Most people think their relatively paltry sum of money isn’t enough to make them the target of fraud, especially when there are so many other bigger and more obvious targets out there. And that attitude is music to the ears of hackers, who are increasingly targeting new accounts in their efforts.
While the money in the new account isn’t likely to be enough to buy the hacker much, it’s certainly enough of a crimp in the victim’s life to force them to consider why they didn’t ask more questions before opening that new account with their local financial institution (FI).
Banks considered new account fraud to be a low priority in the early 2000s due to the extraordinary level of technical skill required to harvest personally identifiable information (PII) at a grand scale, but now 85% of FIs say they see fraudulent activity in the account opening process.
If that number isn’t enough to grab you, try this one on for size: U.S. banks were expected to lose $3.5 billion to new account fraud in 2021, about the same as they lost in 2018 ($3.4 billion). While that might mean fraudsters haven’t gotten much more sophisticated in the past few years, it also shows that banks aren’t doing much to protect their new account holders any better than they were three-plus years ago.
The January edition of PYMNTS’ “Monetizing Digital Intent Tracker®: Using Behavior As A Service To Drive Top-Line Growth” explores the latest in the world of behavioral analytics, including the growing threat of new account fraud, the use of behavioral analytics to keep it at bay, and how these analytics can improve the customer experience across the board.
Get the tracker: Using Behavioral As A Service To Drive Top-Line Growth
FIs must ramp up their focus on protecting a new account holder’s personal information in an effort to prevent or limit fraud, since locking away this information is one way to keep the fraudsters at bay — to some degree anyway.
Passwords and other knowledge-based authentication methods can help, but they’re not as effective as we’d all like to believe. We’re creatures of habit and can only remember a certain number of combinations of lowercase, uppercase, special characters and numbers at once.
Almost one out of three consumers (32%) prefer to use passwords when accessing online services on a browser, but almost half of individuals (44%) use just two to five passwords for all their accounts, meaning they all may be compromised if there’s a data breach.
Close to two out of every five Americans (37%) share their passwords with others, creating another massive opportunity for data theft. And let’s not even talk about the people who text or email their passwords to each other or even to themselves.
Behavioral analytics “offers a much more secure approach to new account fraud prevention,” according to the Tracker. Applicants’ data entry while onboarding is analyzed and the artificial intelligence (AI) platform identifies deviations from new customers’ typical behaviors.
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