Fraud & Identity Management

The risk of identity theft continues to grow yearly for consumers and businesses alike. Identity theft and fraud cases have nearly tripled over the past ten years, with cybercrime losses totaling more than $10 billion this year alone.[1] An effective way for organizations to combat these threats is to implement a policy of identity risk management. Identity risk management Identity risk management refers to the methods used by organizations to anticipate potential fraud threats, protect themselves and their consumers from those vulnerabilities, resolve any fraud incidents that may occur, and prevent future fraud events from happening again. Businesses can implement these methods through a variety of tools and technologies designed to detect fraud risks and mitigate them as quickly and efficiently as possible.  By recognizing the risks of identity theft, helping consumers who fall victim to fraud, and preventing identity theft in the future, financial institutions can take an effective approach to identity risk management and ensure that their business is protected and their consumers stay safe. Recognizing risks of identity theft Identifying high-risk situations Inform consumers about high-risk situations that could lead to identity theft. Emphasize the dangers of data breaches, cyber-attacks, phishing scams, and social engineering tactics. Advise them to be cautious with personal documents and to avoid using public Wi-Fi for sensitive transactions. By raising awareness, financial institutions can help consumers stay vigilant. Risk-based authentication solutions can also help minimize risk with adaptive authentication methods. With sophisticated risk assessment and a combination of front- and back-end authentication methods, organizations can optimize the consumer experience and their identity risk management simultaneously. Protecting vulnerable information Guide consumers on safeguarding their most vulnerable information. Explain the importance of protecting Social Security numbers, credit card and bank account details, PINs, passwords, and medical records. Offer tips on securing this information and the potential consequences of it falling into the wrong hands. Providing practical advice, such as using password managers, enabling multifactor authentication, and regularly updating passwords, can significantly enhance your consumers’ security. Additionally, offering secure storage solutions for sensitive documents can further protect their information. Helping consumers who fall victim to fraud Providing immediate support If a consumer falls victim to identity theft, financial institutions should be ready to provide immediate support. Establish a clear protocol for reporting fraud and ensure that consumer service representatives are trained to handle such situations. Assist consumers in contacting their banks and credit card companies to report fraud and prevent further unauthorized transactions. Having a dedicated fraud response team can streamline this process and provide consumers with the reassurance that their issue is being handled by experts. This team can also offer personalized advice and support, making the recovery process less daunting for the victim. Helping restore identity To support consumers in the process of restoring their identity, financial institutions can offer identity restoration services as part of their consumer support. These services can include helping consumers navigate the complexities of repairing their credit, disputing fraudulent charges, and securing their accounts against future threats. Preventing identity theft in the future Enhancing personal security measures Encourage consumers to strengthen their personal security measures. Promote the use of strong, unique passwords and two-factor authentication (2FA) for all accounts. Advise them to regularly update and patch their software and devices. Offer services like secure document shredding to prevent thieves from accessing sensitive information. Financial institutions can also strengthen their identity risk management efforts by implementing robust security measures within their own systems. Demonstrating a commitment to security can build trust and encourage consumers to adopt similar practices. Implementing monitoring and alerts Financial institutions can offer identity theft protection services that include regular monitoring of credit reports and account alerts for suspicious activities. Educate consumers on the importance of closely monitoring their financial statements and bills to detect any unauthorized transactions early. Providing tools such as mobile apps that offer real-time alerts for suspicious activities can empower consumers to take immediate action if something seems amiss. Additionally, offering complimentary credit monitoring services can add an extra layer of protection. Leveraging data Data and analytics are among the most powerful tools at a financial institution’s disposal. By leveraging advanced analytics, institutions can identify patterns and anomalies that may indicate fraudulent activity. Machine learning algorithms can analyze vast amounts of transaction data in real- time, flagging suspicious behavior before it escalates into fraud. This proactive approach not only helps in early detection but also minimizes the impact on the consumer. Moreover, data analytics can streamline and improve the consumer experience by reducing false positives and ensuring that legitimate transactions are not unnecessarily flagged. This balance between security and convenience is crucial in maintaining consumer trust and satisfaction. Financial institutions can use these insights to tailor their fraud prevention strategies, using digital identity management solutions to provide more value to consumers. Behavioral analytics Fraud detection technology, such as behavioral analytics, is continually evolving as hacking methods become increasingly sophisticated. Insights from behavioral analytics can help mitigate fraud in real time and prevent identity theft, account takeover, and bot attacks — empowering businesses to provide a seamless consumer experience. Experian’s recent acquisition of NeuroID, an industry leader in behavioral analytics, means we now offer even more modern and frictionless capabilities, enhancing our fraud risk suite by providing a new layer of insight into digital behavioral signals and analytics throughout the consumer lifecycle. This additional level of defense against fraud can empower businesses to ensure that their consumers are safe and secure online. Identity management solutions Consumers are more at risk of identity theft than ever before, and it’s the responsibility of financial institutions to provide protection and support to the people they do business with. Offering identity management solutions can help organizations feel safe and secure about their consumer and business data without adding friction or functioning outside of their risk tolerance. Experian’s identity management tools allow financial institutions to confirm the identities of businesses and consumers with minimal friction, balancing end-user experience with enhanced security. This allows organizations to easily manage authentication events with confidence. Next steps Financial institutions have a vital role in helping consumers manage their risk of identity theft. By recognizing vulnerabilities, providing support to victims, and implementing preventive measures, financial institutions can protect their consumers’ personal information and financial well-being. Proactive identity risk management not only benefits consumers but also builds trust and loyalty with your brand. Protect your business from identity fraud today. Discover how Experian’s cutting-edge identity risk management solutions can safeguard your consumers and streamline your operations. Learn more about our identity management solutions This article includes content created by an AI language model and is intended to provide general information. [1] IdentityTheft.org. 2024 Identity Theft Facts and Statistics.

U.S. federal prosecutors have indicted Michael Smith of North Carolina for allegedly orchestrating a $10 million fraud scheme involving AI-generated music. Smith is accused of creating fake bands and using AI tools to produce hundreds of tracks, which were streamed by fake listeners on platforms like Spotify, Apple Music, and Amazon Music. Despite the artificial engagement, the scheme generated real royalty payments, defrauding these streaming services. This case marks the first prosecution of its kind and highlights a growing financial risk: the potential for rapid, large-scale fraud in digital platforms when content and engagement can be easily fabricated. A new report from Imperva Inc. highlights the growing financial burden of unsecure APIs and bot attacks on businesses, costing up to $186 billion annually. Key findings highlight the heavy economic burden on large companies due to their complex and extensive API ecosystems, often unsecured. Last year, enterprises managed about 613 API endpoints on average, a number expected to grow, increasing associated risks. APIs exposure to bot attacks Bot attacks, similar to those seen in streaming fraud, are also plaguing financial institutions. The risks are significant, weakening both security and financial stability. 1. Fraudulent transactions and account takeover Automated fraudulent transactions: Bots can perform high volumes of small, fraudulent transactions across multiple accounts, causing financial loss and overwhelming fraud detection systems. Account takeover: Bots can attempt credential stuffing, using compromised login data to access user accounts. Once inside, attackers could steal funds or sensitive information, leading to significant financial and reputational damage. 2. Synthetic identity fraud Creating fake accounts: Bots can be used to generate large numbers of synthetic identities, which are then used to open fake accounts for money laundering, credit fraud, or other illicit activities. Loan or credit card fraud: Using fake identities, bots can apply for loans or credit cards, withdrawing funds without intent to repay, resulting in significant losses for financial institutions. 3. Exploiting API vulnerabilities API abuse: Just as bots exploit API endpoints in streaming services, they can also target vulnerable APIs in financial platforms to extract sensitive data or initiate unauthorized transactions, leading to significant data breaches. Data exfiltration: Bots can use APIs to extract financial data, customer details, and transaction records, potentially leading to identity theft or data sold on the dark web. Bot attacks targeting financial institutions can result in extensive fraud, data breaches, regulatory fines, and loss of customer trust, causing significant financial and operational consequences. Safeguarding financial integrity To safeguard your business from these attacks, particularly via unsupervised APIs, a multi-layered defense strategy is essential. Here’s how you can protect your business and ensure its financial integrity: 1. Monitor and analyze data patterns Real-time analytics: Implement sophisticated monitoring systems to track user behavior continuously. By analyzing user patterns, you can detect irregular spikes in activity that may indicate bot-driven attacks. These anomalies should trigger alerts for immediate investigation. AI, machine learning, and geo-analysis: Leverage AI and machine learning models to spot unusual behaviors that can signal fraudulent activity. Geo-analysis tools help identify traffic originating from regions known for bot farms, allowing you to take preventive action before damage occurs. 2. Strengthen API access controls Limit access with token-based authentication: Implement token-based authentication to limit API access to verified applications and users. This reduces the chances of unauthorized or bot-driven API abuse. Control third-party integrations: Restrict API access to only trusted and vetted third-party services. Ensure that each external service is thoroughly reviewed to prevent malicious actors from exploiting your platform. 3. Implement robust account creation procedures PII identity verification solutions: Protect personal or sensitive data through authenticating someone`s identity and helping to prevent fraud and identity theft. Email and phone verification: Requiring email or phone verification during account creation can minimize the risk of mass fake account generation, a common tactic used by bots for fraudulent activities. Combating Bots as a Service: Focusing on intent-based deep behavioral analysis (IDBA), even the most sophisticated bots can be spotted, without adding friction. 4. Establish strong anti-fraud alliances Collaborate with industry networks: Join industry alliances or working groups that focus on API security and fraud prevention. Staying informed about emerging threats and sharing best practices with peers will allow you to anticipate new attack strategies. 5. Continuous customer and account monitoring Behavior analysis for repeat offenders: Monitor for repeat fraudulent behavior from the same accounts or users. If certain users or transactions display consistent signs of manipulation, flag them for detailed investigation and potential restrictions. User feedback loops: Encourage users to report any suspicious activity. This crowd-sourced intelligence can be invaluable in identifying bot activity quickly and reducing the scope of damage. 6. Maintain transparency and accountability Audit and report regularly: Offer regular, transparent reports on API usage and your anti-fraud measures. This builds trust with stakeholders and customers, as they see your proactive steps toward securing the platform. Real-time dashboards: Provide users with real-time visibility into their data streams or account activities. Unexplained spikes or dips can be flagged and investigated immediately, providing greater transparency and control. Conclusion Safeguarding your business from bot attacks and API abuse requires a comprehensive, multi-layered approach. By investing in advanced monitoring tools, enforcing strict API access controls, and fostering collaboration with anti-fraud networks, your organization can mitigate the risks posed by bots while maintaining credibility and trust. The right strategy will not only protect your business but also preserve the integrity of your platform. Learn more

