, and streamline the approval process. Instant verification relies on advanced technology to provide swift and efficient results. In cases where instant verification is unavailable, the process seamlessly transitions to permissioned verification, where explicit consent is obtained from individuals to access their payroll data directly from their respective providers. Lastly, manual verification involves collecting payroll and employment documents, which is a more time-consuming and costly process. By implementing this comprehensive approach, you can enhance the efficiency and effectiveness of your verification process while maintaining the integrity of the results. A Flexible Solution Community banks and credit unions are integral to the lending industry. It is crucial for them to select a versatile verification solution that can keep pace with the approval speed of both regional and large banks. Given that community banks and credit unions operate in smaller geographic regions compared to larger institutions, it is imperative for them to have a verification solution that is versatile and can be applied across their entire spectrum of loan offerings, including mortgage loans, automotive loans, credit cards, home equity loans, and consumer loans. This adaptability enables community banks and credit unions to consistently serve their account holders and enhances their ability to compete effectively with larger financial institutions. With a robust verification solution in place, community banks and credit unions can confidently navigate the complexities of the lending landscape and deliver exceptional results for their valued account holders. World-Class Service and Support To ensure a seamless verification journey, community banks and credit unions should choose a solution provider that delivers exceptional service and support. From the initial onboarding process and comprehensive training to ongoing troubleshooting and guidance, a dedicated and knowledgeable support team becomes indispensable in establishing a successful verification process. Having hands-on training and support not only instills peace of mind but also empowers community-focused financial institutions to consistently provide a high level of personalized service, fostering trust and loyalty among their customers and members. By investing in a robust support system, community banks and credit unions can confidently navigate the verification landscape and stay ahead in an ever-evolving financial industry, reinforcing their commitment to delivering an outstanding experience to their communities. As a longstanding leader in the financial industry, Experian understands the unique challenges faced by community banks and credit unions. Our verification solution, Experian VerifyTM, provides accurate, efficient, and compliant income and employment verification services. With Experian Verify, community focused financial institutions can navigate the complexities of income and employment verification with ease, achieving new levels of efficiency and success. To learn more about how Experian Verify can benefit your bank or credit union, we invite you to visit our website and schedule a personalized demo. Together, let's unlock the potential of income and employment verification and elevate your financial institution to new heights of success. Learn more

This article was updated on February 13, 2024. Traditional credit data has long been a reliable source for measuring consumers' creditworthiness. While that's not changing, new types of alternative credit data are giving lenders a more complete picture of consumers' financial health. With supplemental data, lenders can better serve a wider variety of consumers and increase financial access and opportunities in their communities. What is alternative credit data? Alternative credit data, also known as expanded FCRA-regulated data, is data that can help you evaluate creditworthiness but isn't included in traditional credit reports.1 To comply with the Fair Credit Reporting Act (FCRA), alternative credit data must be displayable, disputable and correctable. Lenders are increasingly turning to new types and sources of data as the use of alternative credit data becomes the norm in underwriting. Today, lenders commonly use one or more of the following: Alternative financial services data: Alternative financial services (AFS) credit data can include information on consumers' use of small-dollar installment loans, single-payment loans, point-of-sale financing, auto title loans and rent-to-own agreements. Consumer permission data: With a consumer's permission, you can get transactional and account-level data from financial accounts to better assess income, assets and cash flow. The access can also give insight into payment history on non-traditional accounts, such as utilities, cell phone and streaming services. Rental payment history: Property managers, electronic rent payment services and rent collection companies can share information on consumers' rent payment history and lease terms. Full-file public records: Local- and state-level public records can tell you about a consumer's professional and occupational licenses, education, property deeds and address history. Buy Now Pay Later (BNPL) data: BNPL tradeline and account data can show you payment and return histories, along with upcoming scheduled payments. It may become even more important as consumers increasingly use this new type of point-of-sale financing. By gathering more information, you can get a deeper understanding of consumers' creditworthiness and expand your lending universe. From market segmentation to fraud prevention and collections, you can also use alternative credit data throughout the customer lifecycle. READ: 2023 State of Alternative Credit Data Report Challenges in underwriting today While unemployment rates are down, high inflation, rising interest rates and uncertainty about the economy are impacting consumer sentiment and the lending environment.2 Additionally, lenders may need to shift their underwriting approaches as pandemic-related assistance programs and loan accommodations end. Lenders may want to tighten their credit criteria. But, at the same time, consumers are becoming accustomed to streamlined application processes and responses. A slow manual review could lead to losing customers. Alternative credit data can help you more accurately assess consumers' creditworthiness, which may make it easier to identify high-risk applicants and find the hidden gems within medium-risk segments. Layering traditional and alternative credit data with the latest approaches to model building, such as using artificial intelligence, can also help you implement precise and predictive underwriting strategies. Benefits of using alternative data for credit underwriting Using alternative data for credit underwriting — along with custom credit attributes and automation — is the modern approach to a risk-based credit approval strategy. The result can offer: A greater view of consumer creditworthiness: Personal cash flow data and a consumer's history of making (or missing) payments that don't appear on traditional credit reports can give you a better understanding of their financial position. Improve speed and accuracy of credit decisions: The expanded view helps you create a more efficient underwriting process. Automated underwriting tools can incorporate alternative credit data and attributes with meaningful results. One lender, Atlas Credit, worked with Experian to create a custom model that incorporated alternative credit data and nearly doubled its approvals while reducing risk by 15 to 20 percent.3 Increase financial inclusion: There are 28 million American adults who don't have a mainstream credit file and 21 million who aren't scoreable by conventional scoring models.4 With alternative credit data, you may be able to more accurately assess the creditworthiness of adults who would otherwise be deemed thin file or unscorable. Broadening your pool of applications while appropriately managing risk is a measurable success. What Experian builds and offers Experian is continually expanding access to expanded FCRA-regulated data. Our Experian RentBureau and Clarity Services (the leading source of alternative financial credit data) have long given lenders a more complete picture of consumers' financial situation. Experian also helps lenders effectively use these new types of data. You can also incorporate the data into your proprietary marketing, lending and collections strategies. Experian is also using alternative credit data for credit scoring. The Lift Premium™ model can score 96 percent of U.S. adults — compared to the 81 percent that conventional models can score using traditional data.5 The bottom line Lenders have been testing and using alternative credit data for years, but its use in underwriting may become even more important as they need to respond to changing consumer expectations and economic uncertainty. Experian is supporting this innovation by expanding access to alternative data sources and helping lenders understand how to best use and implement alternative credit data in their lending strategies. Learn more 1When we refer to “Alternative Credit Data," this refers to the use of alternative data and its appropriate use in consumer credit lending decisions, as regulated by the Fair Credit Reporting Act. Hence, the term “Expanded FCRA Data" may also apply and can be used interchangeably. 2Experian (2024). State of the Economy Report 3Experian (2020). OneAZ Credit Union [Case Study] 4Oliver Wyman (2022). Financial Inclusion and Access to Credit [White Paper] 5Ibid.