ID Fraud Hits All-Time High – Learn How to Manage the Risk

Javelin’s recently released 2018 Identity Fraud Study^[1] has told us a lot about what happened with identity theft and fraud last year. As is indicated in the infographic, consumer fraud instances rose significantly from 2016 to 2017, and identity fraud exposure hit an all-time high by a significant amount.

This should come as no great shock, since last year’s Equifax breach – not to mention other smaller, but still significant, events like the Sonic Restaurant and Deloitte data breaches – impacted an estimated 147.9 million U.S. consumers. 

Let’s take a deeper look into what other conclusions about 2017 consumer fraud impact were presented in Javelin’s recent report

1. Experienced an all-time high for identity fraud exposure:
   • 16.7 million U.S. victims in 2017 alone
   • Increase driven by growth in card-not-present fraud and account takeover fraud
     
     
2. Saw significant growth in account takeover fraud:
   • Instances of account takeover fraud tripled from 2016 to 2017
   • Total account takeover fraud losses reached $5.1 billion in 2017
   • Account takeover fraud is one of the worst types of fraud for victimized consumers to deal with
     
     
3. Online shopping presented the greatest fraud opportunity for criminals:
   • Increased adoption of EMV and chip technology is driving more fraudsters to shift their attention to online channels
   • Card-not-present fraud is a ground-breaking 81% more likely to occur than card-present (a.k.a point of sale) fraud
     
     
4. Fraudsters are getting more sophisticated in their efforts.
   • Continue to develop more complex programs, mechanisms and processes to perform fraud
   • Continue to evolve the way in which fraud is performed to develop new techniques and schemes
     
     
5. Data breaches are causing consumers to lose trust in institutions:
   • Breaches rank at the top of identity related concerns for surveyed consumers
   • Proportion of consumers who are concerned about fraud rose from 51% in 2016 to 69% in 2017
   • Much of the increase in concerns relates to the unfounded media coverage of the 2017 Equifax breach
   • Consumers have shifted fraud prevention responsibility from themselves to financial institutions and other entities storing their private information
   • Many consumers reported they are unsure that they have the ability to effectively protect themselves from fraud
   • Most breach victims said they think breach notifications are more about providing legal coverage for the breached company than they are about protecting them

What Can You Do to Help Protect Against the Increased Fraud Threats?

With these record-breaking consumer fraud trends happening last year, it is safe to assume these trends will continue throughout 2018. Which means you and your consumers continue to face an increased risk of identity theft and fraud. So what exactly can you do to reduce the risk of exposure?

Authenticate. Authenticate. Authenticate! The best way to prevent identity fraud is to use multi-factor authentication methods to verify the identity of individuals wanting to gain access to private information or attempting to perform any sort of financial transaction.

New account openings are one of the most common points of fraudulent entry for identity thieves. So it is especially important you are paying close attention to these requests and using multiple layers of authentication on the requestors so you can be sure they are who they say they are.

You should also adopt the following practices to better manage the growing fraud threat:

• Educate staff about detection and prevention methods.
• Respond quickly to any exposures.
• Monitor likely points of entry for fraud.
• Invest in comprehensive liability coverage to protect your business’s finances.
• Offer identity theft coverage with “deeper” fraud monitoring services to protect account holders.
• Enlist the support of risk experts to audit and measure the strength of your policies and procedures.
• Distribute information to consumers about actionable fraud prevention tools and practices.

What Can You Do to Regain the Trust of Consumers?

As was reported by the Javelin study, consumers appear to be under the impression that:

1. Financial institutions are doing little to protect them from fraud.
2. There is little they can do to protect against identity fraud attacks.

We know that consumers need to exercise good online security habits to minimize the risk and impact of identity fraud, but many of them seem to be unaware of the actions they can take to prevent fraud exposure. Better safeguard your institution and consumers from identity fraud related losses by sharing simple preventative measures they can adopt right away to more effectively protect themselves (and your financial institution!) from identity theft and fraud.

Click to Tweet: Identity theft is a scary beast. That's why our institution will continue to do everything in our power to protect your identity and private information!

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[1] “2018 Identity Fraud: Fraud Enters a New Era of Complexity.” Javelin, 6 Feb. 2018, www.javelinstrategy.com/coverage-area/2018-identity-fraud-fraud-enters-new-era-complexity.