Kathleen Peters, Experian’s Senior Vice President and Head of Fraud & Identity, Experian
Technology has advanced in a such a way that it’s made our lives significantly easier. We can purchase nearly any product imaginable from our smartphones, share and store pictures on the cloud, and become a self-proclaimed expert on any topic from the comfort of our own homes. Our lives are grounded in convenience – and technology has certainly furthered the expectation.
However, for all the good that technology provides, it also opens the door for criminals to use its capabilities nefariously. With billions of compromised identity records and security credentials available on the dark web, criminals can execute more advanced forms of fraud, such as synthetic identity and account takeover, against financial institutions and retailers daily. In fact, according to Experian’s 2019 Global Identity & Fraud Report, 80 percent of businesses have seen an increase in online fraud losses from a year ago.
As a society, we’ve become so reliant on the digital ecosystem for our day-to-day needs that some of our own habits, such as creating easily defeated passwords and reusing credentials across multiple online accounts, have left us vulnerable to fraudulent behavior. Based on our research, we found more than 2 in 5 consumers worldwide have already experienced a fraudulent event online at some point in their lives. Criminals have gone the extra mile to take advantage of the resources available to them, however, financial institutions and retailers need to make the investment to stay one step ahead.
While the path of least resistance would be to resort back to face-to-face interactions to confidently verify a person’s identity – at the bank, department store, car dealership, etc. – it’s a bit of an overreaction. It’s far too restrictive and runs counter to the convenience that the online environment provides. Instead organizations should invest in advanced data and analytics to more confidently and accurately assess fraud risk across digital platforms – it provides the balance between security and convenience that so many businesses and consumers desire.
For instance, there’s much more to a digital transaction than the information exchanged between devices and servers. Information about the device itself, the credibility of the relationship between the phone number and its owner, previous use of email and the IP address can help determine the legitimacy of an online transaction. Augment the device intelligence information with biometric attributes, such as fingerprint authentication and/or facial image recognition, and financial institutions and retailers can have a certain level of confidence that the individual is who they claim to be.
Additionally, innovative technology, such as image recognition, has made it possible for organizations to validate government issues forms of identification remotely.
For example, an individual can submit an image of their driver’s license via a smartphone, which will undergo a series of behind-the-scenes tests to verify the documents authenticity in real-time. These tests can detect if security patterns are present, investigate present machine-readable zones, validate issue dates and determine if the original photo was substituted. Once the document has been verified, the individual may be required to submit a “selfie,” to cross-reference biometric data points of the instant headshot with that of the driver’s license. This eliminates the possibility of a fraudster submitting a stolen driver’s license.
The more organizations can accommodate new data sets and technology, the more seamless of an experience they can provide, while maintaining appropriate levels of account protection
Advanced identity management capabilities, such as image recognition, biometrics and device intelligence, can also help organizations, such as banks more accurately identify consumers beyond the need for account protection – it can also be used to facilitate financial health within our communities. If a bank can properly identify thin-file consumers, they can offer education, financial literacy and other resources, such as Experian Boost, which allows the use of utility and mobile phone payments to increase credit scores through the online environment. But, it all begins with the ability to identify the individual.
That said, these advanced authentication measures may not be used as a sole means of fraud prevention and identity management. Financial institutions and retailers need to treat advanced data and technology as a multi-layered approach. The combined capabilities can help organizations more easily detect fraud and identify legitimate customers.
Perhaps, more importantly, financial institutions and retailers need to prioritize flexibility with their technology, so they can adapt to changing conditions and the availability of improvement over time.
There are thousands of customer touchpoints and attributes that can contribute to accurately authenticating an individual’s identity – we just need to understand the value and take advantage of it. The more organizations can accommodate new data sets and technology, the more seamless of an experience they can provide, while maintaining appropriate levels of account protection.
Fraudsters will undoubtedly continue to look for new ways to commit criminal acts, however technology opens the door for organizations to stay one step ahead of them. While a silver bullet for fraud prevention doesn’t exist, advanced technology can help organizations more confidently authenticate individuals and provide a level of service that can keep customers happy.