‘Global State of Fraud’ Report Espouses Better Collaboration to Defeat High-Risk Transactions
Adoption of AI tools to proliferate phishing, deepfakes, and other scams is eroding consumer confidence and trust in digital services.
Banks and online retailers can significantly improve their ability to capture hard-to-detect high-risk fraudulent transactions through combining shared fraud intelligence into their risk assessments, according to the latest “Global State of Fraud” report from LexisNexis® Risk Solutions.
The “Global State of Fraud” report reveals how businesses can build strong digital trust and prevent fraud before it occurs through collaborative digital identity intelligence and details several examples of success, including one organisation that lifted customer recognition rates to 94%. Another integrated digital identity and email intelligence to help lift fraud capture rates by a quarter (26%).
The “Global State of Fraud” report also explores the impact of criminal activity on consumer trust, compounded by the fact that fewer than 10% of mules identified by law enforcement are arrested and fewer than 1% are charged. Rapid adoption of AI-powered technology by fraudsters to automate phishing and deepfakes is helping make scams more efficient and convincing, thereby eroding consumer trust in digital services. Global fraud attacks rose by 19% year on year, according to analysis of the LexisNexis® Digital Identity Network® platform.
‘Global State of Fraud’ Report Explains Why Collaboration Is Imperative
A shared collaborative network, according to the “Global State of Fraud” report ,enables organisations to flag suspicious activity and confirmed fraud events with other members to help make it harder for fraudsters to operate. This can include data about the device being used, IP addresses, and other digital signals, as well as the email address provided.
Analysing the potential risk associated with these signals can significantly boost organisations’ effectiveness at capturing high-risk transactions. In one case, the “Global State of Fraud” report found that a major global bank boosted its detection capability 17-fold or 1,700%. In another, a card issuer improved its risk assessments by a factor of 23 or 2300%. In both cases, collaborative data was used.
Despite this, just six in ten (60%) organisations have technological fraud prevention solutions in place across all transaction channels, and only one in four (27%) organizations in the EMEA and APAC regions use consortia or data exchange initiatives as part of their fraud prevention activities, according to the report. This comes despite a majority of firms saying integrating digital experience and fraud prevention efforts (72%) and minimising customer friction during checkout (68%) are “critical or high” priority.
“Consumers’ desire for faster, instant service is driving demand for change, including the creation of alternative payment solutions. In response, regulators and central banks are enabling systems, such as instant payment rails, which make transactions easier,” said Stephen Topliss, Vice President of Fraud and Identity at LexisNexis Risk Solutions.
He added: “However, every attempt to make transactions easier for consumers is also making life easier for fraudsters. Societal demand for convenience has left financial institutions facing a difficult balancing act to deliver technological innovation and convenience, while maintaining trust and system integrity.”
More Is Needed to Fight Fraud
Broader insights are also essential in the fight against synthetic identities—fake digital profiles created for fraud. Robust intelligence can reveal telltale signs, such as synthetic identities are seven times more likely to have no first-degree relatives and 20 times more likely to appear in multiple credit applications over a short time period.
The report reflects that human beings continue to be a weak link in the trust chain, with an army of money mules—around 40% of whom are typically under the age of 25—helping cybercriminals launder between 2 and 5% of global GDP each year.
Topliss continued: “The worst-case scenario is that consumers cease engaging digitally because they don’t trust the process. Tackling this global issue requires a multi-layered approach, as there is no silver bullet anti-fraud solution.”
Download the “Global State of Fraud” report here (available in English only).
