All posts by Kathleen Peters
Here’s what we expect in 2021: Putting a Face to Frankenstein IDs: Synthetic identity fraud – when a fraudster uses a combination of real and fake information to create an entirely new identity – is currently the fastest growing type of financial crime. The progressive uptick in synthetic identity fraud is likely due to multiple factors, including data breaches, dark web data access and the competitive lending landscape. As methods for fraud detection continue to mature, Experian expects fraudsters to use fake faces for biometric verification. These “Frankenstein faces” will use AI to combine facial characteristics from different people to form a new identity, creating a challenge for businesses relying on facial recognition technology as a significant part of their fraud prevention strategy. “Too Good to Be True” COVID Solutions: With the distribution of vaccines underway and wider availability of rapid COVID-19 testing, Experian expects that fraudsters will continue to find opportunities to capitalize on anxious and vulnerable consumers and businesses. Everyone needs to be vigilant against fraudsters using the promise of at-home test kits, vaccines and treatments as means for sophisticated phishing attacks, telemarketing fraud and social engineering schemes. Stimulus Fraud Activity, Round Two: For Americans suddenly out of work or struggling with the financial fallout from the pandemic, 2020’s government-issued stimulus funds were a welcome relief, but also an easy target for fraudsters to commit scams. Experian predicts fraudsters will take advantage of additional stimulus funding by using stolen data from consumers to intercept stimulus or unemployment payments. Say ‘Hello’ to Constant Automated Attacks: Once the stimulus fraud attacks run their course, Experian predicts hackers will increasingly turn to automated methods, including script creation (using fraudulent information to automate account creation) and credential stuffing (using stolen data from a breach to take over a user’s other accounts) to make cyberattacks and account takeovers easier and more scalable than ever before. With billions of records exposed in the U.S. due to data breaches annually, this type of fraud will prosper in 2021 and beyond until the industry moves away from its reliance on usernames and passwords. Survival of the Fittest for Small Businesses: As a result of COVID-19, businesses were left with no choice but to quickly shift to digital to meet the needs of consumers, and some were more prepared than others. In 2020, consumers may have been willing to give businesses time to adjust to the new normal, but in 2021 their expectations will be higher. Experian predicts businesses with lackluster fraud prevention tools and insufficient online security technology will suffer large financial losses in 2021 and beyond. While fraudsters will iterate on new and old methods of attack in 2021, Experian is always innovating to help businesses stay one step ahead. As a leader in fraud prevention, Experian offers a full suite of automated fraud prevention and detection tools that harness data and analytics to make businesses more secure. To learn more, check out Experian’s fraud prevention solutions and download the Future of Fraud Forecast.
Tens of millions of workers in the U.S. found themselves unemployed earlier this year, as the COVID-19 pandemic caused job loss rates not seen since the Great Depression. While average Americans were reaching out to their state agencies seeking assistance, fraudsters saw unprecedented opportunity. It may be difficult to imagine why someone would take advantage of a system striving to help those in need, but cybercriminals often thrive in times of crisis. At Experian, we took notice as we began to hear from states about a significant uptick in fraudsters wrongfully claiming benefits. When it comes to innovation, we strive to be agile and nimble so we can adapt to the changing needs of consumers and businesses. As a result of COVID-19, one of those emerging needs is to join the fight against unemployment insurance fraud. That’s why Experian has partnered with the Unemployment Insurance (UI) Integrity Center to help mitigate unemployment insurance fraud. Together, we will provide state agencies with a centralized platform to verify identities that are applying for unemployment insurance. The new partnership will combine Experian’s Precise ID® solution, which integrates identity analytics with advanced fraud risk models to distinguish various types of fraud, with the UI Center’s Identity Verification (IDV) capability. In short, 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. This can be easily implemented by any state UI agency through the Center’s Integrity Data Hub. While mitigating fraud is top of mind, security is a top priority as well. The platform was designed and built using the latest National Institute of Standards and Technology IT security standards to ensure the security of sensitive data. With the number of unemployment claims remaining high, it’s clear that state agencies must maximize their time and resources. Fortunately, the solution powered by Experian’s Precise ID will be available to state agencies at no cost through UI Integrity Center, operated by the National Association of State Workforce Agencies (NASWA) in partnership with and funded by the U.S. Department of Labor. This is one of many steps we’re taking at Experian to combat fraud, and we will continue to innovate and adapt on the road to recovery ahead of us. As we move forward together, Experian is committed to leveraging innovation and technology to protect consumers and help businesses meet the challenges of 2020 and beyond.
