Total Identity Fraud Losses Soar to $56 Billion in 2020
SAN FRANCISCO--(BUSINESS WIRE)--Mar 23, 2021--
The 2021 Identity Fraud Study, released today by Javelin Strategy & Research, part of the Escalent family, reveals a daunting new threat to consumers and businesses: identity fraud scams. While total combined fraud losses climbed to $56 billion in 2020, identity fraud scams accounted for $43 billion of that cost. Traditional identity fraud losses totaled $13 billion.
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The 2021 Identity Fraud Study, released today by Javelin Strategy & Research, part of the Escalent family, reveals a daunting new threat to consumers and businesses: identity fraud scams. While total combined fraud losses climbed to $56 billion in 2020, identity fraud scams accounted for $43 billion of that cost. Traditional identity fraud losses totaled $13 billion. The reduction in transaction activity in 2020, combined with financial institutions’ more robust antifraud measures, made it harder for criminals to succeed in their usual fraud activities. They opted instead to interact directly with their fraud victims via identity fraud scams. The scams can sometimes be averted when consumers are more sensitive to misspelled email addresses, suspicious requests for money, or random messages through social media from criminals claiming to represent a financial institution. (Graphic: Javelin Strategy & Research)
With traditional fraud, consumers often have no idea how their identities were stolen. With scams, they can often tell, upon reflection, the exact moment when they interacted with a criminal via email, phone, or text.
“The pandemic inspired a major shift in how criminals approach fraud,” said John Buzzard, Lead Analyst, Fraud & Security, with Javelin Strategy & Research. “Identity fraud has evolved and now reflects the lengths criminals will take to directly target consumers in order to steal their personally identifiable information.”
To find out more information about the report, 2021 Identity Fraud Study: shifting angles, visit https://www.javelinstrategy.com/content/Javelin-2021-Identity-Fraud-Study
Pandemic changes consumer behavior
The global pandemic has had a dramatic impact on consumer financial behavior. Consumers spent more time at home in 2020, transacted less than in previous years, and relied heavily on streaming services, digital commerce and payments. They also corresponded more via email and text, for both work and personal life.
“Criminals follow current events, and unfortunately the pandemic has provided them a host of new storylines to employ online,” said Kathy Stokes, director of the AARP Fraud Watch Network. “Helping consumers know how to spot the red flags of scams is an important step in stopping fraud before it has a chance to happen.”
The reduction in transaction activity, combined with financial institutions’ more robust antifraud measures, made it harder for criminals to succeed in their usual fraud activities. They opted instead to interact directly with their fraud victims via identity fraud scams. The scams can sometimes be averted when consumers are more sensitive to misspelled email addresses, suspicious requests for money, or random messages through social media from criminals claiming to represent a financial institution.
Criminals exploit shift to online lending, banking
The pandemic compelled companies to make quick adjustments to their business models, such as transitioning from in-person lending to remote interactions with borrowers. Criminals pounced on new vulnerabilities presented by the explosion in remote loan originations and closings.
As financial institutions found their footing despite the obvious challenges, criminals took advantage of this ramp up period and banks felt the blow. Nearly one-third of identity fraud victims say their financial services providers did not satisfactorily resolve their problems, and 38% of victims closed their accounts because of lack of resolution at the financial institution where their fraud occurred.
“It is clear that financial institutions must continue to proactively and transparently manage fraud as a means to deepen their customer relationships,” said Eric Kraus, vice president and general manager of fraud, risk and compliance, FIS. “Through our continuing business relationships with financial institutions, we know firsthand that consumers are looking to their banks to resolve instances of fraud, regardless of how the fraud occurred.”
As consumers relied increasingly on digital payment products during 2020, identity fraud scams kept pace with this shift in behavior. Losses related to digital wallets and peer-to-peer (P2P) accounts spiked. This was particularly notable in the case of economic stimulus payment fraud, unemployment benefits fraud, and identity fraud scams.
“The culture of fraud is clearly shifting. The pandemic has created so many more points of vulnerability for families and businesses,” said Paige Schaffer, CEO of Global Identity & Cyber Protection at Generali Global Assistance. “Whether it’s payment products meant to enhance convenience, remote operations, additional logins or even simply more time online, there is more opportunity now than ever for compromise.”
Consumers begin to embrace advanced authentication
Growing acceptance of various digital payment channels presents an opportunity to increase consumer awareness of stronger forms of authentication. Fingerprint scanning and facial recognition, for example, are growing in popularity with consumers.
“Identity verification, throughout the consumer’s digital account engagement, is more vital than ever,” said Cindy White, Chief Marketing Officer at Mitek. “Consumers are willing to do their part to let go of traditional methods and leverage advancements in AI and new biometric technology such as facial scanning. This is good news for them and for their financial institutions.”
As consumers become increasingly savvy online, safe digital transactions will form the foundation of a productive and secure remote financial ecosystem.
“Static forms of consumer authentication must be replaced with a modern, standards-based approach that utilizes biometrics,” said David Henstock, Vice President of Identity Products at Visa. “Businesses benefit from reduced customer friction, lower abandonment rates and fewer chargebacks, while consumers benefit from better fraud prevention and faster payment during checkout.”