In this article...Understanding the scope of fintech fraudThe importance of fintech fraud preventionSynthetic identity (ID) fraud: A growing threatHow fintech fraud detection and prevention are evolvingGet started today The integration of technology with traditional financial services has unlocked unprecedented convenience and opportunities for consumers and businesses alike. However, this digital shift has opened the door for more sophisticated fraud tactics. With fraudsters continuously refining their methods, fintech companies must invest in advanced fintech fraud detection and prevention solutions. Understanding the scope of fintech fraud As fintech platforms expand, they also attract the attention of cybercriminals. The accessibility of digital financial services can create vulnerabilities that fraudsters exploit, executing everything from personal account takeovers to larger-scale breaches involving synthetic identities.  Source: Experian’s 2024 U.S. Identity & Fraud Report To counter these threats, fintech companies must deploy innovative fraud management solutions powered by artificial intelligence (AI), machine learning (ML), and advanced analytics. Unlike traditional methods that often rely on static rules and manual reviews, these solutions can process vast amounts of data, learn from historical patterns, and detect anomalies in real-time. This allows organizations to identify suspicious activities before they lead to significant losses. The importance of fintech fraud prevention While detecting fraud is crucial, preventing it from occurring in the first place is even more important. Fraud prevention solutions aim to create robust systems that stop fraudsters in their tracks before they can cause damage. With the rise of digital financial services, the need for proactive fraud prevention measures has never been greater. These solutions protect both consumers and businesses from financial harm, reducing the risk of financial loss and reputational damage. Advanced fraud prevention solutions employ multi-layered strategies, combining AI-driven fraud detection tools with methods such as multifactor authentication and biometric identity verification. These tools create an extra layer of security, making it difficult for fraudsters to access sensitive data or execute fraudulent transactions. Experian’s fraud prevention solutions offer businesses a comprehensive suite of tools designed to prevent various types of fraud. From real-time transaction monitoring to sophisticated user authentication methods, these solutions provide the protection businesses need to stay ahead of evolving fraud tactics. Synthetic identity (ID) fraud: A growing threat One of the most concerning forms of fraud that fintech companies face is synthetic ID fraud. This type of fraud involves the creation of a fake identity using a combination of real and fabricated information. Fraudsters often steal pieces of personal data—such as Social Security numbers or addresses—and then combine them with fictional information to create a new, synthetic identity. These synthetic identities can be used to open bank accounts, apply for credit cards, or take out loans, leaving businesses and consumers vulnerable to significant financial losses. Synthetic ID fraud is particularly difficult to detect because the synthetic identity often looks legitimate to traditional verification systems. As a result, fintech companies must deploy sophisticated fraud detection systems that can identify synthetic identities before they’re used to commit fraud. Machine learning algorithms, for instance, can analyze behavioral data, detecting discrepancies that may indicate a synthetic identity. Experian is ranked #1 by the Center for Financial Professionals (CeFPro®) for Identity and Fraud. The ranking appeared in CeFPro’s Fintech Leaders Report, a comprehensive annual study of the fintech industry. How fintech fraud detection and prevention are evolving As fraudsters continue to evolve their tactics, fintech companies must remain one step ahead by investing in cutting-edge fraud detection and prevention technologies. Real-time monitoring, predictive analytics, and biometrics are just a few of the technologies shaping the future of fraud detection. By integrating these technologies into their fraud management processes, fintech companies can offer a more secure and seamless experience for their users. With the acquisition of NeuroID, an industry leader in behavioral analytics, Experian has amplified its fraud risk suite by providing a new layer of insight into digital behavioral signals and analytics. Available through our fraud solutions on the Experian Ascend Technology PlatformTM, clients can proactively monitor and analyze a user’s real-time digital behavior, allowing them to confidently navigate the online landscape and provide frictionless customer experiences. Get started today As the fraud landscape continues to evolve, fintech companies must adopt comprehensive solutions to stay ahead of emerging threats. By doing so, they can protect themselves and their customers, ensuring the continued success of digital financial services in the years to come. To learn more, check out our fraud management and fintech solutions. Fraud management solutions Fintech solutions This article includes content created by an AI language model and is intended to provide general information. In this article...

