IDology, a provider of identity verification, authentication and fraud prevention, recently released its Sixth Annual Fraud Report, confirming the growing importance of balancing customer friction and fraud prevention, cited by businesses this year as the number one challenge in fighting fraud. The report reveals a surge in mobile and phishing fraud schemes, a focus on artificial intelligence and machine learning as the growing trends in identity verification, and the strategic role identity verification plays in the quest to gain a competitive edge, retain and attract customers, and increase revenue.
“The prevailing mindset that in order to keep fraud out, the customer verification process has to be made more difficult is quickly becoming outdated,” said John Dancu, CEO of IDology. “In our modern connected world, it’s no surprise that fraud is on the rise and becoming more sophisticated. Winning businesses will be the ones that take a strategic approach to identity verification with the realization that they can offer frictionless customer convenience and effective fraud deterrence to ultimately cultivate customer trust.”
Phishing and mobile fraud surge
Credit card fraud and account takeovers remain the most widespread forms of fraud, but phishing schemes and mobile fraud have surged.
· The prevalence of mobile fraud surged dramatically with an increase of 117% over the previous year (one of the highest year-over-year increases among the fraud vectors measured this year in the survey). The number of businesses that feel their industry is least prepared to detect and prevent mobile device attacks increased 167% compared to a year ago.
· Businesses reported a 63% increase in mobile fraud. All types, including porting, spoofing, hacking and fraudulent change events, are on the rise. Caller ID spoofing increased by 74%, porting by 69% and SMS interception by 50% compared to 2017.
· Phishing, which can be linked to 93% of last year’s security breaches and has steadily risen each year, increased in prevalence by 66%.
“We are at a crossroads where the movement to mobile meets high consumer expectations and sophisticated fraud schemes,” said Julie Conroy, research director for Aite Group’s Retail Banking & Payments practice. “Identity verification is now something that businesses must consider as a key strategic factor for market differentiation and growth. A seamless, comprehensive and multi-layered approach with an anti-fraud consortium network of companies across industries is now table stakes.”
Businesses gain clarity: A firsthand perspective
This year’s Fraud Report provides an inside look at what U.S. businesses have learned about fraud detection and prevention, and how they view the changing landscape. A few highlights:
· Once thought of as a compliance checkbox measure, 85% of businesses now consider identity verification a strategic differentiator due to rising, more sophisticated forms of fraud, competitive pressures and consumer expectations for fast, easy digital onboarding.
· For 75%, identity verification has become more complicated in the last three years. Companies are realizing the need to move toward more robust and comprehensive multi-layered identity verification solutions that examine a full spectrum of identity attributes.
· They see the utilization of mobile device attributes for verification, artificial intelligence, machine learning and mobile document capture as the most impactful new trends in identity verification.
· Across industries, businesses feel particularly unequipped to handle synthetic identity fraud, mobile fraud and account takeovers.
For additional insights into fraud trends across a variety of industries and frsthand perspectives shared by executives on the front lines of fraud prevention, download the full Sixth Annual Fraud Report. Now in its sixth year, the report captures the impact of fraud on leading companies across multiple industries including financial services, healthcare, insurance and ecommerce. Respondent titles and areas of responsibility include senior leadership, vice presidents, directors, managers and analysts in risk, fraud, compliance, product and operations departments.
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