In May 2020, Experian launched Sure Profile and became the first company with an offering to fight synthetic identity fraud that’s integrated into the credit profile with market-leading assurance. In fact, we are so confident in our solution that we’ll share in loan losses on assured profiles if we get it wrong, a first for the industry. Recently, International Data Corporation (IDC) highlighted Sure Profile in the report, IDC, Synthetic Identity Fraud Update: Effects of COVID-19 and a Potential Cure from Experian (doc #US46690220, July 2020) stating “IDC Financial Insights believes that Experian\'s Sure Profile has the potential to have market disrupting effects in the battle against SIF (synthetic identity fraud).” According to McKinsey, synthetic identity fraud is the fastest growing financial crime in the United States, accounting for 10% to 15% of lender losses each year. Synthetic identity fraud occurs when fraudsters combine real and fake information to create “Frankenstein IDs” which are then used to obtain credit or to add these identities as authorized users to existing credit accounts. Then, financial institutions report the identities to credit reporting agencies. A new record with the false information is created and subsequently, the synthetic identity can be used to generate other fake accounts. It is a significant problem that Juniper Research expects will lead to $48 billion in annual online payment fraud losses by 2023. IDC recommends that financial institutions consider Sure Profile when researching how to fight synthetic identity fraud. For institutions that use an analytical platform to detect synthetic identities, IDC suggests examining Sure Profile to see how it can supplement their models, or even replace them. \"Synthetic identity fraud is a massive problem for banks, and I believe that the effects of COVID-19 will exacerbate the problem. However, at the same time, Experian launched a new offering that I believe will be a game changer for how banks attack the synthetic identity problem.\" — Steven D\'Alfonso, research director, IDC Financial Insights Sure Profile validates identities, detects profiles that have an increased risk for synthetic identity fraud and helps cover resulting losses for assured profiles. Leveraging the capabilities of the Experian Ascend Identity Platform™, it uses data to drive advanced analytics, including newly developed machine learning models that predict the likelihood of synthetic identity behavior. Sure Profile provides lenders a simple approach to define and detect synthetic identities early in the originations process. To learn more, check out Experian\'s Sure Profile.
Experian is a proud member of the Better Identity Coalition, which is committed to working alongside policymakers to improve digital security, identity verification, privacy and convenience for everyone. Together, we’re seeking innovative ways to empower Americans to take control of their identities and conduct online business securely. On September 11, 2020, a bipartisan group of House members led by Congressman Bill Foster, introduced the “Improving Digital Identity Act of 2020” to modernize and digitize our essential government identity infrastructure. Through the Better Identity Coalition, Experian supports this bill and the steps it’s taking to help improve digital identity, security and privacy for Americans. As a result of the impact of the COVID-19 pandemic, consumers and businesses have quickly adapted to doing nearly everything digitally, but most government-issued identity credentials, such as drivers’ licenses and passports, were not created to be verified online. The “Improving Digital Identity Act” creates a comprehensive approach across federal, state and local government to address critical shortcomings in identity tools that today make it easy for fraudsters to prey on Americans. The bill creates a framework of standards that new identity solutions should follow to ensure privacy. The bill also allows for federal grants to be given to states to jumpstart modernization of the systems that provide driver’s licenses or other types of credentials to enable digital identity verification, in accordance with the NIST framework. It’s important that the bill gets passed to bring the United States up to speed on digital identity and help fix government-issued identity problems. In addition to supporting bills like the “Improving Digital Identity Act of 2020,” Experian is working hard to develop new innovations to make digital commerce safer for consumers and businesses. Our most recent innovation, Sure Profile makes us the first company with an offering to fight synthetic identity fraud that’s integrated into the credit profile with market-leading assurance. In fact, we are so confident in our solution that we’ll share in loan losses on assured profiles if we get it wrong. Experian is also proud to be the only credit bureau in the initial rollout of the Social Security Administration’s new electronic Consent Based Social Security Verification service. Our inclusion ensures our clients have the tools to more easily detect online fraud while also better recognizing legitimate consumers.
