Will Faster Payments Lead To Faster Fraud?
As #payments move #faster or in real-time, preventing #fraud has to change its approach.
Financial Technology
Tagged: Fraud Toggle Comment Threads | Keyboard Shortcuts
-
user
-
user
In The Face Of Growing Fraud Threats, Finance Firms Should Look At Managed Security
#Security #threats continue to expand in financial services and #banks, insurance companies and securities #firms #should #look at #managed security for better protection, says Accenture.
Financial Technology -
user
Credit Card Fraud Is Down, But Account Fraud That Directly Hurts Consumers Remains High
EMV chips have reduced POS #card #fraud as expected but fraudsters are moving into new areas such as opening new accounts in a stranger’s name, taking over accounts or hitting reward programs for profits.
Financial Technology -
user
Shazam! Some Experts Fell For a Fake Product From A Nonexistent Company In A Fraud Test
Cyber and security professionals showed a charming willingness to provide personal information to a #fake #company with a fake #product set up for International #Fraud Awareness Week.
Financial Technology -
user
Chasing ever-shifting payments fraud
Guest blogger Casey Merolla discusses how the shift from stolen consumer credit card data to synthetic identity #fraud is a growing problem.
2017 was a monumental year for data breaches. Some 1,500 data breaches exposed the records of nearly 179 million Americans, affecting approximately 55 percent of the total US population.1 The increase in consumer data available to fraudsters is driving bank fraud losses higher every year, propelling the shift from counterfeit cards to identity theft and synthetic identity fraud. To combat these trends, financial institutions must look to more advanced tools and technologies to keep up with—and get ahead of—increasingly sophisticated fraud attacks.
Until recently, fraudsters’ primary focus was on obtaining the card data needed to produce counterfeit cards. Since the US rollout of EMV chip #technology, however, counterfeit fraud is falling fast. In fact, credit card issuers reported a 60 percent decline in counterfeit card losses between 2014 and 2016, according to the Nilson Report’s most recent data.2 Now that the proverbial low-hanging fruit of counterfeit card fraud is effectively guarded, fraudsters are moving on to new areas. They have found a ripe opportunity in identity theft and new account fraud. They’re no longer looking just for card data to steal; they’re looking for personal information they can use to create new fake accounts.
“Synthetic identity theft” has emerged as a major driver of #payments fraud in the US. These are cases where criminals weave together real and fictitious information to create new, digital-only identities, and then use them to open new accounts of all types. This form of new account “theft” is attractive to fraudsters because it allows them to obtain control of the account, cultivate high credit limits and bypass account alerts—all to facilitate high-dollar transactions with low risk of detection. A recent Accenture survey indicated that losses on fraudulent credit card applications can be up to 4.0 bps of card sales volume3—and that that loss rate is increasing. On top of the identified fraud losses, synthetic identity fraud may also be hiding in a financial institution’s credit loss line item, with up to 20 percent of credit losses attributable to synthetic identity fraud, according to 2017 Auriemma research.4
The government is taking some steps to help, enacting the Economic Growth, Regulatory Relief and Consumer Protection Act in spring 2018. The Act will allow financial institutions to validate social security numbers in near real-time with an electronic signature, rather than the current paper-based process, which can take weeks. The law also brings with it complex technical requirements, however, and has no official implementation start date or deadlines, leaving financial institutions to fend for themselves for the foreseeable future.
Addressing synthetic identity theft will require financial institutions to develop more rigorous tools and processes for compiling and validating customer data at the time of account opening. Financial institutions should validate each data point provided by a new applicant, using both internal and external sources. These data points should include not just the traditional name, address and phone number, but also less-obvious information, such as the use of the same address, phone, email or even IP address by others. Chances are, a criminal will attempt fraud at the same bank multiple times, so capturing data through all contact channels can be highly valuable for use in identifying fraudulent applications later.
Artificial intelligence engines and Machine Learning will likely play important roles in synthesizing the enormous pool of data, and the first step for financial institutions will be working to collect the data in a usable form. The task is daunting, but so is the future loss potential. Fraudsters continue to evolve their technologies and techniques, and if financial institutions want to keep up, then they must do the same.
1Identity Theft Resource Center, 2017 Annual Data Breach Year-End Review
2Nilson Report October 2017 – Issue 1118
3Accenture Card Fraud Study, July 2017
4Auriemma Consulting Group, Synthetic Identity Fraud Cost Lenders $ 6 Billion in 2016I invite you to join me at Money20/20, where I will be moderating a panel called Fraud Whack-a-Mole: Securing Payments in a Post-EMV World, Monday, October 22 from 1:00 pm – 1:40 pm.
Casey Merolla, Senior Manager, Payments
The post Chasing ever-shifting payments fraud appeared first on Accenture Banking Blog.
-
user
As P2P Payments Increase, So Must Fraud Controls
The demand for P2P #payments does not seem to be slowing anytime soon. A study released today by research firm Aite and Early Warning, owner of the bank-based P2P firm Zelle, found that P2P payments will triple by 2020. In the U.S. alone, Aite projects “over 300% growth from 2015 to 2020—from $ 100.3 billion to $ 316.6 billion” […]
Bank Innovation -
user
Artificial Intelligence Can’t Fight Fraud Alone — Human Ingenuity Is Also Needed
#Artificial #intelligence, machine learning, and compliance were some of the topics that dominated day 1 of #fintech conference Data Disrupt, taking place in New York. The panel “Consumer Finance: Fighting #Fraud with Fire” brought together three fintech companies, who discussed different methods of combating fraud. AI and ML play undeniably large roles in fighting financial […]
Bank Innovation -
user
Zelle Processes $25B in Payments After Reports of Fraud
P2P payment provider #Zelle processed $ 25 billion in #payments during the first quarter of 2018, the service reported yesterday, a more than 15% increase from last quarter. While this seems to be a good deal higher than the payment volume of its competitor service, Venmo (owned by payments company, PayPal), these statistics come #after several […]
Bank Innovation -
user
Synthetic Fraud Slows as Cybersecurity Awareness Increases
EXCLUSIVE—The growth of #synthetic #fraud, or the method by which fraudsters use a combination of real and false details to open malicious accounts, is slowing as lenders, issuers, and consumers all grow more attentive to #cybersecurity methods, a study conducted by credit bureau TransUnion found. The study, released earlier this week, notes that the percentage …Read More
Bank Innovation -
user
ACH Fraud, Already Rampant, Is Accelerated by Faster Payment Push
EXCLUSIVE – My colleague JJ Hornblass recently commented on the ACH #fraud that took place at our company, and how one of its most striking aspects was the casual way in which the bank reacted to it. This casualness may be due to ACH fraud not being anything new to the industry. What is new …Read More
Bank Innovation
Reply