Financial Services

Rising balances and delinquency rates are causing lenders to proactively minimize credit risk through pre-delinquency treatments. However, the success of these types of account management strategies depends on timely and predictive data. Credit attributes summarize credit data into specific characteristics or variables to provide a more granular view of a consumer’s behavior. Credit attributes give context about a consumer’s behavior at a specific point in time, such as their current revolving credit utilization ratio or their total available credit. Trended credit attributes analyze credit history data for consumer behavior patterns over time, including changes in utilization rates or how often a balance exceeded an account’s credit limit during the previous 12 months. In a recent analysis, we found that credit attributes related to utilization were highly predictive of future delinquencies in bankcard accounts, with many lenders better managing their credit risk when incorporating these attributes into their account management processes. READ: Find out how custom attributes and models can help you stay ahead of your competitors in the "Build a profitable portfolio with credit attributes" e-book. Using attributes to manage credit risk An enhanced understanding of credit attributes can be leveraged to manage risk throughout the customer lifecycle. They can be important when you want to: Improve credit strategies and efficiencies: Overlay attributes and incorporate them into credit policy rules, such as knockout criteria, to expand your lending population and increase automation without taking on more credit risk. Better understand customers' credit trends: Experian’s wide range of credit data, including trended credit attributes, can help you quickly understand how consumers are faring off-book for visibility into other lending relationships and if they’ll likely experience financial stress in the future. Credit attributes can also help precisely segment populations. For example, attributes can help you distinguish between two people who have similar credit risk scores — but very different trajectories — and will better determine who's the least risky customer. Predicting 60+ day delinquencies with credit attributes To evaluate the effectiveness of credit attributes during account review, we looked at 2.9 million open and active bankcard accounts to see which attributes best predicted the likelihood of an account reaching 60 days past due. For this analysis, we used snapshots of bankcard accounts that were reported in October 2022 and April 2023. Additionally, we analyzed the predictive power of over 4,000 attributes from Experian Premier AttributesSM and Trended 3DTM. Key findings Nine of the top 20 most predictive credit attributes were related to credit utilization rates. Delinquency-related attributes were predictive but weren’t part of the top 10. Three of the top 10 attributes were related to available credit. Turning insight into action While we analyzed credit attributes for account review, determining attribute effectiveness for other use cases will depend on your own portfolio and goals. However, you can use a similar approach to finding the predictive power of attributes. Once you identify the most predictive credit attributes for your population, you can also create an account review program to track these metrics, such as changes in utilization rates or available credit balances. Using Experian’s Risk and Retention Triggers℠ can immediately notify you of customers' daily credit activity to monitor those changes. Ongoing monitoring of attributes and triggers can help you identify customers who are facing financial stress and are headed toward delinquency. You can then proactively take steps to reduce your risk exposure, prioritize accounts, and modify pre-collections strategy based on triggering events. Experian offers credit attributes and the tools to use them Creating and managing credit attributes can be a complex and never-ending task. You need to regularly monitor attributes for performance drift and to address changing regulatory requirements. You may also want to develop new attributes based on expanding data sources and industry trends. Many organizations don’t have the resources to create, manage, and update credit attributes on their own. That’s where Experian’s 4,500+ attributes and tools can help to save time and money. Premier Attributes includes our core attributes and subsets for over 50 industries. Trended 3D attributes can help you better understand changes in consumer behavior and creditworthiness. Clear View AttributesTM offers insights from expanded FCRA data* that generally isn’t reported to consumer credit bureaus. You can easily review and manage your portfolios with Experian’s Ascend Quest™ platform. The always-on access allows you to request thousands of data elements, including credit attributes, risk scores, income models, segmentation data, and payment history, at any time. Use insights from the data and leverage Ascend Quest to quickly identify accounts that may be experiencing financial stress to limit your credit risk — and target others with retention and up-selling opportunities. Watch the Ascend Quest demo to see it in action, or contact us to learn more about Experian’s credit attributes and account review solutions. Watch demo Contact us

This series will dive into our monthly State of the Economy report, providing a snapshot of the top monthly economic and credit data for those in financial services to proactively shape their business strategies. During their June meeting, the Federal Reserve continued to hold rates steady and released an updated Summary of Economic Projections. In this update, the committee reduced 2024 rate cut projections from three to one and increased their year-end inflation expectations. Both of these updates were likely driven by a lack of downward progress in inflation in Q1. But as the Federal Reserve extends the period of restrictive rates, it places more weight on each monthly economic data release to inform the Fed’s next move. Data highlights from this month’s report include: Job creation exceeded economists’ expectations with 272,000 jobs added in May. Inflation cooled in May, with annual headline inflation down from 3.4% to 3.3% and annual core inflation down from 3.6% to 3.4%. Auto loan amounts decreased in Q1 as inventories continue to stabilize. Check out our report for a deep dive into the rest of this month’s data, including the latest trends in delinquencies, spending, and the new housing market. Download June's report  To have a holistic view of our current environment, it’s important to view the economy from different angles and through different lenses. Watch our experts discuss the latest economic and credit trends in the recording of our latest macroeconomic forecasting webinar and listen to our latest Econ to Action podcast. For more economic trends and market insights, visit Experian Edge.

