If the rate and efficacy of identity-based fraud attacks in 2020 and 2021 are any indications, the coming year will set a new high, and not in a good way.
According to a 2021 survey by McKinsey, “New trends in US consumer digital payments”, the use of digital payments and accounts has reached near-ubiquitous adoption, with nearly four out of five US customers having made some type of digital payment in 2021.
The convergence of these trends, combined with the ability for international fraud networks and criminals to profit (while posing little risk to themselves), is expected to make 2022 a watershed moment in how corporations approach identity protection.
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What will be the reactions of businesses and consumers?
According to the Global Risks Report 2022, 86% of respondents believe data privacy is becoming more of a problem, and 40% do not trust companies with their personal information. These figures should serve as a wake-up call to every executive concerned about their company’s reputation.
While most data breaches are not the responsibility of the organization collecting the data, consumers seem unconcerned about who is to blame. Instead, they are only concerned with the unpleasant consequences that they are forced to undergo as a result, and they are forced to endure a lot.
Regardless, identity theft, which affects both enterprises and consumers, is a downstream result of exposed Personal Identifiable Information (PII).
Organizations should do everything they can to keep their platforms safe from fraudulent activities. Companies that fail to meet this obligation risk losing their reputation, losing customers, increasing the expense of acquiring new customers, and facing legal accountability, enforcement, penalties, and fines. Unfortunately, despite current efforts, many businesses continue to lag behind fraud advances.
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Case in point
In the last two years, nearly half of all US consumers (48%) have been victims of identity theft. Acc ording to a report by Aite Novarica, “U.S. Identity Theft: The Stark Reality”, more than one-third of US consumers were victims of account takeover (38%) and a similar number of application fraud during the same time period (37%).
To blame the legacy identity verification solutions that don’t account for the breadth and depth of data required to prevent more complex synthetic identities or those that focus on a single point of compromise. Inaction on the side of firms that don’t proactively and continuously examine their identity verification strategy – which, given the current fraud landscape, is a requirement is also a risk.
Organizations will need to improve their approach to identity verification in 2022 to combat fraud. This includes securing the enrollment process and employing a multi-layered strategy to confirm and certify identification over the customer lifecycle.
To compensate for the massive amounts of exposed PII already being used by fraud groups, organizations will need to empower themselves with more and better data. The transmission of that data is equally critical so that firms may make faster yet more informed decisions.
A safer and more successful 2022 will need partnering with a provider who has access to precise and organized data, as well as the capacity to exploit that data efficiently, in real-time, to reduce risk while increasing user experience.
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