Fraud & Identity Management

Explore what multi-factor authentication is, how it works, and why it’s crucial for enhancing your digital security against data breaches.

  Managing digital identities is a necessity, responsibility and privilege. When done right, digital identity management solutions can help consumers feel recognized and safe. In turn, companies can build strong and personalized relationships with their customers while complying with regulatory requirements and combating hydra-like fraud attacks. What is digital identity? The concept and definition of a digital identity have expanded as everyday interactions increasingly happen in digital realms. Today, a digital identity is more than an online account. Identities can be created and depend on all the digital information associated with a unique entity, which may be a person, business or device. A person's digital identity often includes online and offline attributes that fall into one of three categories: Something a user knows, such as a username, password or PIN. Something a user has, such as a mobile phone or security token. Something that's part of the user, such as a fingerprint, iris, voice pattern, behavior or preferences. People are increasingly open to sharing this type of personal information if it serves a purpose. Our Global Identity and Fraud Report found that 57 percent of consumers are willing to share data if it ensures greater security or prevents fraud, and 63 percent of consumers think sharing data is beneficial (up from 51 percent in 2021).1 People can also use these identifiers to verify their identity at a later point. But digital identity verification tools should rely on more than user-provided verification alone. A person may have hundreds or thousands of digital interactions every day, and these can leave digital footprints that you can use to create or expand digital identities. These types of identifiers — such as search queries, geotags, behaviors and device information — can also help you authenticate a user and offer a more customized and seamless experience. However, when focusing on consumers' digital identities, it's important to remember that their identity is more than the sum of data points. A person's digital identity is unique and personal, and it should be managed accordingly. The business side's challenges A discussion of what makes up an identity can quickly turn philosophical. For instance, you can't authenticate identical twins based on a face scan or DNA test, so what is it that makes them unique? In some ways, the example gets to the heart of businesses' challenges today. To create a safe and enjoyable online identity verification experience, you need to be able to distinguish between a real person and an imitator, even when the two look nearly identical. Access to more information can make this easier, but you then need to ensure that you can keep this information secure. It can be a tricky balance, but if you get it right, your efforts will be rewarded. People want to be recognized as they move across channels and devices, and organizations want to be able to quickly and accurately identify users with a friction-right experience that also helps prevent fraud. However, while 84 percent of businesses say recognizing customers is "very" or "extremely" important, only about 33 percent of consumers are confident that they'll be repeatedly recognized online.1 There's a clear gap — and an opportunity to better meet customers' desires. Organizations across industries know they need a customer recognition strategy and 82% already have one in place.2 Some businesses address this challenge with identity platforms that are standardized and interoperable. Standardization allows the platform to gather and store the growing influx of data that it can use as part of a digital identity strategy. Interoperability allows the platform to match different types of data, including physical data, with a person to verify their digital identity and avoid the creation of duplicate identities. In short, the platforms can make sense of increasingly large amounts of internal and external data and easily incorporate new data sources as they become available. Regulatory compliance and digital identity Navigating the regulatory landscape is a significant challenge for organizations dealing with digital identities. Compliance is not only necessary for legal reasons but also critical to maintaining customer trust and safeguarding institutional