Nick Mothershaw, Director of Fraud and Identity Solutions at Experian
Safer Internet Day is upon us on February 6. Although the national day is run for the benefit of young digital natives, aiming to promote the safe and positive use of digital technology, it’s a good marker for people of all ages to consider how they stay safe online.
For the business community, it’s a good time to ride the greater public awareness and ensure that your customers are protected from fraud and internet dangers by their service providers, that the organisation understands how to defend against the latest digital threats – and also, that customers understand how to protect themselves as well.
Experian’s 2018 Global Fraud and Identity Report showed that 91% of consumers own a smartphone and other mobile devices, on which most (90%) are shopping when and wherever they wish.
According to the Global Fraud and Identity Report, four out of five consumers trust that businesses are making the protection of their personal information a top priority. And on the other side, in business, almost three-quarters (72%) cite fraud as a growing concern over the previous year, and (63%) reported the same or higher levels of fraudulent losses over the period.
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63% of businesses told us that they have experienced the same or more fraud losses in the past 12 months than the previous year.
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But when it comes to online engagement, three-quarters (75%) of businesses are interested in more advanced security measures and authentication processes that have little or no impact on the customer – which is understandable. Any friction from what the customer sees as onerous or unusual identity checking or anti-fraud defences may make them wish to shop elsewhere – especially if the mechanisms used are not explained.
That said, nearly two-thirds (66%) of the consumers surveyed in the Report appreciated security protocols when transacting online – because it makes them feel protected. In some ways, consumers tolerate the nuisance of barriers to accessing their accounts (e.g., forgetting their password or having to re-enter other security controls like CAPTCHA or PIN codes), because they do understand that these provided better security for themselves.
So for businesses, there is a delicate balance to achieve. They need to deliver an online experience that instils confidence, with security protocols that make customers feel safe and protected. And, they need to allow for easy and convenient access. These areas can be mutually exclusive, at times.
Given the differences in tolerance for friction across different markets and age groups, a global one-size-fits-all solution is a difficult proposition. It is also a moving target, as consumers’ tolerance for friction could in fact lessen over time. There are also the expectations for a frictionless experience among future generations of digital customers used to an online digital experience that imposes few, if any, visible security protocols.
Security protocols are transitioning to more data-driven, artificial-intelligence powered systems operating behind the scenes, as technology matures and demonstrates its use in customer support functions. Businesses may need to gain and maintain the customer’s trust without the familiar perceptions of security borne through very obvious barriers…
Solutions that combine device information with other data points such as biometrics could help businesses in the future better recognise their customers rather than challenging them.
The great irony is that the weapon against online fraud is also the source of its vulnerability. Account setup process require consumers to provide extensive personal information, and answers to secret questions, and passwords. Data breaches have exposed this information to fraudsters. Once stolen, this information can be used to facilitate fraudulent activity, giving personal information genuine value in illicit markets. As the potential windfall from digital fraud grows, so does the cybercriminal’s motivation to stay ahead of the latest detection strategies and technologies.
As businesses make strides in introducing innovative ways for customers to open accounts and/or transact online, they are still faced with challenges to overcome. Traditional solutions relied on behaviour patterns that helped businesses detect fraud. Yet, as businesses innovate the digital experience, they feel increasingly vulnerable and less confident in their ability to spot fraud: 54% of businesses are only “somewhat confident,” in their ability to detect fraudulent activity compared to only 40% who are ‘very confident’.
Given the Safer Internet Day theme, the first should be Child Identity Theft. Child identity theft may not be as common as other types of ID theft but it is very attractive to thieves. That is because there is usually no credit history established for the children who become victims. Scammers sometimes use children’s information to open new accounts, take out loans, and more. The child may not know their credit has been used to run up debt in their name until it’s time to apply for a current account with an overdraft.
The fraudsters are wily, constantly seeking new ways to dupe consumers and businesses alike, and so businesses must assume care for their customers and stay at the forefront of keeping online services safe, for all.
