At Experian’s recent client conference, Vision 2011, there was a refreshing amount of positive discussion and outlook on origination rates and acquisition strategies for growth. This was coming not only from industry analysts participating in the conference but from clients as well. As a consumer, I’d sensed the ‘cautious optimism’ that we keep hearing about because my mailbox(the ‘original’ one, not email) has slowly been getting more and more credit card offer letters over the last 6 months. Does this mean a return to prospecting and ultimately growth for financial institutions and lenders? It’s a glimmer of hope, for sure, although most agree that we’re a long way from being out of the woods, particularly with unemployment rates still high and the housing market in dire shape.
Soooo…..you may be wondering where I’m going with this….
Since my job is to support banks, lenders, utilities and numerous other businesses’ in their fraud prevention and compliance efforts, where my mind goes is: how does a return to growth – even slight – impact fraud trends and our clients’ risk management policies?
While many factors remain to be seen, here are a few early observations:
· Account takeover, bust out fraud, and other types of existing account fraud had been on the rise while application fraud had declined or stayed the same (relative to the decrease in new originations); with prospecting and acquisition activity starting to increase, we will likely see a resurgence in new account fraud attempts and methods.
· Financial institutions and consumers are under increasing risk of malware attacks; with more sophisticated malware technology popping up every day, this will likely be a prime means for fraudsters to commit identity theft and exploit potentially easier new account opening policies.
· With fraud loss numbers flat or down, the contracted fraud budgets and delayed technology investments by companies over the last few years are a point of vulnerability, especially if the acquisition growth rate jumps substantially.