Dealing with delinquent debt is a challenging yet crucial task, and when faced with economic uncertainties, the need for effective debt management and collections strategies becomes even more pressing. Thankfully, advanced analytics offers a promising solution. By leveraging data-driven insights, you can enhance operational efficiency, better prioritize accounts, and make more informed decisions. This article explores how advanced analytics can revolutionize debt collection and provides actionable strategies to implement treatment. Understanding advanced analytics in debt collection Advanced analytics involves using sophisticated techniques and tools to analyze complex datasets and extract valuable insights. In debt collection, advanced analytics can encompass various methodologies, including predictive modeling, machine learning (ML), data mining, and statistical analysis. Predictive modeling Predictive modeling leverages historical data to forecast future outcomes. By applying predictive models to debt collection, you can estimate each account's repayment likelihood. This helps prioritize your efforts toward accounts with a higher chance of recovery. Machine learning Machine learning algorithms can automatically identify patterns in large datasets, enabling more accurate predictions and classifications. For debt collectors, this means better segmenting delinquent accounts based on likelihood of repayment, risk, and customer behavior. Data mining Data mining involves exploring large datasets to unearth hidden patterns and correlations. In debt collection, data mining can reveal previously unnoticed trends and behaviors, allowing you to tailor your strategies accordingly. Statistical analysis Statistical methods help quantify relationships within data, providing a clearer picture of the factors influencing debt repayment and focusing on statistically significant repayment drivers, which aids in refining collection strategies. Benefits of advanced analytics in delinquent debt collection The benefits of employing advanced analytics in delinquent debt collection are multifaceted and valuable. By integrating these technologies, financial institutions can achieve greater efficiency, reduce operational costs, and improve recovery rates. Enhanced prioritization and decisioning With data and predictive analytics, you can gain a complete view of existing and potential customers to determine risk exposure and prioritize accounts effectively. By analyzing payment histories, credit scores, and other consumer behavior, you can enhance your collectoins prioritization strategies and focus on accounts more likely to  pay or settle. This ensures that resources are allocated efficiently, and decisions are informed, maximizing your return on investment. Watch: In our recent tech showcase, learn how to harness the power of our industry-leading collection decisioning and optimization capabilities.  Reduced costs Advanced analytics can significantly reduce operational costs by streamlining the collection process and targeting accounts with higher recovery potential. Automated processes and optimized resource allocation mean you can achieve more with less, ultimately increasing profitability. Better customer relationships With debt collection analytics, digital communication tools, artificial intelligence (AI), and ML processes, you can enhance your collections efforts to better engage with consumers and increase response rates. Adopting a more empathetic and customer-centric approach that embraces omnichannel collections can foster positive customer relationships. Implementing advanced analytics: A step-by-step guide Step 1: Data collection and integration The first step in implementing advanced analytics is to gather and integrate data from various sources. This includes payment histories, account information, demographic data, and external data such as credit scores. Ensuring data quality and consistency is crucial for accurate analysis. Step 2: Data analysis and modeling Once the data is collected, the next step is to apply advanced analytical techniques. This involves developing predictive models, training machine learning algorithms, and conducting statistical analyses to identify notable patterns and trends. Step 3: Strategy development Based on the insights gained from the analysis, you can develop targeted collection strategies. These may include segmenting accounts, prioritizing high-potential recoveries, and choosing the most effective communication methods. It’s essential to test and refine these strategies to ensure optimal performance continually. Step 4: Automation and implementation Implementing advanced analytics often involves automation. Workflow automation tools can streamline routine tasks, ensuring strategies are executed consistently and efficiently. Integrating these tools with existing debt collection systems can enhance overall effectiveness. Step 5: Monitoring and optimization Finally, continuously monitor the performance of your advanced analytics initiatives. Use key performance indicators (KPIs) to track success and identify areas for improvement. Regularly update models and strategies based on new data and evolving trends to maintain high recovery rates. Putting it all together Advanced analytics hold immense potential for transforming delinquent debt collection and can drive better return on investment. By leveraging predictive modeling, machine learning, data mining, and statistical analysis, financial institutions and debt collection agencies can perfect their collection best practices, prioritize accounts effectively, and make more informed decisions. Our debt collection analytics and recovery tools empower your organization to see the complete behavioral, demographic, and emerging view of customer portfolios through extensive data assets, advanced analytics, and platforms. As the financial landscape evolves, working with an expert to adopt advanced analytics will be critical for staying competitive and achieving sustainable success in debt collection. Learn more *This article includes content created by an AI language model and is intended to provide general information.

