Published: Thursday March 31, 2016
A post by John Lord, Managing Director at GBG.
Financial Fraud Action UK have released their roundup of 2015, and the picture isn’t pretty. The UK lost a colossal £755m over the course of the year, a rise of 26% on 2014. Much of this growth has been due to online banking fraud, which saw losses increase by 64% - a very worrying trend indeed for consumers, particularly when one takes into consideration the recent comments by the UK Met Police Commissioner that online fraud victims shouldn’t be compensated by banks.
The ways in which we interact with financial institutions has changed so rapidly as to be unrecognisable, and fraudsters’ methods have evolved at an alarmingly similar pace. It’s unsurprising that so many individuals find themselves having been duped into sending money, or even worse having shared their personal details – to simply dismiss them as reckless ignores the incredibly complex nature of many fraud techniques that are in use.
With fraudsters and scammers becoming increasingly sophisticated, businesses and individuals need to consider how they can stay one step ahead to protect their identity, data and IP. Unfortunately, as instances of fraud increase so too does the butterfly effect of its occurrence; the implications that impact an individual or business long after the fraudulent activity has occurred or is discovered. When your ID is stolen your details become compromised, and are often locked down or cancelled - but you still need to pay your direct debits for travel, food, or shopping, etc. Putting a complete halt to your data could cause more harm than good, as it can bring your whole life to a standstill.
It’s therefore incredibly important that data is utilised correctly to ensure those impacted by fraud do not experience these problems. For example, if a customer who has recently experienced credit card fraud is attempting to make a payment to an online retailer or bank, that organisation should be able to request other proof of identity such as uncompromised personal information from that customer in order to authenticate the payment (rather than block the transaction entirely).
The first move of most fraudsters is to use the actual identity of an individual, thereafter creating synthetic identities compiled from elements of the stolen data. Businesses will sometimes take a sledgehammer approach, blocking the original identity to avoid the identity theft. As identity theft fraud usually only happens for less than a month after the original theft however, this really is shutting the barn door after the horse has bolted - and is often a waste of time.
Businesses that take the sledgehammer approach hope that by continuing to block that identity the subsequent ‘synthetic’ identities will also be identified - but what of the victim themselves? This clearly causes them harm, and really doesn’t work in blocking future fraud. More sophisticated techniques are required, and the responsibility should fall to the business not the citizen to fulfill these checks.
Identity data intelligence has a huge role to play in not only uncovering incidences of fraud and stopping the butterfly effect of its implications, but also preventing fraud from occurring in the first place. By using more data, analytical insights, and triangulation of multiple identity proofing techniques, when identity theft does happen the effects can be minimised - for both the citizen and the businesses serving them.
To find out more about the role data has to play in the fight against fraud please email us at email@example.com.