Identity Fraud: The Gateway to Account Takeover
November 11th, 2021
As the world grows more accustomed to conducting business digitally, the need for the ease and convenience of faster payments is considered vital. However, as the general population adopts faster payments more readily, it gives rise to fraudsters utilizing new tactics to illicitly acquire both funds as well as access to accounts.
One of the methods that fraudsters have been increasingly relying upon in recent years is fully utilizing accounts that have been left vulnerable thanks to massive data breaches by organizations, such as the recent Twitch data breach. Since many people use the same email address and usernames for a majority of their online accounts, it’s only a matter of time for a fraudster to find the right variation of passwords to access accounts where their payment information is, such as banking, entertainment, or even utility accounts.
Once fraudsters gain access to all of the accounts of those exposed by these breaches, they start the process of moving funds out of these accounts, trying to not draw attention to their activity. At this time, digital trust has been broken between customers and organizations, and it’s up to financial institutions (FIs) to reestablish that trust by reassuring their customers that their funds are fully protected from evolving fraud.
By investing in technology such as advanced AI and process automation, fraud fighters can be shown the full picture and detect suspicious activity the moment it occurs, FIs can show their customers that they’re dedicated to protecting them. Organized crime does not clock in and clock out when the average person does – it’s a 24/7 operation that doesn’t ever stop.
The Right Amount of Friction
FIs need to look to not only authenticate payments in real-time but also provide the right amount of security for customers to limit a fraudster’s access to a compromised account’s funds. Through the concept of “friction-right,” FIs can apply the right amount of friction at the optimal moments for each transaction.
For example, if a trusted customer is sending a payment to another trusted customer, then no friction will be added. However, if that same customer is sending a payment to a suspicious account, then the customer will receive a moment of friction to authenticate that purchase in real-time.
Ultimately, the responsibility falls to FIs to provide an optimal experience for their customers and utilize the right methods to protect them, while ensuring that they maintain a positive customer experience.
Identity fraud is the fastest-growing threat to both customers and FIs, and only by investing in technologies to detect these real-time schemes, as well as provide customer education on the risks of using digital channels, can we stay ahead of fraudsters.
To learn more about how to protect your customers from identity fraud, click here.