In this article...What is a TOAD attack?How TOAD attacks happenEffective countermeasures Keeping TOADS at bay with Experian Imagine receiving a phone call informing you that your antivirus software license is about to expire. You decide to renew it over the phone, and before you know it, you have been “TOAD-ed”! What is a TOAD attack? Telephone-Oriented Attack Deliveries (TOADs) are an increasingly common threat to businesses worldwide. According to Proofpoint's 2024 State of the Phish Report, 10 million TOAD attacks are made every month, and 67% of businesses globally were affected by a TOAD attack in 2023. In the UK alone, businesses have lost over £500 million to these scams, while in the United States the reported monetary loss averaged $43,000 per incident, with some losses exceeding $1 million.TOADs involve cybercriminals using real phone numbers to impersonate legitimate callers, tricking victims into divulging sensitive information or making fraudulent transactions. This type of attack can result in substantial financial losses and reputational damage for businesses. How TOAD attacks happen TOAD attacks often involve callback phishing, where victims are tricked into calling fake call centers. Before they strike, scammers will gather a victim's credentials from various sources, such as past data breaches, social media profiles, and information bought on the dark web. They will then contact the individual through applications like WhatsApp or call their phone directly. Here is a common TOAD attack example: Initial contact: The victim receives an email from what appears to be a reputable company, like Amazon or PayPal. Fake invoice: The email contains a fake invoice for a large purchase, prompting the recipient to call a customer service number. Deception: A scammer, posing as a customer service agent, convinces the victim to download malware disguised as a support tool, granting the scammer access to the victim's computer and personal information. These techniques keep improving. One of the cleverer tricks of TOADs is to spoof a number or email so they contact you as someone you know. Vishing is a type of phishing that uses phone calls, fake numbers, voice changers, texts, and social engineering to obtain sensitive information from users. It mainly relies on voice to fool users. (Smishing is another type of phishing that uses texts to fool users, and it can be combined with phone calls depending on how the attacker works.) According to Rogers Communication website, an employee in Toronto, Canada got an email asking them to call Apple to change a password. They followed the instructions, and a “specialist” helped them do it. After receiving their password, the cyber criminals used the employee's account to send emails and deceive colleagues into approving a fake payment of $5,000. Artificial intelligence (AI) is also making it easier for TOAD phishing attacks to happen. A few months ago, a Hong Kong executive was fooled into sending HK$200m of his company's funds to cyber criminals who impersonated senior officials in a deepfake video meeting. Effective countermeasures To combat TOAD attacks, businesses must implement robust solutions. Employee training and awareness: Regular training sessions and vishing simulations help employees recognize and respond to TOAD attacks. Authentication and verification protocols: Implementing multi-factor authentication (MFA) and call-back verification procedures enhances security for sensitive transactions. Technology solutions: Bots and spoofing detection and voice biometric authentication technologies help verify the identity of callers and block fraudulent numbers. Monitoring and analytics: Advanced fraud detection and behavioral analytics identify anomalies and unusual activities indicative of TOAD attacks. Secure communication channels: Ensure consumers have access to verified customer service numbers and promote secure messaging apps. A strong strategy should also involve using advanced email security solutions with AI fraud detection and machine learning (ML) to effectively defend against TOAD threats. These can help identify and stop phishing emails. Regular security audits and updates are necessary to find and fix vulnerabilities, and an incident response plan should be prepared to deal with and reduce any breaches. By integrating technology, processes, and people into their strategy, organizations can develop a strong defense against TOAD attacks. Keeping TOADS at bay with Experian®  By working and exchanging information with other businesses and industry groups, you can gain useful knowledge about new or emerging threats and defense strategies. Governments and organizations like the Federal Communications Commission (FCC) have a shared duty to defend the private sector and public consumers from TOAD attacks, while many of the current rules and laws seem to lag behind what criminals are doing. By combining the best data with our automated ID verification processes, Experian® helps you protect your business and reputation. Our best-in-class solutions employ device recognition, behavioral biometrics, machine learning, and global fraud databases to spot and block suspicious activity before it becomes a problem. Learn more *This article includes content created by an AI language model and is intended to provide general information.

The morning kicked off with the buzz of innovation. Shri Santhanam, Financial Services and Data General Managers Platforms and Software, and leaders from Experian debuted the latest enhancements for the Experian Ascend Technology PlatformTM. The demo touted faster automation, seamless data integration, security and compliance, and simplified experience. Resiliency, security and gen AI capabilities are all core components and outputs of the new platform. Keynote speakers: Steffi Graf and Andre AgassiTennis icons Steffi Graf and Andre Agassi captivated the audience with stories of their memorable matches, how they met and their foray into pickleball. From notorious rivals to the pivotal moments that were part of their weeks at seeding in the number 1 position – 377 weeks and 101 weeks respectively. Keynote speaker: Jason SudeikisEmmy-award winning actor, comedian, writer and producer – and also known as the affable Ted Lasso – Jason Sudeikis had the crowd laughing reminiscing his favorite skits from his time at Saturday Night Live and outtakes from his numerous films. He talked about the impact of Ted Lasso and the origin of the “Believe” sign, as well as what’s ahead. Sessions – Day 2 highlights The conference hall was buzzing with conversations, discussions and thought leadership. Some themes definitely rose to the top — the increasing proliferation of fraud and how to combat it without diminishing the customer experience, leveraging AI and transformative technology in decisioning and how Experian is pioneering the GenAI era in finance and technology. Alternative dataAlternative data can be used to holistically measure a consumer's creditworthiness. Property data to banking insights to consumer-permissioned data and more can be a critical part of your strategies to segment, analyze and underwrite unbanked and new-to-credit consumers. EngagementEconomic headwinds and fierce competition in the banking industry have acquisition costs soaring, making it more important than ever to be critical of your organization’s advertising spend. Meanwhile, consumers are trending back toward the convenience of banking bundles, and they expect their financial institutions to help them improve their financial health. These conditions create a unique opportunity to extract value from digital experiences. CollectionsData, advanced analytics and machine learning are transforming all aspects of collections during a time when consumer debt pressure is building. Organizations can harness the power of data-driven insights, predictive modeling, enhanced segmentation and optimized decisions to ensure they have the strongest contact data and best collections strategy to reduce delinquencies and boost recovery rates. See you next year for Vision 2025!

