Increasing Exposure to ID Fraud Increases Financial Risk for All Parties

With over 29.4 million transactions in 2018’s second quarter alone, up 24.1% from 2017, P2P is at particular fraud risk, according to identify and authentication firm Dallas-based GIACT Systems’ infographic.

With the amount of personally identifiable information available, fraudulent actors are migrating to popular, expedient payment channels. “Growing Exposure to Identity Fraud Increases Financial Risk for Every Business and its Customers,” highlighted identity fraud trends affecting peer-to-peer mobile payment channels.

GIACT points out growing exposure to identity fraud increases financial risk for every business and its customers. Diverse new digital payment options take friction out of transactions. For example, real-time payment is the most valued banking service enhancement for businesses. But they also require faster, smarter ways of spotting bad actors.

“P2P and mobile channels makeup the ideal breeding ground for fraud, given the increasing volume of transactions taking place and because the technology is relatively new,” David Barnhardt, EVP of product at GIACT, said. “We believe that good fraud protection begins at enrollment and continues, on an ongoing basis, throughout the customer and payment lifecycle.”

Statistics tell a disturbing story: In 2017, over 16.7 million U.S. consumers were victims of identity fraud, up 8% from the previous year, placing financial institutions, P2P payment processors and their customers in severe danger.

In addition: almost 17 million U.S. consumers were victims of identity fraud in 2017, up 8% from 2016; 78% of organizations experienced payments fraud in 2017, up from 60% in 2013; 45% of fintechs cited customer payments fraud as a major concern (broken down further, internal fraud accounted for 35% and hacking and malware represented 30% each); and 27% of respondents abandoned a digital financial transaction due to a lack of visible security.

GIACT suggested in today’s real-time marketplace, speed and safety must go hand-in-hand. In addition to highlighting the latest fraud trends, the infographic details best practices for preventing identity-based payment fraud. Best practices urge financial institutions and P2P processors to proactively interdict bad actors; conceal screening; tap into social media, smartphone use and other non-traditional data sources; and apply real-time processing with up-to-date data.