Online fraud has increased exponentially over the past few years, with the Federal Trade Commission (FTC) data showing that consumers reported losing more than $10 billion to fraud in 2023. This marks the first time that fraud losses have reached that benchmark, and it’s a 14% increase over reported losses in 2022. As a result, e-commerce merchants and retailers have reacted by adding friction to e-commerce interactions.   The risk is that a legitimate user may be denied a purchase because they have incorrectly been labeled a fraudster — a “false decline.” Now, as the holiday shopping season approaches, e-commerce merchants expect a surge in online spending and transactions, which in turn creates concern for an uptick in false declines.   In a recent webinar, Experian experts Senior Vice President of Business Development and eCommerce Dave Tiezzi and Senior Director of Product Management Jose Pallares explored strategies for how e-commerce merchants can determine the risk level of a transaction and ensure that they do not miss out on genuine purchases and good customers. Below are a few key perspectives from our speakers:  What are the biggest challenges posed by online card transactions?  DT: One of the biggest issues merchants face is false declines. In the report, The E-Commerce Fraud Enigma: The Quest to Maximize Revenue While Minimizing Fraud Experian and Aite-Novarica Group (now Datos Insights) found that 1.16% of all sales are unnecessarily rejected by merchants. While this percentage may seem small, it represents significant revenue loss during the high-volume holiday shopping season. The report also highlights that 16% of all attempted online transactions encounter some form of friction due to suspected fraud. Alarmingly, 70% of that friction is unnecessary, meaning it’s not preventing fraud but instead disrupting the purchasing process for legitimate customers. This friction translates into a poor online shopping experience, often resulting in cart abandonment, lost sales and a decline in customer loyalty.  What are the key consumer trends and expectations for the upcoming holiday season?  DT: Experian's 2024 Holiday Spending Trends and Insights Report reveals that while 35% of holiday shopping in 2023 occurred in December, peaking at 9% the week before Christmas, Cyber Week in November also represented 8% of total holiday sales. This highlights the importance for merchants to be prepared well before the holiday rush begins in November and extends through December. As they gear up for this high-volume season, merchants must also prioritize meeting consumer expectations for speed, ease and security—which are top-of-mind for consumers. According to our 2024 U.S. Identity & Fraud Report, 63% of consumers consider it extremely or very important for businesses to recognize them online, while 81% say they’re more trusting of businesses that can accomplish easy and accurate identification. They’re also wary of fraud, ranking identity theft (84%) and stolen credit card information (80%) as their top online security concerns. Considering these trends, it’s important for merchants to ensure seamless and secure transactions this holiday season.   False declines are a persistent problem for e-commerce merchants, especially during the holidays. How can merchants minimize these declines while protecting consumers from fraud? What best practices can merchants adopt to address these risks?  JP: False declines often result from overly cautious fraud detection systems that flag legitimate transactions as suspicious. While it’s essential to prevent fraud, turning away legitimate customers can severely impact both revenue and customer satisfaction. To minimize false declines, merchants should leverage advanced fraud prevention tools that combine multiple data points and behavioral insights. This approach goes beyond basic fraud detection by using attributes such as customer behavior, transaction patterns and real-time data analysis. Solutions incorporating NeuroID’s behavioral analytics and signals can also better assess whether a transaction is genuine based on the user’s interaction patterns, helping merchants filter out bad actors and make more informed decisions without disrupting the customer experience. What actionable strategies should e-commerce brands or merchants implement now to reduce cart abandonment and ensure a successful holiday season?  JP: One of the most effective tools we offer is Experian Link™, a credit card owner verification solution designed to reduce false declines while protecting against fraud. Experian Link helps e-commerce merchants and additional retailers accurately assess transaction risk by answering a key question: Does this consumer own the credit card they presented for payment? This ensures that legitimate customers aren’t mistakenly turned away while suspicious transactions are properly flagged for further review. By adopting a multilayered identity and fraud prevention strategy, merchants can significantly reduce false declines, offer a frictionless checkout experience and maintain robust fraud defenses—all of which are essential for a successful holiday shopping season.   Are there any examples of a retailer successfully leveraging credit card owner verification solutions? What were the results?  JP: Yes. We recently partnered with a leading U.S. retailer with a significant online presence. Their primary goals were to reduce customer friction, increase conversion and identify their customers accurately. By leveraging Experian Link and its positive signals, the retailer could refine, test and optimize their auto-approval strategies. As a result, the retailer saw an additional $8 million in monthly revenue from transactions that would have otherwise been declined. They also achieved a 10% increase in auto-approvals, reducing operating expenses and customer friction. By streamlining backend processes, they delivered a more seamless shopping experience for their customers.   Stay ahead this holiday season  For more expert insights on boosting conversions and enhancing customer loyalty, watch our on-demand webinar, Friction-Free Festivities: Strategies to Maximize Conversion and Reduce False Declines, hosted by the Merchant Risk Council (MRC). Additionally, visit us online to learn more about how Experian Link can transform your business strategy. Watch on-demand webinar Visit us The webinar is available to MRC members. If you’re already a member, you can access this resource here. Not a member? Our team would be happy to schedule a demo on Experian Link and discuss strategies to help your business grow. Get in touch today. 

In today’s digital age, call center fraud is a growing threat that businesses can no longer afford to ignore. As fraudsters become increasingly sophisticated, it’s crucial for companies to implement robust security measures to protect both their operations and their consumers. Various forms of call center fraud can have a significant impact on businesses. To prevent this, companies can use effective strategies including multifactor authentication solutions and account takeover prevention techniques. But first, what is call center fraud? Understanding call center fraud Call center fraud occurs when fraudsters exploit vulnerabilities in customer service operations to gain unauthorized access to sensitive information and commit identity theft. This type of fraud can take many forms, including social engineering, which occurs when a fraudster manipulates a call center agent into providing information or access, and phishing, which occurs when fraudsters use deceptive tactics to obtain confidential details from unsuspecting individuals. One of the most concerning tactics used by fraudsters is impersonation, or pretending to be legitimate consumers to gain access to accounts. Once they have access, they can make unauthorized transactions, change account details, or even take over the account entirely—a scenario known as an account takeover. The impact of these fraudulent activities can be devastating, leading to significant financial losses, damage to brand reputation, and a loss of consumer trust. Key strategies for preventing call center fraud According to recent research, account takeover fraud has increased by 330% in the past two years, projecting to cost $6.24 billion globally.[1] In addition, the number of U.S. consumers who have experienced account takeover has increased from 22% in 2021 to 29% in 2023.[2] To effectively combat call center fraud, businesses must adopt a multi-layered approach that includes advanced technological solutions, comprehensive employee training, and real-time monitoring. Here are some of the most effective strategies: 1. Implementing multifactor authentication (MFA) solutions One of the most effective ways to secure consumer interactions is by implementing multifactor authentication (MFA) solutions. MFA requires users to provide two or more verification factors to gain access to an account or complete a transaction. This adds an extra layer of security, making it significantly more difficult for fraudsters to succeed even if they have obtained some of the consumer’s information. MFA can be integrated into call center operations in several ways. For example, businesses can use voice recognition as a biometric factor, requiring consumers to verify their identity through a unique voiceprint. Other methods include sending a one-time code via text message, which the consumer must provide during the call, or using mobile app verification, where consumers approve transactions directly through their smartphones. 2. Account takeover prevention Account takeover is one of the most serious threats to call centers, as they involve fraudsters gaining control of a consumer’s account, often with disastrous consequences. To prevent account takeover, businesses can employ a combination of technological solutions and best practices. First, understanding what account takeover entails is crucial. It typically begins when a fraudster obtains some of the consumer’s personal information—often through phishing, social engineering, or a data breach. They then use this information to impersonate the consumer and convince call center agents to provide them with access to the account. To combat this, businesses can employ several account takeover prevention techniques. Anomaly detection systems can flag unusual activities, such as login attempts from unfamiliar locations or devices, prompting additional verification steps. Behavioral biometrics is another powerful tool, analyzing patterns in how users interact with their devices to detect inconsistencies that may indicate fraud. Continuous authentication, where the system continuously verifies the user’s identity throughout the session, is also effective in catching fraudsters in the act. 3. Training and awareness Technology alone may not be enough to entirely prevent call center fraud—human factors are equally important. Regular training for call center staff is essential to ensure team members can recognize and respond to potential fraud attempts. Employees should be trained to identify common tactics used by fraudsters, such as social engineering, and to follow strict verification procedures before providing any sensitive information. Awareness campaigns can also play a significant role in preventing fraud. Internally, companies should run regular campaigns to remind employees of the importance of adhering to security protocols. Externally, educating consumers about the risks of fraud and encouraging them to use security features like MFA can help reduce the likelihood of successful attacks. 4. Real-time monitoring and analytics Real-time monitoring is a critical component of an effective fraud prevention strategy. By continuously monitoring calls and transactions, businesses can quickly identify and respond to suspicious activities before they escalate. Advanced analytics tools, including voice analytics and behavior analysis, can provide valuable insights into potential fraud, allowing companies to take proactive measures. Voice analytics, for instance, can detect stress or hesitation in a caller’s voice, which may indicate that they are not who they claim to be. Behavior analysis can track how consumers typically interact with their accounts, flagging deviations from the norm as potential fraud. Continuous improvement is key here—regularly reviewing and updating monitoring protocols ensures that businesses stay ahead of evolving threats. Preventing call center fraud in your business By using a multi-layered fraud approach through a variety of authentication solutions, your business can quickly detect call center fraud without disrupting your consumers’ experience. Identify the risk Identity-based risk detection can pinpoint when a specific identity may be in the hands of fraudsters. Device intelligence solutions can recognize the risk associated with a specific device used to attempt online access. Address the risk Knowledge-based authentication (KBA) can quickly authenticate users by asking questions only they can answer, which can deter fraudsters. MFA services can generate and deliver a one-time password to a consumer’s mobile device to verify their identity in real time. Document verification allows your business to collect and verify images of identity documents uploaded from a consumer’s mobile device. Protect your business and your consumers from call center fraud Call center fraud is a significant threat that requires a proactive and comprehensive approach to prevention. By implementing strategies such as multifactor authentication solutions, account takeover prevention techniques, and robust employee training, businesses can significantly reduce their risk of falling victim to fraud. In today’s fast-paced digital world, staying vigilant and proactive is the key to safeguarding your call center against fraud. Act now to protect your business and maintain the trust of your consumers. Enable your call center to detect risk quickly and effectively with our robust fraud prevention solutions. Get started Download our identity and fraud report This article includes content created by an AI language model and is intended to provide general information. [1] Worldmetrics.org, Account Takeover Statistics: Losses to Reach $6.24 Billion Globally, 2024. [2] Security.org, Account Takeover Incidents are Rising: How to Protect Yourself in 2024.

