Layers of Identity Attributes & Data Diversification – Key to Fighting Fraud

The recent data breach and privacy events have been game-changers. In the first half of 2018 alone, 4.5 billion data records were compromised worldwide. With more and more personal information swimming in the dark web, there is an abundant supply for fraudsters to work with, which is impacting customer-not-present transactions online and digital environments, in particular. There is little denying that more fraud is happening with increased sophistication and prevalence.

Our research found that 9 out of 10 companies believe recent breaches have adversely impacted their business operations in significant ways. Companies are experiencing higher fraud rates and risk, including more incidents of synthetic identity fraud, account takeovers, and other types.

Moreover, nearly 60% of businesses faced increases in fraud attempts this year – double the number who said it remained the same. Companies also don’t feel prepared to detect and deter fraud, especially the more sophisticated types such as synthetic identity fraud (SIF). In fact, about a third of companies feel unprepared to address SIF when compared to a quarter of responding companies in 2017.

Consumers are also being impacted by data breaches. We found that 57% of consumers feel an elevated level of concern about their personal information compared to what they felt last year. More than half are extremely/very concerned that their information has been exposed due to a data breach.

With all the dynamics and change events, businesses need to reconsider their traditional approaches to identity verification. Static ID proofing using credit bureau data is not enough and in fact, is practically negligent when aiming to protect businesses and consumers since such data is awash on the dark web.

Instead, a different, more strategic approach is needed in the form of comprehensive identity verification solutions that leverage multiple layers of identity attributes from thousands of diverse data sources to quickly locate and approve customers. These solutions also utilize smart step-up processes, such as dynamic Knowledge-Based Authentication (KBA) questions, and also scan ID documents, or use mobile network operator (MNO) data to make the process an easy, more ‘frictionless’ customer experience while still deterring fraud.

When companies use a more robust identity verification platform that correlates different layers of identity attributes – such as location, IP addresses, and mobile & device attributes – from diverse data sources, they can determine risk based on real-time information. This provides a more accurate identity profile for the customer that reduces fraud risks without creating a dissatisfactory experience.

Another issue when using credit bureau data is that customers with thin credit files cannot be located, as they lack the basic credit information available. Approximately, 25% of US consumers are considered ‘thin file’ according to the Consumer Financial Protection Bureau (CFPB). Identity verification solutions that use layered identity attributes can help locate and approve these types of consumers, the majority of which are younger or new to the country.

Since security is also top of mind for most consumers today, it impacts how businesses approach identity verification. We found that security, ease, low effort, and speed are the most important attributes of account opening for consumers.

With the increased risk environment and changing customer expectations, it’s not surprising that identity verification has become more complex and complicated in the last several years – balancing fraud prevention and customer friction is now the number one challenge companies face when fighting fraud.

Identity verification is now mission-critical on both the front and back-ends of business operations. It’s a powerful contributor to the front-end for new customer onboarding as well as ongoing customer engagement. It’s also a causal force for increasing revenue and customer retention.

With all the dynamics and change events, businesses need to reconsider their traditional approaches to identity verification. Static ID proofing using credit bureau data is not enough and in fact, is practically negligent when aiming to protect businesses and consumers since such data is awash on the dark web. Utilizing a multi-layered approach for identity proofing that validates ‘under the covers’ can elevate customer trust and satisfaction while effectively deterring fraud.


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