reputation. Organizations must stay informed about the regulatory frameworks that affect digital identity, such as the General Data Protection Regulation (GDPR) in the European Union, the California Consumer Privacy Act (CCPA), and other pertinent laws in jurisdictions they operate. These regulations dictate how personal data can be collected, stored, used and shared. Staying ahead of regulatory changes: Regulatory landscapes are dynamic, particularly concerning digital data. Organizations should engage with policymakers and participate in industry forums to  stay ahead of changes. By proactively managing compliance, organizations can avoid costly penalties, operational disruptions and reputational damage. The consumer's perspective Some organizations are adopting a consumer-centric approach to digital identity that puts consumers' needs and desires first. These can broadly be broken into four categories: Security: While people want a seamless and personalized experience, security and privacy are listed as top concerns year after year.1 That might not be surprising given that data breaches continually make headlines and there are growing concerns over identity theft. Privacy: Security is related to privacy, but privacy means more than keeping consumers' information safe from hackers. Our April 2022 Global Insight Report found that 90 percent of consumers want some or complete control over how their personal data is used. 3 Recognition: People want to be continually recognized once they share and verify their identity, even if they move between devices or channels. And nearly 70 percent of consumers say it's important for businesses to recognize them across multiple visits.1 Inclusion: Consumers may have varying levels of access to technology, comfort with technology and access to physical identifiers. Creating digital identity solutions for these potential barriers can also increase financial inclusion. While these are all areas of focus, organizations also need to find the right fit for each person and interaction. For instance, consumers may expect and even appreciate a robust verification process when they're opening a new financial account. But they could quickly be turned off by a similar process if they're making a small purchase or trying to play a new online game. What to look for in a digital identity partner Digital identity solutions and services have grown increasingly sophisticated to meet today's challenges. Identity hubs and data orchestration engines can connect with multiple services to help create, resolve, verify and authenticate identities. By moving away from a siloed approach, businesses can offer customers a better experience while minimizing their risk throughout the customer journey. When comparing potential partners, look for a company that: Has a customer-first approach: If your business is customer-first, then you need a partner who has a similar view. Uses multidimensional data: The partner should be able to offer and use offline and digital data sources to resolve, verify and authenticate digital identities. Its capabilities may become increasingly important as new data sources emerge. Isn't afraid to innovate: Look into how the partner is testing and using the latest advancements, such as artificial intelligence, in its digital identity solutions. Protects your brand: Understand how the partner helps detect and prevent fraud while creating a seamless experience for your customers and protecting their data. The right partner can increase your bottom line, help you build trust and improve your brand's reputation. Learn more about Experian Identity, an integrated approach to digital identity that builds on Experian's decades of experience managing and securing identifying information. Learn more 1“2022 Global Identity and Fraud Report: Building digital consumer trust amidst rising fraud activity and concerns," Experian, June 2022 2“2021 Global Identity and Fraud Report: Protecting and enabling customer engagements in the new digital era," Experian, April 2021. https://www.experian.com/content/dam/marketing/na/global-da/pdfs/GIDFR_2022.pdf https://www.experian.co.th/wp-content/uploads/2021/04/Experian-Global-Identity-Fraud-Report-2021.pdf 3"Global Insights Report: April 2022," Experian, April 2022. https://www.experian.com/blogs/global-insights/wp-content/uploads/2022/04/WaveReportApril2022.pdf *This article includes content created by an AI language model and is intended to provide general information.