This series will dive into our monthly State of the Economy report, providing a snapshot of the top monthly economic and credit data for those in financial services to proactively shape their business strategies. After again announcing no change in the target fed funds rate during their May meeting, the Federal Reserve continues to face the decision of when to begin cutting rates. The economic data released this month only complicated this decision, as growth came in well-below expectations and the labor market seemed to ease on several fronts. However, there was only minimal downward progress in inflation, especially considering the high prices seen over the past few months. In this month’s report, we dive into the data developments that comprise this economic story. Data highlights from this month’s report include: Economic growth in Q1 came in at 1.6%, under economists’ expectations. Underlying components of consumer spending and business investment remained solid. Inflation cooled in April, with annual headline inflation down from 3.5% to 3.4% and annual core inflation down from 3.8% to 3.6%. Consumer sentiment fell 13% in May, due to stubborn inflation, low growth, and easing in the labor market. Check out our report for a deep dive into the rest of this month’s data, including the latest trends in job creation, spending, and the fed funds rate. Download May's State of the Economy report  To have a holistic view of our current environment, it’s important to view the economy from different angles and through different lenses. Watch our team of experts discuss the latest economic and credit trends in the recording of our latest macroeconomic forecasting webinar, download our latest forecast scenario report, or listen to our latest Econ to Action podcast for views on the economic environment in different market segments. For more economic trends and market insights, visit Experian Edge.

Experian’s award-winning platform now brings together market-leading data, generative AI and cutting-edge machine learning solutions for analytics, credit decisioning and fraud into a single interface — simplifying the deployment of analytical models and enabling businesses to optimize their practices. The platform updates represent a notable milestone, fueled by Experian’s significant investments in innovation over the last eight years as part of its modern cloud transformation.  “The evolution of our platform reaffirms our commitment to drive innovation and empower businesses to thrive. Its capabilities are unmatched and represent a significant leap forward in lending technology, democratizing access to data in compliant ways while enabling lenders of all sizes to seamlessly validate their customers’ identities with confidence, help expand fair access to credit and offer awesome user and customer experiences,” said Alex Lintner CEO Experian Software Solutions. The enhanced Experian Ascend Platform dramatically reduces time to install and offers streamlined access to many of Experian's award-winning integrated solutions and tools through a single sign-on and a user-friendly dashboard. Leveraging generative AI, the platform makes it easy for organizations of varying sizes and experience levels to pivot between applications, automate processes, modernize operations and drive efficiency. In addition, existing clients can easily add new capabilities through the platform to enhance business outcomes. Read Press Release Learn More Check out Experian Ascend Platform in the media: Transforming Software for Credit, Fraud and Analytics with Experian Ascend Platform™ (Episode 160) Reshaping the Future of Financial Services with Experian Ascend Platform Introducing Experian’s Cloud-based Ascend Technology Platform with GenAI Integration 7 enhancements of Experian Ascend Platform

“Learn how to learn.” One of Zack Kass’, AI futurist and one of the keynote speakers at Vision 2024, takeaways readily embodies a sentiment most of us share — particularly here at Vision. Jennifer Schulz, CEO of Experian, North America, talked about AI and transformative technologies of past and present as she kicked off Vision 2024, the 40th Vision. Keynote speaker: Dr. Mohamed El-Erian Dr. Mohamed El-Erian, President of Queens’ College, Cambridge and Chief Economic Advisor at Allianz, returned to the Vision stage to discuss the labor market, “sticky” inflation and the health of consumers. He emphasized the need to embrace and learn how to talk to AI engines and that AI can facilitate content, creation, collaboration and community Keynote speaker: Zack Kass Zack Kass, AI futurist and former Head of Go-To-Market at OpenAI, spoke about the future of work and life and artificial general intelligence. He said AI is aiding in our entering of a superlinear trajectory and compared the thresholds of technology versus those of society. Sessions – Day 1 highlights The conference hall was buzzing with conversations, discussions and thought leadership. Some themes definitely rose to the top — the increasing proliferation of fraud and how to combat it without diminishing the customer experience, leveraging AI and transformative technology in decisioning and how Experian is pioneering the GenAI era in finance and technology. Transformative technologiesAI and emerging technologies are reshaping the finance sector and it's the responsibility of today's industry leaders to equip themselves with cutting-edge strategies and a comprehensive understanding to master the rapidly evolving landscape. That said, transformation is a journey and aligning with a partner that's agile and innovative is critical. Holistic fraud decisioningGenerative AI, a resurgence of bank branch transactions, synthetic identity and pig butchering are all fraud trends that today's organizations must be acutely aware of and armed to protect their businesses and customers against. Leveraging a holistic fraud decisioning strategy is important in finding the balance between customer experience and mitigating fraud. Unlocking cashflow to grow, protect and reduce riskCash flow data can be used not only across the lending lifecycle, but also as part of assessing existing portfolio opportunities. Incorporating consumer-permissioned data into models and processes powers predicatbility and can further assess risk and help score more consumers. Navigating the economyAmid a slowing economy, consumers and businesses continue to struggle with higher interest rates, tighter credit conditions and rising delinquencies, creating a challenging environment for lenders. Experian's experts outlined their latest economic forecasts and provided actionable insights into key consumer and commercial credit trends. More insights from Vision to come. Follow @ExperianVision and @ExperianInsights to see more of the action.

