Breaches and legacy authentication methods inviting tax, business fraud risk

U.S. tax filers face an increased risk of fraud this year, in part because 640 million consumer records were breached last year, most of them including Social Security numbers (SSNs).

According to the  second half update to the “State of Omnichannel Fraud” report from TransUnion, 71 percent of breaches in the first half of 2024 included SSNs, up from 57 percent in full-year 2023.

Government agencies should deploy identity verification and document authentication technologies to stop the photo-realistic credentials malicious actors can create with breached personally identifiable data (PII) and AI.

Identity verification is an effective technology available for preventing fraud, according to 56 percent of business leaders surveyed by TransUnion. Behavioral biometrics was selected by 38 percent, just behind synthetic identity detection, and amidst a set of measures based on the reputation of the user’ IP, device, phone number or email address. Those reputational methods were chosen by between 35 and 47 percent of those surveyed.

Phishable credentials prominent

The most common primary method of customer authentication used remains a username and password (39 percent), well ahead of biometric authentication (29 percent), which perhaps even more worryingly is followed by PINs (21 percent).

If the legitimate account-holder’s device is compromised, they are in trouble, as the most popular secondary authentication method is a one-time passcode (OTP), at 35 percent.

The 24-page report goes on to detail the cost of fraud for businesses and how the fraud risk associated with new account creation threatens the quality of digital experiences.

The overall fraud rate in the first half of 2024, as observed through TransUnion TruValidate, was 5.2 percent. This is the lowest mark since at least the beginning of 2020, though TransUnion calls it “stubbornly high.”

Article Topics

biometric authentication  |  data protection  |  fraud prevention  |  IRS  |  TransUnion  |  U.S. Government