Plaid has launched a collaborative network designed to stop “the chain reaction of identity fraud.”
The new Plaid Beacon network is open to FinTechs, financial institutions of all sizes and Plaid-powered customers and allows them to share information about stolen identities and compromised accounts, Plaid Head of Identity Alain Meier said in a Thursday (June 22) blog post.
“Through a set of APIs [application programming interfaces], Beacon enables real-time, secure information sharing across the ecosystem to mitigate repeat fraud against businesses, protect consumers and create a safer digital finance ecosystem,” Meier said in the post.
By enabling the reporting of instances of fraud and facilitating identity screening, Plaid Beacon aims to counter three common forms of attack: stolen identity, synthetic and account takeover fraud, according to the post.
This solution aims to prevent the “chain reaction” that occurs when fraudsters use compromised identity information in multiple fraud attempts across apps and services, the post said.
Plaid Beacon is meant to provide greater visibility across digital finance services and deliver an industrywide anti-fraud solution that works for organizations of all sizes, per the post.
“There’s power in numbers, and together we can help stop the chain reaction of identity fraud,” Meier said in the post.
PYMNTS research has found that smaller financial institutions (FIs) tend to bear the brunt of fraud and other financial crime attacks.
While 62% of all FIs reported experiencing an increase in financial crime, an even greater share of smaller FIs — those with between $5 billion and $25 billion in assets — experienced such an increase, according to “The State of Fraud and Financial Crime in the U.S.,” a PYMNTS and Featurespace collaboration.
Similarly, the Federal Trade Commission (FTC) said in March that consumers reported an increase in losses to fraud schemes, with the total reported in 2022 being 30% higher than that in 2021.
The launch of Plaid Beacon comes about two weeks after Plaid launched a solution that allows consumers to verify their identity across all Plaid-powered apps and services.
The company’s Identity Verification product now lets previously verified users sign up for additional digital finance apps without repeating the entire identity verification process.