With e-commerce booming and more transactions occurring online, the threat of chargeback fraud has never been more significant. In this article, we'll explore chargeback fraud, why it's a growing problem, and, most importantly, how to prevent it. Whether you're a small or large business, understanding and implementing robust chargeback fraud prevention measures is critical to protecting your organization. What is chargeback fraud? Before we can prevent chargeback fraud, we need to know what we're dealing with. A chargeback happens when a cardholder disputes a transaction, or files a chargeback request, leading to the reversal of the payment to the merchant. Chargebacks can occur for various reasons including: Fraudulent transactions: If a card is stolen or its information is used without authorization, like in the case of account takeover fraud or card not present fraud, the cardholder can dispute the charges. Unauthorized transactions: Even if the cardholder didn't lose their card, they might notice charges they didn't make. Quality issues: If the product or service doesn't meet the cardholder's expectations or has a defect, they might dispute the charge. Billing errors: Sometimes, billing mistakes happen, such as being charged multiple times for the same transaction. Subscription cancellations: When a cardholder cancels a subscription but continues to be billed they can dispute the charges. While there are legitimate reasons for chargebacks, chargeback fraud, also known as friendly fraud, occurs when a customer makes a legitimate purchase with their credit card and then disputes the charge by filing a chargeback request. Unlike third-party fraud, where the cardholder's information is stolen or used without permission, in chargeback fraud, the cardholder initiates the dispute to avoid paying for goods or services they legitimately received. Chargeback fraud can take various forms: False claims of non-receipt: The cardholder claims they never received the purchased item, even though they did. Unauthorized transaction claims: The cardholder denies making the purchase, even though they did so legitimately. Product/service dissatisfaction: The cardholder claims dissatisfaction with the product or service as a reason for disputing the charge, even if the product or service was as described. Subscription services: The cardholder signs up for a subscription service and then disputes the recurring charges as unauthorized or unwanted. Why chargeback fraud is on the rise Chargeback fraud is becoming more pervasive for a couple of reasons. First, as e-commerce grows, so does the opportunity for fraud. Without face-to-face interactions, fraudsters can pull off their schemes more easily. Second, the process of issuing chargebacks has become consumer-friendly, with banks often siding with the cardholder without deep scrutiny of the claim. Finally, with the rise of subscription-based services and digital goods, the incidence of "friendly fraud" is increasing. The impact and repercussions of chargeback fraud The impact of chargeback fraud can be felt across several areas within a business. Financially, it's a clear and direct loss. There are also significant operational costs associated with managing chargebacks, including potential product loss, bank and related fees, and administrative work. However, the less tangible, more insidious repercussions involve damage to the business's reputation. A high chargeback rate can lead to a merchant account being suspended or terminated, causing a loss of the ability to process credit card payments. A tarnished reputation can further lead to losing consumer trust, which can be hard to regain. Preventing chargeback fraud Preventing and managing chargeback fraud often involves implementing fraud prevention solutions, providing clear communication and customer support, and disputing illegitimate chargebacks with evidence when possible. Here are key actions you can take to protect your business against chargeback fraud: Educate and communicate with customers: Ensure your customers are fully aware of your return and refund policies. Be clear and transparent in your communications about what happens in the event of a disputed transaction. This can significantly reduce misunderstandings that often lead to legitimate chargebacks. Implement stringent transaction verification processes: Utilize Address Verification Services (AVS) and Card Verification Value (CVV2) verification for online and over-the-phone transactions. These credit card authentication services add an extra layer of security and can establish the validity of a purchase. Keep meticulous records: Document all transactions, including emails, phone calls, and any other purchase-related correspondence. In the event of a dispute, these records can serve as compelling evidence to defend the transaction. Immediate shipment and tracking: Ship products as quickly as possible after purchase and provide tracking information to customers. This delights customers and provides tangible proof of delivery should a chargeback be disputed. Utilize advanced fraud detection tools: Many fraud detection services are available that can instantly flag potentially fraudulent transactions, from monitoring for suspicious spending patterns to IP tracking for online orders. Examples include: Tokenization: Tokenization replaces sensitive card data with a "token," a random string of characters that is useless to fraudsters. This token can be stored or transmitted easily, with the actual payment information securely kept off-site. Machine learning and AI: Machine learning and AI fraud detection solutions can analyze vast amounts of transaction data to detect patterns and anomalies, thus flagging potentially fraudulent activity in real-time. The role of customer support in chargeback prevention While the above tools can help your organization prevent fraudulent charge backs, you likely already have a key tool in your company that can help mitigate chargebacks altogether. Your customer support team is your front line in chargeback prevention. Train them to handle customer inquiries effectively and resolve issues before they escalate. Offer multiple contact channels: Give customers several ways to reach your support team, such as email, phone, and live chat. The more easily they can contact you, the less likely they are to resort to a chargeback. Ensure prompt and courteous service: A positive and responsive customer service experience can turn a potential chargeback into a loyalty-building opportunity. Make refunds and returns as easy as possible for your customers. Additionally, clear and generous policies will reduce dissatisfaction and the likelihood of chargebacks. How we can help Chargeback fraud can be a daunting prospect for any business, but with the right strategies in place, you can protect your business, your customers and your bottom line. Our fraud management solutions provide robust verification options and layered risk management to help reduce the risk of chargeback fraud. Our advanced fraud detection solutions leverage machine learning algorithms and behavioral analytics to confirm the identity of customers during transactions, identify suspicious patterns and activities, and offer deeper insights that enhance fraud prevention strategies. These solutions can help detect potential instances of chargeback fraud in real-time or during post-transaction analysis. Learn more

