As the number of data breaches skyrockets, so does the amount of PII data available to criminals. With more merchants accepting online purchases, we can expect identity-related fraud in 2022 to greatly exceed the losses of $721B reported in 2021. Technology exists to mitigate this fraud but few online businesses are investing in it:
“While a breach is usually is not the fault of the company collecting the data, consumers don’t really care who is responsible. Instead, they just care about the negative impacts they are consequently forced to endure, and they endure a lot.
Regardless, the downstream effect of exposed PII is, of course, identity theft, which impacts both organizations and consumers alike.
In 2021, US businesses were estimated to lose over $721bn due to identity-based fraud attacks.
Meanwhile, identity fraud’s impact on consumers is a whopping $1100 average loss per incident.
“Unfortunately, many organizations continue to fall behind fraud’s advancements despite current efforts”
Collectively, this is unsustainable. It should not be tolerated.
Organizations should do everything in their power to prevent fraudulent activity from occurring on their platforms. (Companies who don’t live up to this responsibility face reputational damage, customer attrition, rising costs of new customer acquisition, legal liability, enforcement, penalties and fines.)
Case in point: in the past two years, nearly half of US consumers (48%) were impacted by identity theft. Over the same period, more than one-third of US consumers became victims to account takeover (38%) and a similar percentage to application fraud (37%).
Legacy identity verification solutions that don’t account for the breadth and depth of data needed to stop more sophisticated synthetic identities or those that focus on a single point of compromise are to blame. So, too, is inaction on the part of organizations that don’t proactively and continually revisit their identity verification strategy – a must, given the current fraud landscape.
To address fraud in 2022, organizations will need to enhance their approach to identity verification. That includes securing the enrollment process and taking a multi-layered approach to verifying and authenticating identity throughout the customer lifecycle. From enrollment to payment, managing change events to ongoing KYC and compliance.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
