Combating Identity Misuse and Fraud in a Global, Social Economy
Illicit use of identities has been occurring for many years; however, due to the faceless nature of e-commerce and now consumer banking, the impacts are being felt in a painful way across all industries. It is not uncommon for fraud losses to be measured in the tens of millions of dollars, and these losses have been known to top $500m.
At the center of these massive losses are identities, stolen or fabricated in order to facilitate the crimes. What is needed to prevent these losses is the ability to uniquely verify the identities that are part of a given transaction in real time. This includes important attributes such as behavioral patterns and other uses of that particular identity “in the wild” at a given merchant or bank. Only fraud analytic services that include complete information about an identity are able to detect and prevent these scams.
Over the last few years, the bad actors behind these criminal activities have focused their resources. They’ve formed their operations into big businesses complete with business plans and search engine optimization, as well as a mix full time and contract employees. They work around the globe, operating as true 21st century tech enterprises with big profits. The timing of this shift to coordinated, global operations couldn’t be better for them, as consumers are now demanding more online and “frictionless” services to match their highly mobile lifestyles. Fraudsters are certainly happy with the new, much broader attack surface that today’s social economy provides, and are ready to take advantage of our highly connected virtual identities. Identities have become the new currency, and are therefore highly valuable targets for today’s fraudster given their reach across the financial and ecommerce markets.
We’ve put together a few best practice suggestions for our clients:
Minimize friction effectively
- Use passive methods to detect elevated risk and adjust fraud response controls accordingly
- Employ risk-based authentication; also decrease credit limits, delay activations or payments while other checks are performed, require deposits
Use the power of networked communities to reveal risk anomalies
- Leverage normal geo-location triangulation, device history and reputation, real-time suspicious activity surrounding the identity profile and/or identity components
Participate in fraud exchanges
- Benefit from the network impact through consortium pooling of fraud data
For help in implementing these practices at your organization, contact our specialists.
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