Overall Voice Fraud Rate Climbs More Than 350%, Banking Second Highest

Voice fraud rates climbed at more than 350% since 2013 across several industries, including banking. Various causes share the blame including new voice tech, and the rise in significant data breaches.

Atlanta based voice authentication firm Pindrop its “2018 Voice Intelligence Report” detailed developments in fraud, the future of voice and the bearing on customer service across numerous industries revealed the voice fraud rate increase through 2017 showed no signs of slowing down. Additionally, between 2016 and 2017, overall voice channel fraud increased by 47%, or one in every 638 calls.

While fraudsters attack call centers across industries, the increase year over year was most dramatic in the insurance industry, with a 36% increase, followed by banking, with a 20% increase. While credit unions saw about half the fraud rate of banks, Pindrop discovered 80% of fraudulent calls to credit unions are domestic in origin compared to 43% of bank fraud in general.

Pindrop found advancements in voice technology, are not without consequence. The average fraudster’s toolbox is more advanced than ever, thanks to developments in machine learning and artificial intelligence technology. Pindrop found fraudsters are increasingly leveraging techniques like imitation, replay attack, voice modification software and voice synthesis, often with great success.

“The opportunity for voice to serve as a primary interface is becoming a reality due to integrations with IoT devices, the takeoff of voice assistants and more,” Pindrop CEO Vijay Balasubramaniyan said. “In turn, advanced voice technology is falling into the hands of bad actors and we’re seeing a dramatic spike in voice fraud.”

Additional industry stats include:

• Bank fraud is a lucrative business. From 2016 to 2017, the fraud rate in the phone channel increased by 20%, and by 269% from 2014 to 2017.
• Card issuers saw a smaller but still steady increase in fraud rates of 14% from 2016 to 2017 and just 24% since 2014. Fraudsters attacking card issuers tend to use an even mix of cell phone and VoIP to make those calls.
• Insurance fraud is more complex and ultimately costlier than banking fraud. It generally requires more calls and takes more time, but the payout can be greater. Fraudsters are willing to invest more time, because of the potential gains from personal pension plans, 401k and life insurance policies. Insurance companies have seen a 248% increase in fraud since 2015.
• Brokerages saw a slower increase of fraud, of just 4.5% between 2016 and 2017, but there has been a steady increase of 78% over four years, indicating brokerages are still a profitable target for fraudsters.
• The retail industry continues with the highest rates of fraud overall, and further experiencing a 15% increase in the voice fraud rate from 2016 to 2017. Since 2014, the retail industry fraud rate increased 134%, as more sales take place online, over the phone and through omnichannel processes.

The report noted despite yearly upsurges, the fraud threat is unlikely to discourage businesses from integrating voice technology. According to a survey of business and technology leaders, 88% believe that voice technology will give them a competitive advantage in improving their customer experience. Twenty-eight percent of those surveyed have already implemented voice technology to improve customer experience, with 57% more planning to deploy in the next year. As voice technology continues to advance and become a part of daily interactions, business leaders will need to explore how they’re keeping customers and their data safe.

The report indicated as fraud becomes more cross-channel, it becomes more cross-industry.  ‘Even if fraudsters aren’t stealing money in a particular industry, that doesn’t mean data breaches are any less serious.”  A data breach is usually one step away from financial loss. “Like why they exploit the weakest channel (voice), fraudsters exploit industries with weaker security and then use that data to breach industries with stronger security (such as banks).”