Fraud-as-a-Service (FaaS) represents an emerging and increasingly sophisticated business model within cybercrime. In this model, malicious actors commercialize their expertise, tools, and infrastructure, enabling others to perpetrate fraud more easily and efficiently. These FaaS offerings are often accessible via dark web marketplaces or underground forums, streamlining and automating fraud processes, such as large-scale phishing campaigns. This enables the creation of convincing counterfeit websites and the distribution of bulk emails, allowing cybercriminals to harvest credentials and personal information en masse.   Organized cybercrime syndicates leverage account creation bots to establish hundreds of fraudulent accounts across various platforms, bypassing standard security protocols and scaling their illicit activities seamlessly. A fraudster no longer requires deep technical skills or detailed knowledge of complex verification techniques, such as liveness detection. Instead, they can acquire turnkey FaaS solutions that, for instance, inject pre-recorded video footage to spoof verification processes, enabling the rapid creation of thousands of fraudulent accounts.  The commoditization of fraud has effectively democratized it, lowering the barriers to entry. Previously accessible to a select few, FaaS has developed sophisticated techniques and is now available to a broader and less technically adept audience. Now, even individuals with basic computer skills can access these services and initiate fraudulent schemes with minimal effort.   Key tools in the FaaS arsenal  Central to the success of fraud-as-a-service is the ability to create fraudulent accounts while evading detection. This process can be alarmingly straightforward, even for companies adhering to industry-recognized best practices. Widely available programs, such as app cloners, enable fraudsters to generate multiple instances of the same application on a single device, modifying its source code to bypass security measures to detect such activities. The generalization of artifical intelligence (AI) and increased access to technology have provided cybercriminals with new tools to launch sophisticated scams, such as Pig Butchering and Authorized Push Payment (APP) scams.   Similarly, image injection tools facilitate the insertion of manipulated images to deceive verification systems, while emulators simulate legitimate device activity at scale, making detection more challenging. Techniques such as location spoofing allow fraudsters to alter the perceived geographical location of a device, thereby evading location-based security checks and allowing their scams to remain undetected.  Once fraudulent accounts are established, cybercriminals focus on monetizing their efforts. Industries like food delivery and ride-hailing are particularly vulnerable to promotional abuse. Fraudsters exploit promotional offers intended for new customers by using cloned apps, injected images, and emulators to create multiple fake accounts, redeem discounts, and resell them for profit. AI-driven automation and advanced communication technologies lower the barriers for these scams, enabling criminals to operate at a larger scale and with greater efficiency. This has made scams more pervasive and difficult for individuals and institutions to detect.  In the ride-hailing industry, these tactics are used to manipulate fare structures and incentives. Fraudsters operate multiple driver or rider accounts on the same device to earn referral bonuses and other promotional rewards. Emulators can simulate rides with fabricated start and end points, while location spoofing tools manipulate GPS data, inflating fares, and earnings. Such fraudulent activities result in significant financial losses for companies and degrade service quality for legitimate users, as resources are diverted from genuine transactions and logistical algorithms are disrupted.  The implications of FaaS for businesses  The commercialization of fraud poses a substantial threat to businesses, not only by democratizing fraud but also by enabling it to rapidly scale. . Fraudsters can experiment with multiple schemes simultaneously, sharing feedback and accelerating their learning curve. A single tool developed by one individual can be deployed by numerous bad actors to perpetrate fraud on a large scale, with remarkable speed. This ease of execution allows fraudsters to overwhelm companies with a barrage of attacks, maximizing their financial gains while exacerbating the challenges of fraud prevention for targeted organizations.  Developing a FaaS-Resilient fraud prevention strategy  To effectively combat fraud-as-a-service, businesses must adopt AI fraud strategies that mirror the operational sophistication of fraudsters. These cybercriminals treat their activities as profitable enterprises, continually optimizing their return on investment through scalable and adaptable tactics. By deeply understanding the methodologies employed by fraudsters, companies can develop more effective fraud prevention measures that disrupt fraudulent operations without inconveniencing legitimate users.  Proactive fraud prevention strategies are essential in countering FaaS tactics. Effective measures rely on robust data collection and analysis. Regular reviews of key performance indicators (KPIs) and velocity checks, which monitor the rate at which users complete transactions, can help identify irregular behaviors.  Passive signals, such as device fingerprinting and location intelligence, are also invaluable in detecting suspicious activities. By scrutinizing data related to app tampering or device emulation, businesses can more accurately determine whether a genuine user is accessing their platform or if a fraudster is attempting to bypass detection.  Given the dynamic nature of FaaS, adaptation is crucial. Fraud prevention strategies must evolve continually to keep pace with emerging threats. Advanced technologies offer nuanced insights into user behavior, enabling businesses to identify and thwart fraud attempts with greater precision. Moreover, cutting-edge risk monitoring tools can help avoid false positives, ensuring that legitimate users are not unduly impacted.  As fraudsters persist in innovating and refining their tactics, organizations must remain vigilant, stay informed about emerging trends, invest in advanced fraud prevention and detection technologies, and cultivate a culture of security and awareness. While it may be tempting to underestimate fraudsters due to the illicit nature of their activities, it is important to recognize that many approach their work with a level of professionalism comparable to legitimate businesses. Understanding this reality offers valuable insights into how companies can effectively counteract fraud and protect their monetary interests.  Learn more This article includes content created by an AI language model and is intended to provide general information.