The annual Identity Fraud Study, now in its eighteenth year, is the nation’s longest-running comprehensive analysis of identity fraud trends, independently produced by Javelin Strategy & Research. The platinum sponsors of this study are AARP, FIS, Generali Global Assistance, Mitek, and VISA. Neustar is a partner sponsor and Feedzai and ID Insight are industry sponsors.
About Javelin Strategy & Research
Javelin Strategy & Research, Part of the Escalent family, helps its clients make informed decisions in a digital financial world. It provides strategic insights for financial institutions, government, payments companies, merchants, fintechs and technology providers. Javelin’s independent insights result from a rigorous research process that assesses consumers, businesses, providers, and the transactions ecosystem. It conducts in-depth primary research studies to pinpoint dynamic risks and opportunities in digital banking, payments, fraud & security, lending and wealth management. For more information, visit www.javelinstrategy.com. Follow us on Twitter and LinkedIn.
AARP is the nation’s largest nonprofit, nonpartisan organization dedicated to empowering people 50 and older to choose how they live as they age. With a nationwide presence and nearly 38 million members, AARP strengthens communities and advocates for what matters most to families: health security, financial stability and personal fulfillment. AARP also produces the nation’s largest circulation publications: AARP The Magazine and AARP Bulletin. To learn more, visit www.aarp.org, www.aarp.org/espanol or follow @AARP, @AARPenEspanol and @AARPadvocates, @AliadosAdelante on social media.
FIS is a leading provider of technology solutions for merchants, banks and capital markets firms globally. Our employees are dedicated to advancing the way the world pays, banks and invests by applying our scale, deep expertise and data-driven insights. We help our clients use technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers. Headquartered in Jacksonville, Florida, FIS is a Fortune 500 ® company and is a member of Standard & Poor’s 500 ® Index. To learn more, visit www.fisglobal.com. Follow FIS on Facebook, LinkedIn and Twitter ( @FISGlobal ).
Feedzai is the market leader in fighting financial crime with AI. Coding the future of commerce with today’s most advanced risk management platform powered by big data and machine learning. https://feedzai.com/about-us
About Generali Global Assistance
Generali Global Assistance (GGA) is a leading brand comprised of Travel Insurance & Assistance, Medical Risk & Home Care Management, Identity & Cyber Protection, as well as other care services. GGA is part of the Generali Group, which for over 190 years has provided peace of mind to its clients and their customers and is supported by more than 72,000 employees worldwide. GGA is proud to be the identity protection engine behind some of the biggest names in the financial and insurance industries, providing comprehensive identity & cyber protection to more than 165 million customers across 90+ countries. To learn more about Generali Global Assistance’s identity & cyber protection offerings, please visit www.irisidentityprotection.com. Follow us on Twitter, LinkedIn, and Facebook.
About ID Insight
ID Insight is on the front lines in the fight against identity fraud. Only ID Insight has a Fraud Intelligence Platform combining patented analytics with massive consortium and identity datasets to stay ahead of emerging fraud schemes. Since 2003, thousands of banks and credit unions, as well as credit issuers, retailers, and healthcare companies have relied on ID Insight’s platform-based solutions to mitigate the damaging effects of account takeover and new-account fraud.
Mitek (NASDAQ: MITK) is a global leader in mobile capture and digital identity verification built on the latest advancements in computer vision and artificial intelligence. Mitek’s identity verification solutions enable organizations to verify an individual’s identity during digital transactions to reduce risk and meet regulatory requirements, while increasing revenue from digital channels. More than 7,500 organizations use Mitek to enable trust and convenience for mobile check deposit, new account opening and more. Mitek is based in San Diego, Calif., with offices across the U.S. and Europe. Learn more at www.miteksystems.com. Follow Mitek on LinkedIn, Twitter and YouTube, and read Mitek’s latest blog posts here.
Neustar is an information services and technology company and a leader in identity resolution providing the data and technology that enable trusted connections between companies and people at the moments that matter most. Neustar offers industry-leading solutions in marketing, risk, communications and security that responsibly connect data on people, devices and locations, continuously corroborated through billions of transactions. Neustar serves more than 8,000 clients worldwide, including 60 of the Fortune 100. Learn how your company can benefit from the power of trusted connections here: home.neustar.
Visa Inc. (NYSE: V) is the world’s leader in digital payments. Our mission is to connect the world through the most innovative, reliable and secure payment network – enabling individuals, businesses and economies to thrive. Our advanced global processing network, VisaNet, provides secure and reliable payments around the world, and is capable of handling more than 65,000 transaction messages a second. The company’s relentless focus on innovation is a catalyst for the rapid growth of digital commerce on any device for everyone, everywhere. As the world moves from analog to digital, Visa is applying our brand, products, people, network and scale to reshape the future of commerce. For more information, visit About Visa, visa.com/blog and @VisaNews.
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CONTACT: Elisabeth Hershman
KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA
INDUSTRY KEYWORD: DATA MANAGEMENT BANKING TECHNOLOGY PROFESSIONAL SERVICES WOMEN SENIORS MEN SECURITY SOFTWARE CONSUMER FINANCE
SOURCE: Javelin Strategy & Research
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PUB: 03/23/2021 08:00 AM/DISC: 03/23/2021 08:01 AM