Financial institutions are constantly searching for ways to engage their consumers while providing valuable services that keep them financially sound and satisfied. At the same time, consumers are looking for ways to limit their risk and grow their financial power while improving and protecting their financial health. Both can be accomplished through personalized financial experiences.

The world of finance can be a dangerous place, where cunning schemes lurk in the shadows, ready to pounce on unsuspecting victims. In the ever-evolving landscape of financial crime, the insidious ‘pig butchering’ scam has emerged as a significant threat, targeting both financial institutions and their clients. What is a ‘pig butchering’ scam? ‘Pig butchering’ scams are named after the practice of farmers fattening up their livestock before “butchering” them. This comparison describes the core of ‘pig butchering’ scams, where criminals entice victims to participate in investment schemes and cryptocurrency fraud. Originating in Southeast Asia and now rampant in the United States, these scams often start with online interactions via social media or dating applications. Scammers build trust with the victim, eventually gaining access to their online accounts. They "fatten the pig" by enticing more cryptocurrency investments and then make off with their ill-gotten gains. The repercussions are staggering, with reported losses exceeding $3.5 billion in 2023 alone according to an AP News article, and around 40,000 victims in the United States, including cases of losses as massive as $4 million. The real-life impact The story of “RB,” a San Francisco man who engaged with a scammer named "Janey Lee," serves as a stark warning. Through social media, Janey orchestrated an elaborate scheme, promising "RB” substantial returns in cryptocurrency investment. Seduced by false promises, “RB” emptied his life savings into the scam, only to be rescued by a Federal Bureau of Investigation (FBI) intervention, narrowly avoiding financial ruin.1 Malicious actors are improving their targeting skills, and often pursue executives and victims with a large sum of money, such as C-level officials from financial institutions. This past February, a $50 million pig slaughtering fraud incident caused the CEO of a local bank in Kansas to lose all his funds and the bank to collapse a few months later. FinCEN's vigilance and updates The Financial Crimes Enforcement Network (FinCEN) remains vigilant, issuing advisories to financial institutions to combat ‘pig butchering’ scams. Their latest advisory highlights evolving scam tactics, including aggressive promotions, using money mules for illegal fund transfers, and leveraging new financial products like decentralized finance (DeFi) platforms to obfuscate transactions. FinCEN also warns about red flags such as large and sudden investments from older customers, quick fund withdrawals after big deposits, and the frequent use of coins or mixers that hide transactions. Financial institutions are encouraged to: Report any suspicious activities by using specific terms like "pig butchering fraud advisory" in their reports to make analysis and response easier. File suspicious activity reports (SARs) using the key term “FIN-2023-PIGBUTCHERING.” Guide potential victims to report to the FBI’s IC3 or the Security and Exchange Commission (SEC’s) reporting system. A call to action for financial institutions The fight against ‘pig butchering’ scams requires proactive measures from financial institutions: Enhance fraud detection and anti-money laundering (AML) programs: Implement robust systems compliant with regulatory guidelines, conduct thorough customer enhanced due diligence, and leverage fraud detection software to spot anomalies and red flags., and leverage fraud detection software to spot anomalies and red flags. Leverage data analytics: Utilize data analytics tools to monitor customer behavior, identify irregular patterns, and swiftly detect potential ‘pig butchering’ activities. Employee training: Educate employees on scam risks, fraud detection techniques, and FinCEN red flags to empower them as the first line of defense., and FinCEN red flags to empower them as the first line of defense. Community education: Educate customers on recognizing and avoiding investment scams, promoting awareness, and safeguarding their assets. Navigating challenges with effective solutions ‘Pig butchering’ scams cause not only money losses but also personal troubles and reputational harm. Awareness, learning, and cooperation are essential in protecting from these complex financial fraudsters, securing the safety and confidence of your institutions and stakeholders. By combining the best data with our automated identification verification processes, you can protect your business and onboard new talents efficiently. Our industry-leading solutions employ device recognition, behavioral biometrics, machine learning, and global fraud databases to spot and block suspicious activity before it becomes a problem. Learn more 1San Francisco Chronical (2023). Crypto Texting Scam *This article includes content created by an AI language model and is intended to provide general information.

