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Identity fraud is rising – here’s what you need to know

Identity fraud is rising – here’s what you need to know

By Gus Tomlinson, General Manager at GBG

Every day, whether they know it or not, consumers are relying on identity-based technology. From unlocking a phone with Face ID to ordering gifts online, our identities are shaping the way we access services, and the data they provide is helping businesses to develop increasingly personal customer experiences.

This year in particular has massively accelerated the digital nature of our lives, with consumers and businesses now more reliant than ever on technology. Digital-first has become a necessity, not a novelty, and we’ve even seen older generations jumping into digital channels.

Our recent research highlighted that 1 in 3 consumers over the age of 75 signed up to a new online account this year, while nearly half (47 percent) of overall UK consumers opened a new shopping point. Almost overnight, we saw generations shift their activity online and major spikes in digital interactions.

However, this digital boom doesn’t come risk free – it has also opened up endless new opportunities for fraudsters. It’s no secret that a rise in online activity leads to a rise in fraudulent activity, and so both businesses and consumers alike need to stay vigilant and be aware of fraud risks as the digital economy continues to expand.

The lowdown on identity fraud

In the past year, 1 in 5 consumers has been a victim of identity fraud – and this is only set to rise as our reliance on digital grows in the ‘new normal’.

Awareness and concern over the rising fraud levels isn’t confined to experts in the sector though – the pandemic has shone a light on fraud across the board, with new data breaches and fraud scams regularly featuring on our daily news feeds. Our research revealed that a third of consumers are now more worried about fraud as a result of COVID-19, and they are particularly worried about the impact on banking, voting and online shopping.

Businesses are therefore finding themselves at a critical cross roads – consumer trust is falling while the risk posed by fraudsters is rising. If they’re to tackle the impact of identity fraud, businesses need to understand the threats and ensure that their customers are also aware. Education and understanding is key to mitigating fraud from the offset – and as the older generations transition towards digital, educating these more vulnerable customers about online safety will be key.

Teams can also look to implement secure verification methods for online operations and interactions with customers – which could span passcodes, behavioural biometrics and document verification.

Biometrics is on the rise

In terms of sector-specific risks, consumers see the financial services industry as being most at risk of COVID-19-related fraud. This concern ties into the rise in digital banking – almost a third (31 percent) of UK adults opened an online bank account this year, while 18 percent signed up for a new credit card online. What’s more, our research reveals that 51 percent of those working in financial services say that fraud attempts are on the rise, potentially costing between an average of £1,000 and £4,999 per attempt.

When it comes to preventing identity fraud across the board, biometrics is seen as the number one solution, followed by device authentication and matching against third-party data. In line with this sentiment, consumer resistance towards biometrics is falling quickly: only 15 percent of consumers now say they’d outright refuse to adopt the method as a means of verifying their identity, compared with 30 percent who would refuse to use social media for verification.

Priorities for digital success

We’ve accelerated head first into this newly digital world, so it’s unsurprising that there have been challenges, and elements of digital trust have faltered along the way.

For consumers, signing up to, and transacting with, businesses online isn’t as easy or safe as it needs to be. The internet was built without identity or ‘digital trust’ in mind, and therefore mitigating fraud while managing friction can be a challenging task. Our research found that more than half (54 percent) of businesses believe striking this balance has become more complex over the past three years. If they’re to succeed and compete in the increasingly competitive and digital global market, businesses need to achieve a “frictionless user experience” with fraud prevention and security embedded throughout.

These priorities shift when we look towards consumer preferences. While frictionless experiences are crucial for businesses, consumers are looking for speed and simplicity when opening a new online account. Security also remains high on the agenda, with over half of consumers positioning it as the top priority.

Mitigating identity fraud

Over the next 12 months, half of businesses intend to increase spend on identity fraud prevention. This boost is no doubt driven by the need to protect their customers. New technologies will encompass a large proportion of this spending, since the solutions available to help fight complex fraud techniques are continually advancing.

There are software, enhancements and data available to help businesses take a proactive approach in the fight against fraud. Ultimately, the more we continue to layer data, documents and biometrics, the more trust there will be around our identities. And beyond data, sophisticated technologies, such as machine learning, are enabling organizations to make faster, more accurate trusted decisions.

As well as introducing fraud prevention technologies into the mix, a vital step lies in creating ‘friendly friction.’ Consumers are searching for more active involvement in the verification process, without losing the slick onboarding or transaction process they have come to expect. This can include manually entering data when creating an online account – as this is still the most trusted process for consumers.

Small steps like this, combined with advanced fraud prevention techniques, can ultimately help organizations to develop strong defenses and earn new levels of consumer digital-trust.

About the author

Gus Tomlinson is General Manager Identity Fraud Propositions at GBG and an expert in identity technology with experience in global data, regulations and market trends. She has a deep understanding not only of GBG’s product portfolio, but also the global markets that its customers operate in across the globe.

DISCLAIMER: Biometric Update’s Industry Insights are submitted content. The views expressed in this post are that of the author, and don’t necessarily reflect the views of Biometric Update.

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