Replay attacks may threaten your customers’ online security Today, consumer online security is more important than ever. This year, the FTC has already received nearly six million reports of fraud, and 1.4 million of those cases were specifically identity theft.[1] In addition, a recent study reported that losses due to identity fraud amounted to almost $23 billion in 2023.[2] And consumers aren’t the only ones at risk. According to CyberArk’s global research report, 93% of organizations had two or more identity-related breaches in the past year.[3] This means it’s not only up to consumers to protect themselves against identity theft. It’s also up to businesses to protect themselves and their customers from the threat of fraud. As security technology advances, so do the tactics of hackers attempting to steal information such as usernames, account numbers, and passwords from innocent online users. One method that hackers use to obtain this information is called a replay attack, which can pose a serious threat to your customers’ online security. What is a replay attack? A replay attack is a network-based security hack in which a hacker intercepts legitimate data transmission and then fraudulently repeats it to gain access to a network or system. These attacks are designed to fool the victim into believing the hacker is a genuine user, and they happen in three steps: Eavesdropping: The hacker listens in on secure network communications, such as information sent through a Virtual Private Network (VPN), to learn about the activity happening on that network. Interception: The hacker intercepts legitimate user information – usernames, user activity, computer specs, passwords, etc. Replay: The hacker illegally resends (or “replays”) the valid information they gathered to trick the receiver into thinking that they are a genuine user. Here’s an example: John transfers funds from one online banking account to another. A hacker illegally captures that transaction message (which is often accompanied by a digital signature or token) and “replays” that same transaction message multiple times to trigger additional fund transfers, all without the genuine user’s knowledge or permission. The bank doesn’t recognize a problem because the “replayed” transaction messages includes the legitimate digital signature/token, so the bank approves the additional transfers. Replay attacks aren’t just used for banking transactions. They can be used for various activities, such as: Internet of Things (IoT) device attacks: IoT devices include a multitude of “smart home” devices such as smart plugs, cameras, locks, appliances, speakers, lights, and more. Vulnerabilities in these devices can allow hackers to replicate commands to these devices that seem legitimate, such as turning on cameras, unlocking doors, and disabling security systems.[4] Remote keyless entry systems for vehicles: Most vehicles use a remote key fob to lock and unlock the doors. This key fob usually uses radio waves to send the lock/unlock signal to the car. Hackers can use a device to receive and transmit radio waves near a person’s vehicle that mimic that same lock/unlock signal, and then “replay” that signal to unlock the person’s car themselves.[5] Text-dependent speaker verification: Some people use voice recognition to verify their identity when accessing an account or system. Hackers can record a person’s voice when the person speaks to verify their identity, and then “replay” that voice recording to fraudulently access the account.[6] How to prevent replay attacks Replay attacks are dangerous because they are often unnoticed or overlooked until the damage has already been done. Fortunately, there are ways to stop hackers from using replay attacks to access your customers’ personal information. Device intelligence: By leveraging unique intelligence about the device being used, replay attacks can be thwarted even when fraudsters are using authentic, but stolen, information. Time stamping: By forcing a timestamp on all sent and received messages, you can prevent hackers from sending repeated messages with legitimate information obtained illegally. Geolocation review: By identifying suspicious language and/or time zones, you can compare access routes to confirm customers are authentic and secure. Why it matters for your business Consumers in the U.S. value network security more than ever, with 70% rating security a top priority, even over personalization and convenience.[7] People want to feel safe online, and if they experience a threat of identity theft or fraud, they’ll need to find a reliable resource to keep their personal information secure. Successful replay attacks allow fraudsters to impersonate real users and potentially gain partial or full access to their personal online accounts. If your customers fall victim to these kinds of attacks, the resulting stress may have a negative impact on your relationship with them. With our fraud management solutions, your business can strengthen your customers’ trust and security by leveraging highly trained fraud analysts to help uncover suspicious activity that might not be noticed otherwise. Lower fraud losses and achieve fraud capture rates that exceed industry averages. Protect your customers by using a covert, frictionless solution the reduces false positives. Improve operational efficiency by prioritizing resources across the board. Protect your consumers with powerful fraud management solutions 63% of consumers say it’s important for businesses to be able to recognize them online, and 81% say they are more trusting of businesses that can accomplish easy and accurate identification.[8] While replay attacks can cause consumers stress and anxiety, taking action to prevent them can fortify a strong, trusting relationship between your business and your customers. Protect your customers and prevent replay attacks with our powerful fraud management solutions. Get started [1] IdentityTheft.org, 2024 Identity Theft Facts and Statistics. [2] Javelin, 2024 Identity Fraud Study: Resolving the Shattered Identity Crisis. [3] CyberArk, Report: 93% of Organizations Had Two or More Identity-Related Breaches in the Past Year, May 2024. [4] Hackster.io, IoT Devices May Be Susceptible to Replay Attacks with a Raspberry Pi and RTL-SDR Dongle, 2017. [5] Automotive World, How to mitigate vulnerabilities in keyless entry systems, 2023. [6] Antispoofing, Audio Replay Attacks and Countermeasures Against Them, 2022. [7] 2018 Experian® Global Fraud Report [8] Experian® 2024 Identity and Fraud Report Highlights Evolving Fraud Landscape This article includes content created by an AI language model and is intended to provide general information.

Experian’s ninth annual report on identity and fraud highlights persistent worries among consumers and businesses about fraud, including growing threats from GenAI. In this report, we explore how the evolving fraud landscape is impacting identity verification, customer experience, and business priorities for the future. Our 2024 U.S. Identity and Fraud Report draws insights from surveys of over 2,000 U.S. consumers and 200 businesses. This year’s report dives into: Evolving consumer sentiment over security and experience Businesses’ investments to tackle growing fraud challenges Effective technology solutions to accurately identify and authenticate consumers The impact of GenAI on the fraud landscape   To keep pace with the evolving landscape, businesses will need to apply a multi-faceted strategy that leverages multiple types of recognition and security to stop all types of fraud while allowing real customers through. To learn more about our findings and perspective, read the full 2024 U.S. Identity and Fraud Report, watch our on-demand webinar, or read the press release. Download Now Watch Webinar Read Press Release

Gen Z, or "Zoomers," born from 1997 to 2012, are molded by modern transformations. They have witnessed events from post-9/11 impacts to the rise of the internet and the COVID-19 crisis. As early adopters of technology, their lives are intertwined with smartphones, online shopping, social platforms, cloud services, emerging fintech, and artificial intelligence. They are called “digital natives” as they are the first generation to grow up with internet as part of their daily life. Research generally indicates that this post-millennial generation values practicality, favoring financial stability over entrepreneurial pursuits. They appreciate communication tailored to them and often employ social media to cultivate their personal brands. As a generation growing up immersed in technology, they tend to choose digital interactions, seeking to forge robust, secure, genuine, and unconstrained digital experiences. The challenge of identity verification Identity verification presents a considerable challenge for Generation Z. According to a Fortune survey, close to 50% of this demographic regrets not opening financial accounts earlier, citing a lack of readiness to join the financial ecosystem by the age of 18. Consequently, this has given rise to "digital ghosts"—people with minimal or nonexistent financial histories who face challenges when trying to utilize financial services. The 2009 Credit Card Accountability Responsibility and Disclosure Act mandates that individuals under 21 need a cosigner or show income proof to get a credit card, hindering their early financial involvement. Moreover, conventional identity checks are becoming less reliable due to the surge in identity theft. Innovative solutions for verifying Gen Z Verifying identities and preventing fraud among Gen Z presents unique challenges due to their digital-native status and limited credit histories. Here are some effective strategies and approaches that financial institutions can adopt to address these challenges: Leveraging alternative data sources Academic records leverage information from higher learning institutions such as universities, colleges, and vocational schools. This data can be vital for authenticating the identities of younger individuals who may lack a substantial credit history. Employment verification retrieve data confirming the identity and employment status, especially focusing on Gen Z who are new to the job market. Utility and telecom records leverage payment histories for utilities, phone bills, and other recurring services, which can provide additional layers of identity verification. Alternative financial data includes online small dollar lenders, online installment lenders, single payment, line of credit, storefront small dollar lenders, auto title and rent-to-own. Phone-Centric ID Phone-Centric Identity refers to technology that leverages and analyzes mobile, telecom, and other signals for the purposes of identity verification, identity authentication, and fraud prevention. Phone-Centric Identity relies on billions of signals from authoritative sources pulled in real time, making it a powerful proxy for digital identity and trust. Advance authentication technologies Behavioral biometrics analyze user behaviors such as typing patterns, navigation habits, and device usage. These subtle behaviors can help create a unique profile for each user, making it difficult for fraudsters to impersonate them. Adaptive risk-based authentication that adjusts the level of security based on the user's behavior, location, device, and other factors. For example, a higher level of verification might be required for transactions that are deemed unusual or high-risk. Real-time fraud detection AI and machine learning: Deploy AI and machine learning algorithms to analyze transaction patterns and detect anomalies in real-time. These technologies can identify suspicious activities and flag potential fraud. Fraud analytics: Use predictive analytics to assess the likelihood of fraud based on historical data and current behavior. This approach helps in proactively identifying and mitigating fraudulent activities. Secure digital onboarding Digital identity verification: Implement digital onboarding processes that include online identity verification with real-time document verification. Users can upload government-issued IDs and take selfies to confirm their identity. Video KYC (Know Your Customer): Use video calls to conduct KYC processes, allowing bank representatives to verify identities and documents remotely via automated identity verification. This method is secure and convenient for tech-savvy Gen Z customers. Make identity verification easy To authenticate identities and combat fraud within the Gen Z population, financial organizations need to implement a comprehensive strategy utilizing innovative technologies, non-traditional data, and strong protective protocols. Such actions will enable the creation of a trustworthy and frictionless banking environment that appeals to a generation adept in digital interactions, thereby establishing trust and encouraging enduring connections. To learn more about Experian’s automated identity verification solutions, visit our website. Learn more 

