As data breaches become more widespread and as fraud tactics continue to evolve, countless identities have come to be available for sale on black markets that can be accessed, for example, on the dark web. This stolen identity data consists of enough personal information on a consumer for a fraudster to accurately impersonate that individual and defraud organizations. We call this compromised identity information “perfect” because it can perfectly match a legitimate consumer’s record. This is where fraudsters capitalize – they can use a “perfect identity” in an attempt to open or access financial accounts, for example.
Based on results from our 3rd Annual Fraud Report, information theft (from 19% in 2014 to 39% in 2015) and account takeover (from 33% in 2014 to 39% in 2015) activity is on the rise. Coupled with the increase in suspected fraud attempts year over year, credit unions realize the clear need to employ necessary identity verification and fraud prevention solutions to ensure a customer is indeed a legitimate customer and not a fraudster with “perfect” identity information in hand.
In 2013, IDology started launching annual fraud reports in which we poll senior executives from our customer base – many of whom are in the banking and other financial services sectors. The report presents the collective input of some of the world’s most talented and diligent and anti-fraud practitioners who have direct experience with this delicate security versus convenience balance.
We’re pleased to highlight some of the most notable results and analysis. We hope the results, analysis and overall report help your credit union in knowing the state of fraud in 2015 and where fraudsters are moving their efforts.
Suspected Fraud Attempts Continue to Climb
For a third year in a row, the amount of survey respondents reporting an increase in suspect fraud attempts rose. As suspected fraud attempts remain problematic for credit unions, and as these attempts continue to climb, the need for credit unions to detect fraudulent activity and take the steps needed to protect their organization is clear. However, organizations must also remain focused on improving the user experience by employing multiple layers of verification and only raising the level of friction when potential risk flags are present.
Fraudsters Continue to Target Website Applications
In line with IDology’s 2014 Fraud Report, website applications continue to bear the brunt of attempted fraud. As EMV continues to gain traction in the United States, it’s expected that fraud will shift to website applications since Chip-and-Pin technology is more difficult to duplicate than the current magnetic-stripe variety in use. As new fraud schemes arise targeting online applications, credit unions will need to take increased action to boost their identity verification and fraud prevention programs.
Call Center and Mobile Fraud Intensifies
Survey respondents reporting mobile fraud tactics also rose this year. Mobile fraud has become increasingly top of mind for credit unions as the use of smartphones gain in popularity and usage. With the convenience of smart devices being able to access personal accounts, security is becoming more and more of a priority. Another interesting development in this year’s results is the rise in organizations reporting suspected call center fraud attempts – from 2% in 2014 to 13% in 2015. Ultimately, these survey results demonstrate the increased need for credit unions and other financial services providers to not only prevent fraud in the best way possible, but it also must be accomplished in such a way that ensures good customers encounter a streamlined experience without friction.
To download the complete seventeen-page 2015 Fraud Report, click here.