Fraud and ID theft: Helping your customers fight back
There’s never been a better time to be a fraudster. Fraud is a big business and a growing threat to consumers, e-commerce businesses, and financial institutions in today’s digital landscape. The rewards are high for cyber criminals who remain masked by the anonymity of the Internet, and increasingly sophisticated attacks expose the personal information, payments methods, and transactional data of consumers around the world.
According to Experian’s 2019 Global Identity and Fraud Report, 60 percent of consumers worldwide have experience online fraud at some point. There were 16.7 million victims of fraud in 2017 along, totaling $16.8 billion in fraud losses, according to Javelin Strategy & Research’s 2018 Identity Fraud Study.
A growing problem for businesses, a gnawing concern for consumers
According to Steve Pulley, Experian’s EVP and general manager of Global Identity and Fraud Solutions, the recently released Experian study paints an ominous picture. Fifty-five percent of businesses reported an increase in online fraud-related losses over the past 12 months, predominantly around account origination and account takeover attacks. In the U.S. alone, 80 percent of businesses have seen their online fraud losses increase from 2017-2018.
Even with more secure methods of payments like tokenized virtual wallets and the global rollout of the EMV chip standard for physical cards, fraud for card-not-present (CNP) transactions—the primary payment method for global e-commerce sales—is in the rise. CNP fraud will cost retailers worldwide $130 billion between 2018 and 2023, a new report from Juniper Research predicts.
The risks posed by fraud—from identity theft, exposure of personally identifiable information, account takeover, and transaction and card fraud—have a direct impact on customer sentiment, trust, and loyalty. According to one Experian study, 1 million consumers switch financial institutions each year as a result of fraud, taking $4B in credit card spending with them.
Enlisting allies on the front line
Customers want an ally in the ward against fraudsters. Seventy-four percent of consumers expect their financial institution to offer identity protection services, and 71 percent of consumers expect credit education services from their financial services provider. It’s also a great opportunity for fintechs and institutions of any size to create an engaging dialogue with their customers. Experian’s 2019 Global Identity and Fraud Report concludes that transparency-inspired initiatives like education, better communication, and helping consumers feel in control of their information can be particularly successful in 2019, and they will pay handsome dividends.
Offering customers credit education services, identity protection, and fraud alerts and controls not only builds loyalty and trust, it also engages them on the front lines against in the fight against fraudsters. Since 2016, credit, debit, and prepaid card issuers have offered spending controls and real-time alert features to their customers, giving them more visibility and control over their account activity. These tools have enabled customers to monitor suspicious activity soon after it happens, effectively making them front-line sentries.
These controls and alerts have been effective, but they are limited to card transactions. They do not specifically secure customer’s credit information or mitigate identity theft risk. Credit files are vulnerable to ID thieves who can apply for credit in a customers’ name without their knowledge. More robust identity and credit monitoring tools are needed to provide a more comprehensive bulwark of fraud protection and risk mitigation.
Experian’s suite of fraud education services and fraud control tools that allow customers and their trusted financial service provider to work together to protect their identity and credit standing.
- Credit Score Alerts: Alerts customers when their credit score changes or their risk level / score rank changes.
- Real-Time Credit Inquiry Alerts: Notifies customers in real time when hard inquiries are detected
- Positive Activity Alerts: Alerts customers to activity on a previously inactive/dormant credit lines
- SmartMetrics Data: Provides data and statistics about customers’ accounts.
- Identity Education Center: Information and tips on how to minimize identity theft
- Identity Theft Risk Assessment: A quiz that gives customers an identity theft risk ranking
- Financial Accounts Takeover: Notifies customers of changes to their existing account, or if their personal information has been used to apply for a new bank account or credit card account
- Real-Time Authorization Alerts: Notifies customers when their personal information is used for new applications or identity authorizations
- Social Media and Child Monitoring: Monitors social media privacy and reputational risks and extend monitoring customers’ children
- SSN Trace Monitoring: Monitors and tracks SSN to protect against identity theft
For fintechs, smaller banks, challenger banks, and credit unions that pride themselves on delivering tailored services for their members, fraud and identity theft tools and resources can deliver a personalized customer experience that helps them compete against larger financial institutions with bigger pockets. Just as important, these offerings can go a long way in building engagement and trust, says Experian’s Pully: “Ultimately, transparency, security, and convenience are common denominators of trust, and trust is imperative because that’s what drives loyalty.”
Experian’s turnkey solutions are available via a white-label platform, making it easy for financial companies to offer a comprehensive set of branded identity protection and monitoring tools that help their customers protect themselves.