In this article...Rise of AI in fraudulent activitiesFighting AI with AI Addressing fraud threatsBenefits of leveraging AI fraud detectionFinancial services use caseExperian's AI fraud detection solutions In a world where technology evolves at lightning speed, fraudsters are becoming more sophisticated in their methods, leveraging advancements in artificial intelligence (AI). According to our 2024 U.S. Identity and Fraud Report, 70% of businesses expect AI fraud to be their second-greatest challenge over the next two to three years. To combat emerging fraud threats, organizations are turning to AI fraud detection to stay ahead and protect their businesses and their customers, essentially fighting AI with AI. This blog post explores the evolving AI fraud and AI fraud detection landscape. The rise of AI in fraudulent activities Technology is a double-edged sword. While it brings numerous advancements, it also provides fraudsters with new tools to exploit. AI is no exception. Here are some ways fraudsters are utilizing AI: Automated attacks: Fraudsters employ AI to design automated scripts that launch large-scale attacks on systems. These scripts can perform credential stuffing, where stolen usernames and passwords are automatically tested across multiple sites to gain unauthorized access. Deepfakes and synthetic identities: Deepfake technology and the creation of synthetic identities are becoming more prevalent, as we predicted in our 2024 Future of Fraud Forecast. Fraudsters use AI to manipulate videos and audio, making it possible to impersonate individuals convincingly. Similarly, synthetic identities blend real and fake information to create false personas. Phishing and social engineering: AI-driven phishing attacks are more personalized and convincing than traditional methods. By analyzing social media profiles and other online data, fraudsters craft tailored messages that trick individuals into revealing sensitive information. Watch now: Our 2024 Future of Fraud Forecast: Gen AI and Emerging Trends webinar explores five of our fraud predictions for the year. Fighting AI with AI in fraud detection To combat these sophisticated threats, businesses must adopt equally advanced measures. AI fraud detection offers a robust solution: Machine learning algorithms: Fraud detection machine learning algorithms analyze vast datasets to identify patterns and anomalies that indicate fraudulent behavior. These algorithms can continuously learn and adapt, improving their accuracy over time. Real-time monitoring: AI systems provide real-time monitoring of transactions and activities. This allows businesses to detect and respond to fraud attempts instantly, minimizing potential damage. Predictive analytics: Predictive analytics uses historical data to forecast future fraud trends. By anticipating potential threats, organizations can take proactive measures to safeguard their assets. Addressing fraud threats with AI fraud detection AI's versatility allows it to tackle various types of fraud effectively: Identity theft: 84% of consumers rank identity theft as their top online concern.* AI systems can help safeguard consumers by cross-referencing multiple data points to verify identities. They can spot inconsistencies that indicate identity theft, such as mismatched addresses or unusual login locations. Payment fraud: Coming in second to identity theft, 80% of consumers rank stolen credit card information as their top online concern.* Payment fraud includes unauthorized credit card transactions and chargebacks. AI can be used in payment fraud detection to surface unusual spending patterns and flag suspicious transactions for further investigation. Account takeover: Account takeover fraud, the topmost encountered fraud event reported by U.S. businesses in 2023, occurs when fraudsters gain access to user accounts and conduct unauthorized activities.* AI identifies unusual login behaviors and implements additional security measures to prevent account breaches. Synthetic identity fraud: Synthetic identity fraud involves the creation of fake identities using real and fabricated information. Notably, retail banks cite synthetic identity fraud as the operational challenge putting the most stress on their business.* AI fraud solutions detect these false identities by analyzing data inconsistencies and behavioral patterns. Benefits of leveraging AI fraud detection Implementing AI fraud detection offers numerous advantages: Enhanced accuracy: AI systems are highly accurate in identifying fraudulent activities. Their ability to analyze large datasets and detect subtle anomalies surpasses traditional methods. Cost savings: By preventing fraud losses, AI systems save businesses significant amounts of money. They also reduce the need for manual investigations, freeing up resources for other tasks. Improved customer experience: AI fraud detection minimizes false positives, ensuring genuine customers face minimal friction. This enhances the overall customer experience and builds trust in the organization. Scalability: AI systems can handle large volumes of data, making them suitable for organizations of all sizes. Whether you're a small business or a large enterprise, AI can scale to meet your needs. Financial services use case The financial sector is particularly vulnerable to fraud, making AI an invaluable tool for fraud detection in banking. Protecting transactions: Banks use AI to monitor transactions for signs of fraud. Machine learning algorithms analyze transaction data in real time, flagging suspicious activities for further review. Enhancing security: AI enhances security by implementing multifactor authentication and behavioral analytics. These measures make it more challenging for fraudsters to gain unauthorized access. Reducing fraud losses: By detecting and preventing fraudulent activities, AI helps banks reduce their fraud losses throughout the customer lifecycle. This not only saves money but also protects the institution's reputation. Experian's AI fraud detection solutions AI fraud detection is revolutionizing the way organizations combat fraud. Its ability to analyze vast amounts of data, detect anomalies, and adapt to new threats makes it an essential element of any comprehensive fraud strategy. Experian’s range of AI fraud detection solutions help organizations enhance their security measures, reduce fraud losses, authenticate identity with confidence, and improve the overall customer experience. If you're interested in learning more about how AI can protect your business, explore our fraud management solutions or contact us today. Learn More *Source: Experian. 2024 U.S. Identity and Fraud Report. This article includes content created by an AI language model and is intended to provide general information. 

In this article...What is credit card fraud?Types of credit card fraudWhat is credit card fraud prevention and detection?How Experian® can help with card fraud prevention and detection With debit and credit card transactions becoming more prevalent than cash payments in today’s digital-first world, card fraud has become a significant concern for organizations. Widespread usage has created ample opportunities for cybercriminals to engage in credit card fraud. As a result, millions of Americans fall victim to credit card fraud annually, with 52 million cases reported last year alone.1 Preventing and detecting credit card fraud can save organizations from costly losses and protect their customers and reputations. This article provides an overview of credit card fraud detection, focusing on the current trends, types of fraud, and detection and prevention solutions. What is credit card fraud? Credit card fraud involves the unauthorized use of a credit card to obtain goods, services or funds. It's a crime that affects individuals and businesses alike, leading to financial losses and compromised personal information. Understanding the various forms of credit card fraud is essential for developing effective prevention strategies. Types of credit card fraud Understanding the different types of credit card fraud can help in developing targeted prevention strategies. Common types of credit card fraud include: Card not present fraud occurs when the physical card is not present during the transaction, commonly seen in online or over-the-phone purchases. In 2023, card not present fraud was estimated to account for $9.49 billion in losses.2 Account takeover fraud involves fraudsters gaining access to a victim's account to make unauthorized transactions. In 2023, account takeover attacks increased 354% year-over-year, resulting in almost $13 billion in losses.3,4 Card skimming, which is estimated to cost consumers and financial institutions over $1 billion per year, occurs when fraudsters use devices to capture card information from ATMs or point-of-sale terminals.5 Phishing scams trick victims into providing their card information through fake emails, texts or websites. What is credit card fraud prevention and detection? To combat the rise in credit card fraud effectively, organizations must implement credit card fraud prevention strategies that involve a combination of solutions and technologies designed to identify and stop fraudulent activities. Effective fraud prevention solutions can help businesses minimize losses and protect their customers' information. Common credit card fraud prevention and detection methods include: Fraud monitoring systems: Banks and financial institutions employ sophisticated algorithms and artificial intelligence to monitor transactions in real time. These systems analyze spending patterns, locations, transaction amounts, and other variables to detect suspicious activity. EMV chip technology: EMV (Europay, Mastercard, and Visa) chip cards contain embedded microchips that generate unique transaction codes for each purchase. This makes it more difficult for fraudsters to create counterfeit cards. Tokenization: Tokenization replaces sensitive card information with a unique identifier or token. This token can be used for transactions without exposing actual card details, reducing the risk of fraud if data is intercepted. Multifactor authentication (MFA): Adding an extra layer of security beyond the card number and PIN, MFA requires additional verification such as a one-time code sent to a mobile device, knowledge-based authentication or biometric/document confirmation. Transaction alerts: Many banks offer alerts via SMS or email for every credit card transaction. This allows cardholders to spot unauthorized transactions quickly and report them to their bank. Card verification value (CVV): CVV codes, typically three-digit numbers printed on the back of cards (four digits for American Express), are used to verify that the person making an online or telephone purchase physically possesses the card. Machine learning and AI: Advanced algorithms can analyze large datasets to detect unusual patterns that may indicate fraud, such as sudden large transactions or purchases made in different geographic locations within a short time frame. Advanced algorithms can analyze large datasets to detect unusual patterns that may indicate fraud, such as sudden large transactions or purchases made in different geographic locations within a short time frame. Behavioral analytics: Monitoring user behavior to detect anomalies that may indicate fraud. Education and awareness: Educating consumers about phishing scams, identity theft, and safe online shopping practices can help reduce the likelihood of falling victim to credit card fraud. Fraud investigation units: Financial institutions have teams dedicated to investigating suspicious transactions reported by customers. These units work to confirm fraud, mitigate losses, and prevent future incidents. How Experian® can help with card fraud prevention and detection Credit card fraud detection is essential for protecting businesses and customers. By implementing advanced detection technologies, businesses can create a robust defense against fraudsters. Experian® offers advanced fraud management solutions that leverage identity protection, machine learning, and advanced analytics. Partnering with Experian can provide your business with: Comprehensive fraud management solutions: Experian’s fraud management solutions provide a robust suite of tools to prevent, detect and manage fraud risk and identity verification effectively.  Account takeover prevention: Experian uses sophisticated analytics and enhanced decision-making capabilities to help businesses drive successful transactions by monitoring identity and flagging unusual activities. Identifying card not present fraud: Experian offers tools specifically designed to detect and prevent card not present fraud, ensuring secure online transactions.  Take your fraud prevention strategies to the next level with Experian's comprehensive solutions. Explore more about how Experian can help. Learn More Sources 1 https://www.security.org/digital-safety/credit-card-fraud-report/ 2 https://www.emarketer.com/chart/258923/us-total-card-not-present-cnp-fraud-loss-2019-2024-billions-change-of-total-card-payment-fraud-loss 3 https://pages.sift.com/rs/526-PCC-974/images/Sift-2023-Q3-Index-Report_ATO.pdf 4 https://www.aarp.org/money/scams-fraud/info-2024/identity-fraud-report.html 5 https://www.fbi.gov/how-we-can-help-you/scams-and-safety/common-scams-and-crimes/skimming This article includes content created by an AI language model and is intended to provide general information. 

