Eighth Annual IDology Fraud Report: Amid Remarkable Digital Adoption, Fraud Attempts Spike, Hitting Four-Year High
- Fraud Increases Significantly Across All Vectors; 79% of Businesses Expect More to Come This Year
IDology, a GBG company, released its Eighth Annual Fraud Report confirming the impact of rapid digitization driven by COVID-19 and revealing a 53% increase in fraud attempts across nearly every channel. The most targeted channel was mobile, with an astounding 89% increase in fraud attempts.
For the first time in the history of IDology’s Annual Fraud Report, identity verification was reported as the biggest challenge to combating fraud. As COVID-19 drove 84 million Americans online for services that were previously carried out in person, businesses faced an influx of new customers to onboard. In response, many appeared to loosen fraud controls in an effort to reduce friction and simplify onboarding, particularly for digital “newbies.” This loosening, combined with COVID-19 factors such as dispersed fraud teams, remote work, stimulus checks, and sophisticated phishing and synthetic identity fraud (SIF) schemes, led to surging fraud attempts.
Among other notable findings from the report:
Mobile Fraud Hits Historical Highs
For three years running, mobile fraud has consistently caused concern for businesses and, with the pandemic amplifying its potency, is hitting new highs. Mobile fraud techniques increased across the board with the most predominant being automatic number identification/caller ID spoofing (40%), followed by porting (43%), device cloning (38%) and recycling of phone numbers (37%).
Synthetic Identity Fraud Remains a Concern
SIF attempts continue to increase each year, growing from 31% in 2017 to 43% of respondents reporting an increase in SIF in 2020. With nearly half of respondents extremely or very concerned about SIF, this ever-elusive and hard-to-identify fraud vector deserves attention, particularly as PPP loans create new opportunities for fraudsters to create and secure synthetic identities to secure federally backed loans.
Across the Board, Fraud Vectors are Intensifying
Phishing, the most significant cause of large-scale breaches, continued to surge. ACH/wire fraud rose 15%, presumably due to rising P2P usage in response to social distancing. In addition, first-party fraud increased 28%, likely due to economic pressures leading to chargeback fraud, while card fraud increased only 3% in the last 12 months.
Identity Verification Becomes the Top Challenge to Fraud Deterrence Across Industries
As mentioned earlier, identity verification was reported as the biggest challenge to combating fraud. Fifty-seven percent view multi-point verification, including identity document scanning, as an important element in their fraud-fighting arsenals. Data diversity is considered a best practice by 48% and leveraging multiple layers of identity attributes by 45%.
“With businesses quickly adjusting course to securely and smoothly onboard millions of digital consumers in response to COVID-19, identity verification is today’s essential digital handshake and the critical starting point for building trust while also preventing fraud,” said Christina Luttrell, CEO of IDology. “The data clearly shows that, at its core, fraud is an identity problem. In this rapidly shifting landscape, businesses need data transparency and intelligence to understand how identity attributes are performing so they can make adjustments that pinpoint fraud on an extremely granular scale while streamlining the experience for legitimate customers.”
For additional insights into fraud trends across a variety of industries and firsthand perspectives shared by executives on the front lines of fraud prevention, download the full IDology Annual Fraud Report. Now in its eighth year, the report captures the impact of fraud on leading companies across multiple industries including financial services, healthcare, insurance and e-commerce. The survey was fielded September 16 – October 23, 2020, with 314 business and fraud respondents in areas of responsibility that include senior leadership, vice presidents, directors, managers and analysts in risk, fraud, compliance, product and operations departments.
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