Over the past few years, we’ve seen massive increases in digital/online payment fraud and account takeover fraud. Synthetic identity fraud is also skyrocketing. A ‘fraud earthquake’ is coming, and it will happen online.
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To help navigate this shifting landscape, Mitek’s latest white paper Fraud trends and tectonics looks at how fraud is playing out in financial services and online marketplaces.
Online fraud is increasing daily. Peer to peer (P2P) fraud saw a 733% increase from 2016 to 2019. Account takeovers increased 72% from 2018 to 2019. In 2019 there were 5,183 data breaches and 7.9 billion exposed records – the worst on record. We now estimate there could be about $200 billion in cumulative fraud losses between 2020 and 2024... and that’s on the conservative side.
What’s causing this? Proliferation of digital channels and accounts, massive data breaches and advanced technology like AI are all contributing factors. Typically, online marketplaces and financial services, including fintechs, employ defences called ‘point solutions’. Though point solutions have worked in the past, today many of these models minimize identity verification at account origination, accepting identities from other digital platforms and services. As a result, the effectiveness of these defences is quickly diminishing; digital identity has become the master key criminals use to open doors to the money vault.
Financial services and online marketplaces use different tools to try to tell the difference between behaviours of legitimate customers and fraudsters. But fraudsters have access to the same (if not better) technology and they’re using it to create fake profiles which beat the best models. Financial services and online marketplaces both have strengths, however both can better defend their customers, platforms, brand reputations, and financial stability by learning from each other’s experiences and best practices.
Digital transformation is changing how we pay our bills, manage our finances, shop, work and play. So is growth in the connection between a person’s identity and fraud crimes, threatening the foundational trust consumers need to have in the digital businesses that are the fabric of daily life. Today’s businesses should adopt a unified approach to identity verification and fraud management, and learn from each other during the process.
Mitek Fraud series: Biometrics and Fraud in the COVID era. What's changing? | Identity Verification through the customer journey | The Pandemic blindsided us; will surging digital fraud do the same? | How to fight fraud with data | What is a Deepfake and how does it impact fraud? | Financial services and online marketplaces face shifting fraud landscapes | What is synthetic identity fraud? | What is Account Takeover Fraud
About Joe Bloemendaal
Joe Bloemendaal is the head of strategy, at Mitek. Joe joined Mitek, the leading provider of mobile capture and identity solutions, after the acquisition of IDchecker in 2015. As a big advocate of services that bridge the gap between offline and online ID verification, Joe argues that the true potential of the Internet will only be unlocked if we can trust someone online like we can trust someone offline. Joe is an ‘intreprenuer’ with a real passion for solving problems, designing strategies and solutions using his solid background in Risk Management, ID Fraud, KYC, and Identity Verification, to help Mitek’s clients leverage the most out of DIDV technologies.