Finding a balance between providing secure financial services and user-friendly experiences is no easy task. One of the biggest hurdles? Ensuring identity authentication is robust and reliable. Let's walk through the essentials of identity authentication, its importance, and what effective solutions look like. What is identity authentication? Identity authentication is the process of proving that an individual is who they claim to be. Unlike identity verification, which simply confirms that the provided identity information is valid, identity authentication goes a step further by ensuring that the person presenting the information is indeed its rightful owner. At its core, identity authentication relies on various methods to verify identities. These methods can range from simple password checks to more sophisticated technologies like biometrics and adaptive authentication. The goal is to create multiple layers of security that make it difficult for unauthorized users to gain access. Types of authentication methods Several types of identity authentication methods are used today. Passwords and PINs are the most basic forms, but they are increasingly being supplemented or replaced by more advanced solutions like multi-factor authentication (MFA) , biometric scans, and knowledge-based authentication (KBA). Each method has its advantages and limitations, making it crucial for financial institutions to choose the right mix. Authentication vs. verification While often used interchangeably, identity verification and identity authentication serve different purposes. Identity verification solutions confirm that the provided identity information matches public records, whereas identity authentication solutions ensure that the person presenting the information is its true owner. Identity verification is typically a one-time process conducted at the beginning of a relationship, such as when opening a new bank account. On the other hand, identity authentication is an ongoing process, ensuring that each login or transaction is carried out by a legitimate user. Though different, these processes are crucial for financial institutions. They work together to provide a robust security framework that minimizes the risk of fraud while offering a seamless user experience. READ: Learn how to overcome online identity verification challenges. Why it's important for financial institutions The importance of identity authentication for financial institutions cannot be overstated. With the rise of cyber threats and sophisticated fraud schemes like synthetic identity fraud, robust identity authentication measures are more critical than ever. Enhancing security. Effective authentication significantly enhances the security of financial transactions. By preventing unauthorized access, sensitive information and financial assets are safeguarded. Advanced solutions like multi-factor authentication solutions add extra layers of protection. Building trust with customers. Robust authentication also helps build trust with customers. When users feel confident that their accounts and personal information are secure, they are more likely to engage with the institution and utilize its services. Regulatory compliance. For financial institutions, compliance with regulatory standards is paramount. Many regulations now mandate strong identity authentication measures to protect against fraud and ensure the security of financial transactions. What to look for in an identity authentication solution The ideal solution should offer a balance between security, user experience, and cost-effectiveness. Adaptive authentication solutions use machine learning algorithms to assess the risk level of each transaction. This allows for a dynamic approach to authentication, where additional checks are only required when necessary. Multi-factor authentication (MFA) solutions add an extra layer of security by requiring users to provide multiple forms of identification. This could include something they know (password), something they have (smartphone), and something they are (biometric data). Knowledge-based authentication (KBA) solutions ask users to answer questions based on their personal information. This method is particularly useful for verifying identities during online transactions and account recoveries. Experian’s Knowledge IQSM offers KBA with over 70 credit- and noncredit-based questions to help you authenticate consumers by asking noninvasive questions that can be answered quickly by the true consumer. Comprehensive identity solutions take a holistic approach by integrating various methods and technologies. Experian’s identity solutions offer a range of services, from risk-based authentication to automated identity verification, ensuring comprehensive protection. Importance of user experience. While security is paramount, user experience should not be overlooked. The ideal identity authentication solution should be seamless and user-friendly, minimizing friction during the authentication process. READ: By adopting a consumer-centric approach to digital identity, organizations can offer customers a better experience while minimizing risk. How Experian can help Identity authentication is a critical component of modern financial institutions. By implementing robust and user-friendly solutions, organizations can enhance security, build customer trust, and comply with regulatory standards. Whether it's through adaptive authentication, multi-factor authentication, or knowledge-based authentication, the goal is to create a secure and seamless experience for users. Ready to take your identity strategy to the next level? Explore Experian’s identity solutions today and discover how they can help your institution achieve its security and user experience goals. Learn more This article includes content created by an AI language model and is intended to provide general information.

With more consumers online, bad actors are taking the opportunity to commit more financial crimes, such as account takeover fraud. This online scheme resulted in nearly $13 billion in losses in 2023, up from $11 billion in 2022.1 So, what do organizations need to know about this form of identity theft? And how can they prevent it? Let’s explore one type of account takeover fraud: email account takeover. What is email account takeover? Email account takeover occurs when a fraudster gains access to a legitimate user’s email account through data breaches that expose credentials, purchasing from the dark web, or phishing scams. It's usually one of the first steps in a broader account takeover scheme. Once fraudsters have access to a consumer’s email or social media account, they have access to the private information in that consumer’s inbox: financial statements, health records, and other forms of PII. Fraudsters can also now use the consumer’s email to impersonate them with friends, family, financial institutions or other businesses they interact with.   They can also gain access to other accounts and here’s where email account takeover becomes more dangerous. In this attack, the fraudster gains access to an email or mobile account. Once they have an email, they start by trying to guess the user’s password, commonly called a brute force attack, or through password spraying, where they use commonly used passwords, i.e. ‘password’ or ‘123123.  A recent Google survey found that 65% of people use the same password for some or all of their online accounts. This, along with a corresponding email address can give fraudsters further entre into a consumer’s other accounts. If unsuccessful, they’ll then execute a ‘forgot password’, password reset, or one-time password. Then, they take over the victim’s account with their financial institution to facilitate the transfer of funds from the compromised account. 57% of businesses are experiencing rising fraud losses associated with account opening and account takeover.2 While email account takeover can be quickly executed, detecting it can take time. Unlike credit card fraud, where an individual may soon notice suspicious activity, an email account takeover can go undetected for longer. The owner may not realize until later that their account has been compromised, especially with a dormant account or secondary account they use less. As a result, criminals have more time to facilitate additional attacks. LEARN MORE: Explore 2024 fraud trends listed by Experian. How does it affect your organization? Account takeover fraud doesn't just impact consumers, it can result in significant financial losses for organizations. For example, if your organization offers credit products, you might have to cover the costs of disputing chargebacks, card processing fees, or providing refunds. In the case of a data breach, you may have to pay fines against your organization for not properly protecting consumer information. Nearly two-thirds of consumers say they’re very or somewhat concerned with online security.3 But email account takeover isn't just costly — it can damage your organization's reputation. Consumers expect organizations to have proper security measures in place to protect their information. If a data breach occurs, your security can seem weak, leading consumers to lose trust in your organization. As a result, they may potentially take their business elsewhere. The importance of prevention While consumers listed identity theft as their top concern when conducting activities online, they’re still interacting, opening new accounts, and transacting digitally.4 Coupled with the rise of account takeover fraud and associated losses, it’s more crucial than ever for organizations to accurately detect and prevent these attacks. To do this, they must have a proactive fraud prevention strategy in place. Account takeover fraud prevention requires your business to maintain and continuously reaffirm confidence in the identity data you collect. Your team can monitor, segment, and proactively act on customer identities that display a higher risk of fraud than was determined at account origination through risk-based fraud detection models, machine learning, and advanced analytics. Experian offers many flexible solutions, including: CrossCore® Solutions are best practice-based groupings of fraud and identity products that enable organizations to solve common to complex issues. For example, our fraud risk solutions include email and phone intelligence to improve verification for thin-files and other challenging populations. Experian offers phone/carrier-based matching capabilities with address validity and occupancy data for >95% of U.S. households. FraudNet is a device intelligence solution that analyzes hundreds of device attributes and prevents fraud on all digital channels. Combining contextual data, behavioral data, and device data, it bridges the gap between physical and digital identity to achieve fraud capture rates that exceed industry averages. To further alleviate account takeover fraud, your organization can offer educational resources for fraud prevention. Using various, strong passwords across their accounts, and changing them regularly, is a foundational way consumers can help ensure their accounts are secure. Leveraging user names that are different from your email can also help. If a fraudster is able to takeover an account and initiate a lost password request, and that password is used for other accounts, that fraudster now has the credentials they need to further defraud that consumer. By spreading awareness about identity fraud risks and providing best practices for prevention, you can better protect your organization and consumers. LEARN MORE: Building a multilayered fraud and identity strategy with CrossCore Solutions Partnering with Experian Email account takeover, along with other types of fraud, can be detected and prevented with the right partner. Experian’s fraud management solutions can help your organization accurately verify customers and assess risk with our account takeover and fraud management solutions. Explore Experian’s account takeover solutions and watch an on-demand recording of our Fraud Risk and Identity Verification Solutions tech showcase. Learn more Watch tech showcase 1 Identity Fraud Cost Americans $43 Billion in 2023, AARP. 2-4 2023 U.S. Identity and Fraud Report, Experian.

