Information Sharing Helps Banks Fight Consumer Identity Fraud

Prove - Digital Identity Tracker: Combating Online Fraud With Digital Identification - December 2022 - Explore how financial institutions combat online fraud with digital identification

The “Digital Identity Tracker®” explores how firms use digital identification to slow online fraud and mitigate the harm it causes.

Increasing online fraud threatens businesses and consumers, and both are aware of the growing problem. Fraudsters use leaked credentials in 95% of credential-stuffing attacks on retail websites. Automated threats are responsible for 62% of security incidents in eCommerce, with 64% of automated account takeover (ATO) attempts utilizing an advanced bad bot.60%: Share of acquiring banks that say AI is their most I important technology for detecting fraudulent transactions

Despite the threats, bad habits remain among account users, with 85% of high-net-worth individuals and 69% of millennials still using pets’ names or other easily identifiable information as passwords. Governments are responding with efforts to stop fraud before it happens, with the Federal Trade Commission (FTC) aiming to reduce fraud targeting older Americans. In 2021, adults 60 and older were nearly five times as likely as their younger counterparts to report losing money to a technology support scam and twice as likely to report losses to a prize, lottery or sweepstakes scam.

The “Digital Identity Tracker®” explores how firms use digital identification to slow online fraud and mitigate the harm it causes.

Around the Digital Identity Space

Fraud attempts flood users of mobile banking apps. Even so, most are likely to continue using them because of the convenience they provide for account activities such as tracking debit and credit balances, one-click payments or keeping tabs on income and expenses.

61%: Portion of consumers who would be willing to use login methods other than passwords

Fraud management trumps convenience, however, when it comes to customers’ choice of where to bank. In India, one in six bank customers said they would switch banks if unsatisfied with fraud management, representing 107 million people.

For more on these and other stories, visit the Tracker’s News and Trends section.

An Insider on Why Banks Must Collaborate to Stay Ahead of Fraud

Synthetic identity fraud is especially problematic for financial institutions (FIs) because fabricated identities typically have no consumer victims to report the crime, allowing fraudsters to do damage unchecked across multiple banks. FIs can stop fraud before it happens by better understanding its indicators and sharing data more effectively among other FIs.

To get the Insider POV, we spoke with Lisa Zeimetz, senior vice president, risk/compliance and Community Reinvestment Act officer at First National Bank and Trust, to learn more about how banks can collaborate to stay ahead of fraudsters.

Better, Faster Digital Identification a Must-Have for Consumers, Regulators40%: Share of customers citing convenience as an important driver of interest in advanced ID technology

Many types of fraud are on the rise. In the United Kingdom, authorized push payment (APP) fraud increased 39% year over year in 2021, overtaking credit card fraud based on the most money stolen, with the number of cases jumping 71% through the first half of 2021. Fraud events where bad actors steal identities to open new accounts grew by 64% in 2021, while synthetic account fraud is one of the fastest-growing fraud types.

Digital authentication solutions are crucial for FIs fighting fraud, with 60% of acquiring banks deploying artificial intelligence (AI) as their most important technology and another 27% leaning on rules-based algorithms as their top fraud-fighting tool. Third-party tools can be especially impactful, helping limit merchant losses, and biometrics offers cutting-edge speed and convenience.

To learn more about combating online fraud with digital identification, read the Tracker’s PYMNTS Intelligence.

About the Tracker

The “Digital Identity Tracker®,” a collaboration with Prove, examines how FIs combat online fraud with digital identification.