This post was updated in 2022.
Fraud prevention can seem like a moving target. Criminals often shift from one scheme to the next, forcing organizations to play catch up to protect consumers’ identities and funds. But with the right technology, it’s possible to implement a fraud solution that provides protection and enhances the consumer journey.
The pandemic fraud boom
Government stimulus funds, COVID-19 testing and the loosening of business controls were a boon for criminals and levied an immense cost against businesses and consumers.
Consumer fraud losses rose to $3.3 billion in 2020, up from $1.8 billion in 2019.
The rapid increase in digital activity had two significant impacts. First, it shifted new account applications to the digital channel, where increased anonymity favors fraudsters by creating an environment where identity thieves could hide among the immense volume of applicants and monetize stolen personally identifiable information (PII). Second, it fueled account takeover (ATO) attacks by introducing digital “newbies” with unsophisticated password habits and limited ability to recognize and protect themselves from malware or social engineering, making them easy targets for credential theft.
The return of old-school fraud
Now that businesses and consumers are growing wise to some of the fraud schemes brought on by the COVID-19 pandemic, criminals are turning to new avenues, including tried-and-true methods like account opening and ATO fraud.
New account fraud is expected to cost U.S. financial institutions $3.5 billion in 2021 alone.
Fraud organizations will take the PII available and match it with automated tools to increase their efficiency and success rates while continuing with phishing and other schemes to gain new information that can fuel further attacks.
Building a fraud solution
Staying ahead of fraudsters may feel like a losing proposition but equipped with the proper fraud controls, you can enhance the customer experience, increase operational efficiency and protect against developing fraud schemes.
With a fraud solution that uses multiple tools in concert, it’s possible to recognize, verify and holistically risk assess most consumers that pass through your portfolio. The right platform — ideally one that can call upon different services to perform each job — will enable your organization to flag suspicious activity, increase insight into large-scale attacks, track risky users and break down traditional internal silos.
By coordinating efforts and adding multiple touchpoints to run both in the foreground and background, you can ensure the right friction is applied at the right time without diminishing the end-user experience. In fact, by improving your recognition tools, you can make the experience for recognized, legitimate customers even easier.
To learn more about the potential impacts of traditional fraud and how your organization can leverage a fraud prevention solution to achieve your retention and growth goals, read our latest white paper or request a call.
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