In this article...What is a TOAD attack?How TOAD attacks happenEffective countermeasures Keeping TOADS at bay with Experian Imagine receiving a phone call informing you that your antivirus software license is about to expire. You decide to renew it over the phone, and before you know it, you have been “TOAD-ed”! What is a TOAD attack? Telephone-Oriented Attack Deliveries (TOADs) are an increasingly common threat to businesses worldwide. According to Proofpoint's 2024 State of the Phish Report, 10 million TOAD attacks are made every month, and 67% of businesses globally were affected by a TOAD attack in 2023. In the UK alone, businesses have lost over £500 million to these scams, while in the United States the reported monetary loss averaged $43,000 per incident, with some losses exceeding $1 million.TOADs involve cybercriminals using real phone numbers to impersonate legitimate callers, tricking victims into divulging sensitive information or making fraudulent transactions. This type of attack can result in substantial financial losses and reputational damage for businesses. How TOAD attacks happen TOAD attacks often involve callback phishing, where victims are tricked into calling fake call centers. Before they strike, scammers will gather a victim's credentials from various sources, such as past data breaches, social media profiles, and information bought on the dark web. They will then contact the individual through applications like WhatsApp or call their phone directly. Here is a common TOAD attack example: Initial contact: The victim receives an email from what appears to be a reputable company, like Amazon or PayPal. Fake invoice: The email contains a fake invoice for a large purchase, prompting the recipient to call a customer service number. Deception: A scammer, posing as a customer service agent, convinces the victim to download malware disguised as a support tool, granting the scammer access to the victim's computer and personal information. These techniques keep improving. One of the cleverer tricks of TOADs is to spoof a number or email so they contact you as someone you know. Vishing is a type of phishing that uses phone calls, fake numbers, voice changers, texts, and social engineering to obtain sensitive information from users. It mainly relies on voice to fool users. (Smishing is another type of phishing that uses texts to fool users, and it can be combined with phone calls depending on how the attacker works.) According to Rogers Communication website, an employee in Toronto, Canada got an email asking them to call Apple to change a password. They followed the instructions, and a “specialist” helped them do it. After receiving their password, the cyber criminals used the employee's account to send emails and deceive colleagues into approving a fake payment of $5,000. Artificial intelligence (AI) is also making it easier for TOAD phishing attacks to happen. A few months ago, a Hong Kong executive was fooled into sending HK$200m of his company's funds to cyber criminals who impersonated senior officials in a deepfake video meeting. Effective countermeasures To combat TOAD attacks, businesses must implement robust solutions. Employee training and awareness: Regular training sessions and vishing simulations help employees recognize and respond to TOAD attacks. Authentication and verification protocols: Implementing multi-factor authentication (MFA) and call-back verification procedures enhances security for sensitive transactions. Technology solutions: Bots and spoofing detection and voice biometric authentication technologies help verify the identity of callers and block fraudulent numbers. Monitoring and analytics: Advanced fraud detection and behavioral analytics identify anomalies and unusual activities indicative of TOAD attacks. Secure communication channels: Ensure consumers have access to verified customer service numbers and promote secure messaging apps. A strong strategy should also involve using advanced email security solutions with AI fraud detection and machine learning (ML) to effectively defend against TOAD threats. These can help identify and stop phishing emails. Regular security audits and updates are necessary to find and fix vulnerabilities, and an incident response plan should be prepared to deal with and reduce any breaches. By integrating technology, processes, and people into their strategy, organizations can develop a strong defense against TOAD attacks. Keeping TOADS at bay with Experian®  By working and exchanging information with other businesses and industry groups, you can gain useful knowledge about new or emerging threats and defense strategies. Governments and organizations like the Federal Communications Commission (FCC) have a shared duty to defend the private sector and public consumers from TOAD attacks, while many of the current rules and laws seem to lag behind what criminals are doing. By combining the best data with our automated ID verification processes, Experian® helps you protect your business and reputation. Our best-in-class solutions employ device recognition, behavioral biometrics, machine learning, and global fraud databases to spot and block suspicious activity before it becomes a problem. Learn more *This article includes content created by an AI language model and is intended to provide general information.

“Learn how to learn.” One of Zack Kass’, AI futurist and one of the keynote speakers at Vision 2024, takeaways readily embodies a sentiment most of us share — particularly here at Vision. Jennifer Schulz, CEO of Experian, North America, talked about AI and transformative technologies of past and present as she kicked off Vision 2024, the 40th Vision. Keynote speaker: Dr. Mohamed El-Erian Dr. Mohamed El-Erian, President of Queens’ College, Cambridge and Chief Economic Advisor at Allianz, returned to the Vision stage to discuss the labor market, “sticky” inflation and the health of consumers. He emphasized the need to embrace and learn how to talk to AI engines and that AI can facilitate content, creation, collaboration and community Keynote speaker: Zack Kass Zack Kass, AI futurist and former Head of Go-To-Market at OpenAI, spoke about the future of work and life and artificial general intelligence. He said AI is aiding in our entering of a superlinear trajectory and compared the thresholds of technology versus those of society. Sessions – Day 1 highlights The conference hall was buzzing with conversations, discussions and thought leadership. Some themes definitely rose to the top — the increasing proliferation of fraud and how to combat it without diminishing the customer experience, leveraging AI and transformative technology in decisioning and how Experian is pioneering the GenAI era in finance and technology. Transformative technologiesAI and emerging technologies are reshaping the finance sector and it's the responsibility of today's industry leaders to equip themselves with cutting-edge strategies and a comprehensive understanding to master the rapidly evolving landscape. That said, transformation is a journey and aligning with a partner that's agile and innovative is critical. Holistic fraud decisioningGenerative AI, a resurgence of bank branch transactions, synthetic identity and pig butchering are all fraud trends that today's organizations must be acutely aware of and armed to protect their businesses and customers against. Leveraging a holistic fraud decisioning strategy is important in finding the balance between customer experience and mitigating fraud. Unlocking cashflow to grow, protect and reduce riskCash flow data can be used not only across the lending lifecycle, but also as part of assessing existing portfolio opportunities. Incorporating consumer-permissioned data into models and processes powers predicatbility and can further assess risk and help score more consumers. Navigating the economyAmid a slowing economy, consumers and businesses continue to struggle with higher interest rates, tighter credit conditions and rising delinquencies, creating a challenging environment for lenders. Experian's experts outlined their latest economic forecasts and provided actionable insights into key consumer and commercial credit trends. More insights from Vision to come. Follow @ExperianVision and @ExperianInsights to see more of the action.