Third-party fraud involves an identifiable victim that is willing to collaborate in the investigation and resolution.

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For companies that regularly engage in financial transactions, having a customer identification program (CIP) is mandatory to comply with the regulations around identity verification requirements across the customer lifecycle. In this blog post, we will delve into the essentials of a customer identification program, what it entails, and why it is important for businesses to implement one. What is a customer identification program? A CIP is a set of procedures implemented by financial institutions to verify the identity of their customers. The purpose of a CIP is to be a part of a financial institution’s fraud management solutions, with similar goals as to detect and prevent fraud like money laundering, identity theft, and other fraudulent activities. The program enables financial institutions to assess the risk level associated with a particular customer and determine whether their business dealings are legitimate. An effective CIP program should check the following boxes: Confidently verify customer identities Seamless authentication Understand and anticipate customer activities Where does Know Your Customer (KYC) fit in? KYC policies must include a robust CIP across the customer lifecycle from initial onboarding through portfolio management. KYC solutions encompass the financial institution’s customer identification program, customer due diligence and ongoing monitoring. What are the requirements for a CIP? Customer identification program requirements vary depending on the type of financial institution, the type of account opened, and other factors. However, the essential components of a CIP include verifying the customer's identity using government-issued identification, obtaining and verifying the customer's address, and checking the customer against a list of known criminals, terrorists, or suspicious individuals. These measures  help detect and prevent financial crimes. Why is a CIP important for businesses? CIP helps businesses mitigate risk by ensuring they have accurate and up-to-date information about their customers. This also helps financial institutions comply with laws and regulations that require them to monitor financial transactions for any suspicious activities. By having a robust CIP in place, businesses can establish trust and rapport with their customers. According to Experian’s 2024 U.S. Identity and Fraud Report, 63% of consumers say it's extremely or very important for businesses to recognize them online. Having an effective CIP in place is part of financial institutions showing their consumers that they have their best interests top of mind. Finding the right partner It’s important to find a partner you trust when working to establish processes and procedures for verifying customer identity, address, and other relevant information. Companies can also utilize specialized software that can help streamline the CIP process and ensure that it is being carried out accurately and consistently. Experian’s proprietary and partner data sources and flexible monitoring and segmentation tools allow you to resolve CIP discrepancies and fraud risk in a single step, all while keeping pace with emerging fraud threats with effective customer identification software. Putting consumers first is paramount. The security of their identity is priority one, but financial institutions must pay equal attention to their consumers’ preferences and experiences. It is not just enough to verify customer identities. Leading financial institutions will automate customer identification to reduce manual intervention and verify with a reasonable belief that the identity is valid and eligible to use the services you provide. Seamless experiences with the right amount of friction (I.e., multi-factor authentication) should also be pursued to preserve the quality of the customer experience. Putting it all together As cybersecurity threats are becoming more sophisticated, it is essential for financial institutions to protect their customerinformation and level up their fraud prevention solutions. Implementing a customer identification program is an essential component in achieving that objective. A robust CIP helps organizations detect, prevent, and deter fraudulent activities while ensuring compliance with regulatory requirements. While implementing a CIP can be complex, having a solid plan and establishing clear guidelines is the best way for companies to safeguard customer information and maintain their reputation. CIPs are an integral part of financial institutions security infrastructures and must be a business priority. By ensuring that they have accurate and up-to-date data on their customers, they can mitigate risk, establish trust, and comply with regulatory requirements. A sound CIP program can help financial institutions detect and prevent financial crimes and cyber threats while ensuring that legitimate business transactions are not disrupted, therefore safeguarding their customers' information and protecting their own reputation. Learn more

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In today's fast-paced financial landscape, financial institutions must stay ahead of the curve when it comes to account opening and onboarding. Digital account opening, empowering a prospective client to securely and efficiently open a new account, is key to how banks, credit unions and other financial institutions grow their business and expand their portfolio. Regardless of the time, money and other resources a financial institution invests in marketing to the right target prospect and tailoring an attractive offer, it’s worthless if that prospective customer can’t complete the process due to a poor account opening experience. Unhappy customers vote with their feet. A recent Experian study found that of the more 2,000 consumers surveyed who’d opened a new account in the last six months, 37% took their business elsewhere due to a negative account opening experience.   The choice of a reliable partner can make all the difference to your account opening and onboarding experience. The right partner must provide your financial institution with access to the freshest credit data; advanced analytics, scores and models to empower you to say yes to the right customers that meet your lending criteria; and industry-leading decision engines that make the best decisions and enable you to provide a seamless customer experience.  Moreover, the right partner will also help you in maintaining high levels of security without compromising user experience, all while adhering to regulatory compliance.  Recently, Liminal, a leading advisory and market intelligence firm specializing in the digital identity, cybersecurity, and fintech markets, released its highly anticipated Link™ Index Report for Account Opening in Financial Services, which evaluates solution providers in the financial sector, in the areas of compliance and fraud prevention for account opening. The report recognized Experian as a market leader for compliance and fraud prevention capabilities and market execution. Experian’s identity verification and fraud prevention solutions, including CrossCore® and Precise ID®, received the highest score out of the 32 companies highlighted in the report. It found that Experian was recognized by 94% of buyers and 89% identified Experian as a market leader.   “We’re thrilled to be named the top market leader in compliance and fraud prevention capabilities and execution by Liminal’s Link Index Report,” said Kathleen Peters, Chief Innovation Officer for Experian’s Decision Analytics business in North America. “We’re continually innovating to deliver the most effective identity verification and fraud prevention solutions to our clients so they can grow their business, mitigate risk and provide a seamless customer experience.”  You can access the full report here. To learn more about Experian’s award-winning fraud solutions, visit our identity fraud hub.  Download Liminal Link Index Report

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The Fed launched FedNow, a new instant payment service. While it offers advantages, there's concerns that fraudsters may exploit it with fraud schemes.