This series will dive into our monthly State of the Economy report, providing a snapshot of the top monthly economic and credit data for those in financial services to proactively shape their business strategies. During their March meeting, the Federal Reserve announced no change in the federal funds rate and released their updated Summary of Economic Projects for the remainder of 2024 and 2025. In response to slow but steady cooling inflation, they maintained projections for three rate cuts by the end of 2024. Additionally, they upgraded their growth projections and lowered their unemployment projections, signaling more optimism toward the U.S. economic trajectory. In this month's report, we dive into the data developments that are contributing to this economic story. Data highlights from this month's report include: The Federal Reserve held rates steady and maintained projections for three rate cuts by the end of the year. Inflation progress slowed, with annual headline inflation flat and annual core inflation ticking up from 3.2% to 3.5%. The median rent-to-income ratio increased 4.1% year-over-year to 37.9% nationally. Check out our report for a deep dive into the rest of April's data, including the latest trends in income, originations, and job creation. To have a holistic view of our current environment, we must understand our economic past, present, and future. Check out our annual chartbook for a comprehensive view of the past year and register for our upcoming macroeconomic forecasting webinar for a look at the year ahead. Download April's State of the Economy report  Register for webinar For more economic trends and market insights, visit Experian Edge.

Open banking is revolutionizing the financial services industry by encouraging a shift from a closed model to one with greater transparency, competition, and innovation. But what does this mean for financial institutions, and how can you adapt to this new landscape, balancing opportunity against risk? In this article, we will define open banking, illustrate how it operates, and weigh the challenges and benefits for financial institutions. What is open banking? Open banking stands at the forefront of financial innovation, embodying a shift toward a more inclusive, transparent, and consumer-empowered system. At its core, open banking relies on a simple yet powerful premise: it uses consumer-permissioned data to create a networked banking ecosystem that benefits both financial institutions and consumers alike.  By having secure, standardized access to consumer financial data — granted willingly by the customers themselves — lenders can gain incredibly accurate insights into consumer behavior, enabling them to personalize services and offers like never before. How does open banking work? Open banking is driven by Application Programming Interfaces (APIs), which are sets of protocols that allow different software components to communicate with each other and share data seamlessly and securely. In the context of open banking, these APIs enable: Account Information Services (AIS): These services allow third-party providers (TPPs) to access account information from financial institutions (with customer consent) to provide budgeting and financial planning services. Payment Initiation Services (PIS): These services permit TPPs to initiate payments on behalf of customers, often offering alternative, faster, or cheaper payment solutions compared to traditional banking methods. Financial institutions must develop and maintain robust and secure APIs that TPPs can integrate with. This requires significant investment in technology and cybersecurity to protect customer data and financial assets. There must also be clear customer consent procedures and data-sharing agreements between financial institutions and TPPs. Benefits of open banking Open banking is poised to create a wave of innovation in the financial sector. One of the most significant benefits is the ability to gain a more comprehensive view of a consumer’s financial situation. With a deeper view of consumer cashflow data and access to actionable insights, you can improve your underwriting strategy, optimize account management and make smarter decisions to safely grow your portfolio.  Additionally, open banking promotes financial inclusion by enabling financial institutions to offer more tailored products that suit the needs of previously underserved or unbanked populations. This inclusivity can help bridge the gap in financial services, making them accessible to a broader segment of the population. Furthermore, open banking fosters competition among financial institutions and fintech companies, leading to the development of better products, services, and competitive pricing. This competitive environment not only benefits consumers but also challenges banks to innovate, improve their services, and operate more efficiently. The collaborative nature of open banking encourages an ecosystem where traditional banks and fintech startups co-create innovative open banking solutions. This synergy can accelerate the pace of digital transformation within the banking sector, leading to the development of cutting-edge technologies and platforms that address specific market gaps or consumer demands.  Challenges of open banking While open banking presents a plethora of opportunities, its adoption is not without challenges. Financial institutions must grapple with several hurdles to fully leverage the benefits open banking offers. One of the most significant challenges is fraud detection in banking and ensuring data security and privacy. The sharing of financial data through APIs necessitates robust cybersecurity measures to protect sensitive information from breaches and fraud. Banks and TPPs alike must invest in advanced security technologies and protocols to safeguard customer data. Additionally, regulatory compliance poses a considerable challenge. Open banking regulations vary widely across different jurisdictions, requiring banks to adapt their operations to comply with diverse legal frameworks. Staying abreast of evolving regulations and ensuring compliance can be resource-intensive and complex. Furthermore, customer trust and awareness are crucial to the success of open banking. Many consumers are hesitant to share their financial data due to privacy concerns. Educating customers on the benefits of open banking and the measures taken to ensure their data’s security is essential to overcoming this obstacle. Despite these challenges, the strategic implementation of open banking can unlock remarkable opportunities for innovation, efficiency, and service enhancement in the financial sector. Banks that can successfully navigate these hurdles and capitalize on the advantages of open banking are likely to emerge as leaders in the new era of financial services. Our open banking strategy Our newly introduced open banking solution, Cashflow Attributes, powered by Experian’s proprietary data from millions of U.S. consumers, offers unrivaled categorization and valuable consumer insights. The combination of credit and cashflow data empowers lenders with a deeper understanding of consumers. Furthermore, it harnesses our advanced capabilities to categorize 99% of transaction Demand Deposit Account (DDA) and credit card data, guaranteeing dependable inputs for robust risk assessment, targeted marketing and proactive fraud detection.  Watch open banking webinar Learn more about Cashflow Attributes