This morning on my way into the office, I made my usual stop for coffee. Just like every other day, the barista greeted me by name and my usual drink was being made before I got to the counter. Doesn’t it feel nice when you’re recognized? The same holds true when we interact online. We want to be recognized when we transact online, because recognition helps to stimulate trust. And trust is what makes all of us feel safe and protected. New research from our Global Fraud and Identity Report demonstrates that customer recognition also plays a large role in indicators of fraud. Most of the 500 business executives in 11 countries that we interviewed across the globe, said that if they were certain about a customer’s identity, the need for fraud risk mitigation would be reduced. One of the trickiest components to fraud detection, is finding the fine line between turning away good customers and letting the fraudsters slip through. Our global research revealed that most businesses tend to demonstrate suspicion when it comes to preventing fraud, following a route of detection rather than permission or trust. In fact, 71 percent of businesses know that they deny more transactions than they should. The end result isn’t just a loss of sales, but it also may very likely damage the lifetime value of that customer. Business leaders agree that if they were more precise in identifying the customer and avoiding denial of real transactions, they would see an increase in revenue. In addition, the report confirmed what we all already know – as consumers, we expect the companies we do business with to protect us. We surveyed 5,500 people in 11 countries, and many said they equate visual signs of security and the barriers they encounter when accessing their accounts to mean the transaction is more secure. Nearly 7 out of every 10 people like the security protocols when they transact online because it makes them feel protected. As customers, we want to believe that banks and retailers are doing everything they can to protect and secure our online transactions. Our study also found that 72 percent of businesses say fraud is a growing concern, with online fraud continuing to be a top concern across the globe. One of out every 10 businesses are experiencing the same or more fraudulent losses online compared to a year ago. Fraud is always evolving and fraudsters are becoming more resourceful than ever before. And while there is no silver bullet, and good modern fraud detection requires multiple fraud detection strategies, better customer recognition could make an immediate difference. Simply put, the better you recognize the customer, the better you can recognize fraud. Get a copy of the complete Global Fraud and Identity Report
In October, I had the pleasure of joining many industry leaders and fraud risk professionals from around the world at Experian’s Fusion Summit 2017 held in Scottsdale, Arizona. Our annual Fusion Fraud Summit is a great opportunity to hear from industry leaders on what trends and emerging technology they are currently focusing on. This collaboration with other thought leaders is critical to staying ahead of fraudsters and keeping consumers safe, while providing the best experience possible. In addition to enjoying the sunny Arizona venue, I had the opportunity to network and have candid conversations with attendees and speakers about their fraud challenges and how these challenges affect their businesses. One thing I found striking is that in nearly every conversation, the topics centered on one or more of the following four themes. Security As consumers, we want to feel safe and we want to feel that businesses are doing everything they can to protect us: our payment information, our identity, our credit. Similarly, businesses want to help their customers feel safe, but they also want consumers to know that the data entrusted to them will not fall into nefarious hands. As such, the fraud leaders I spoke with at Fusion are more concerned with security than ever before. But they also know that there is no silver bullet to solve the ever-growing fraud problem. Instead, it’s a multi-layered approach that includes a combination of products and strategies that will recognize identities and assess risk of fraud. Those layers will help to provide the right level of confidence for every transaction. Recognition Being recognized by the people we do business with goes a long way. Whether it’s your coffee shop barista or the front desk clerk at your favorite hotel, being recognized makes us feel appreciated and special. The same applies in today’s digital environment. With the lack of face-to-face interaction online, being recognized when transacting and engaging online is even more important. Customers expect to be recognized and welcomed wherever and whenever they do business. The fraud leaders I spoke with said the same; they want to be as certain as they can about who their customers are. The benefits to this are huge - customers are recognized and welcomed, and it is easier for the business to recognize the fraud. Convenience We all lead busy lives, so it’s handy when we can easily pay bills or make purchases online. But it is not convenient when we’re forced to enter in passwords we may not remember, or get a code from our phone just to prove who we are. Worse yet, purchases could be declined unnecessarily. Now that’s inconvenient. Businesses struggle, especially this time of year, to provide a hassle-free experience for their customers while keeping a handle on increased levels of fraud during the holiday buying season. Most of the executives I spoke with at Fusion would like advanced authentication and security measures that don’t impact customers negatively but provide a better way to establish trust. Trust And in the end, it really comes down to trust. As consumers, why do we prefer to do repeat business with people we know? It is because we trust them. You know them, they know you: recognition helps to stimulate trust. As businesses get to know and recognize their customers, even online customers, they become more confident in evolving the level of conversation and engagement. Trust is at the center of every strong, lasting relationship. And trust is what makes all of us feel safe and protected. While at Fusion, I gave attendees a sneak peek into some of the findings of our upcoming annual Global Fraud Report. Over the last several months, we interviewed 5,500 consumers and more than 550 businesses in 11 markets around the world to hear what concerns and priorities they had. We look forward to sharing lots of great information in the next few weeks and throughout 2018, but for now I can tell you 30 percent of businesses are experiencing more fraud losses over the past 12 months. While these same businesses are eager to introduce new and innovative ways for consumers to open accounts or conduct transactions online, they also are keenly aware that new channels present new challenges. In order to make a difference, we need to work together as an industry to find smarter and more efficient ways to protect both the businesses and the customers they serve. Throughout the coming months, we’ll be sharing the 2018 Global Fraud Report and the findings. I’m sure you’ll find – just as we did – some eye-opening research into how consumers view recognition and trust and what businesses need to do to provide that secure and positive customer experience. For more information about how Experian can help you recognize your customers and better detect fraud, visit: https://www.experian.com/decision-analytics/global/fraud/global-identity-fraud.html