In the previous episode of “The Chrisman Commentary” podcast, Joy Mina, Director of Product Commercialization at Experian, talked about the benefits of a waterfall strategy for income and employment verification. In the latest episode, Joy explores common misconceptions around verifications, such as how a lender needs to put a provider with the most records first in their waterfall. "While that might feel like a sure-fire way to cut costs, it isn't necessarily the most effective," said Joy. "Instead of comparing records, I would really encourage lenders to focus on a provider's total cost to verify a consumer." Listen to the full episode to learn about more misconceptions associated with verifications and what you can do to enhance your strategies. Listen to podcast  Learn more

For lenders, first payment default (FPD) is more than just financial jargon; it's a crucial metric in assessing credit risk. This blog post will walk you through the essentials of FPD,  from defining the term to exploring how you can prevent and mitigate its potential impact. Understanding first payment default FPD occurs when a consumer fails to make their initial payment on a loan or credit agreement, which is often perceived as an early signal of a potential cascade of risky behavior. Recognizing FPD is the starting point for lenders to address potential issues with new borrowers before they escalate. One important aspect to grasp is the timeline of FPD. It’s not just about missing the first payment; it's about "early" missing. The timing of defaults is often critical in assessing the overall risk profile of a borrower or group of borrowers. The earlier a borrower starts to miss payments, the riskier they tend to be. Examining the causes of FPD The roots of FPD are diverse and can be classified into two broad categories: External factors: These include sudden financial crises, changes in employment status, or unforeseen expenses. Such factors are often beyond the borrower's immediate control. Internal factors: This category covers more deliberate or chronic financial habits, such as overspending, lack of savings, or overleveraging on credit. It's often indicative of longer-term financial instability. Understanding the causes of early payment default is the first step in effective risk management and customer engagement strategies. Implications of FPD for lenders FPD doesn't just signal immediate financial loss for lenders in terms of the missed installment. It sets off a cascade of consequences that affect the bottom line and the reputation of the institution. Financial loss. Lenders incur direct financial losses when a payment is missed, but the implications go beyond the missed payment amount. There are immediate costs associated with servicing, collections, and customer support. In the longer term, repeated defaults can lead to write-offs, impacting the institution's profitability and regulatory standing. Regulatory scrutiny. Repeated instances of FPD can also draw the attention of regulators, leading to scrutiny and potentially increased compliance costs. Mitigating first payment default Mitigating FPD requires a multifaceted approach that blends data, advanced analytics, customer engagement, and agile risk management. Lenders need to adopt strategies that can detect early signs of potential FPD and intervene preemptively. Data-driven decision-making. Leveraging advanced analytics and credit risk modeling is crucial. By incorporating transactional and behavioral data, lenders can make more accurate assessments of a borrower's risk profile. Utilizing predictive models can help forecast which borrowers are likely to default on their first payment, allowing for early intervention. Proactive customer engagement. Initiatives that revolve around education, personalized financial planning advice, and flexible payment arrangements can help borrowers who might be at risk of FPD. Proactive outreach can engage customers before a default occurs, turning a potential negative event into a positive experience. Agile risk management. Risk management strategies should be dynamic and responsive to changing market and customer conditions. Regularly reviewing and updating underwriting criteria, credit policies, and risk assessment tools ensures that lenders are prepared to tackle FPD challenges as they arise. Using FPD as a customer management tool Lastly, and perhaps most importantly, lenders can use FPD as a tool to foster better customer management. Every FPD is a data point that can provide insights into customer behavior and financial trends. By studying the causes and outcomes of FPD, lenders can refine their risk mitigation tools and improve their customer service offerings. Building trust through handling defaults. How lenders handle defaults, specifically the first ones, can significantly impact customer trust. Transparent communication, fair and considerate policies, and supportive customer service can make a difference in retaining customers and improving the lender's brand image. Leveraging data for personalization. The increasing availability of data means lenders can offer more personalized services. By segmenting customers based on payment behavior and response to early interventions, lenders can tailor offerings that meet the specific financial needs and challenges of individual borrowers. How Experian® can help First payment default is a critical aspect of credit risk management that requires attention and proactive strategies. By understanding the causes, implications, and mitigation strategies associated with FPD, financial institutions can not only avoid potential losses but also build stronger, more enduring relationships with their customers. Learn more about Experian’s credit risk modeling solutions. Learn more This article includes content created by an AI language model and is intended to provide general information.