An Aite-Novarica consumer survey, commissioned by GIACT (a Refinitiv company), shows that as government stimulus payments slowed, identity theft turned its attention to consumer financial products.
- One-in-four U.S. consumers were impacted by identity theft in 2021, underscoring its pervasive nature and the sizeable challenge facing B2C firms who operate online.
- Identity theft, whether through application fraud or account takeover, targeted a variety of different age groups, account types and organisations.
- A more robust, holistic approach to digital identity verification is required to address today’s high-risk environment.
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Imagine that you have just been contacted by a bank or a collections agency. They are seeking payment on an outstanding balance in your name. The twist is that you do not recognise the transaction – you do not remember opening the account, taking out the loan in question or transferring funds.
Then the realisation of what has just occurred hits you: your identity and/or financial accounts are compromised and are actively being used to steal money.
One-in-four U.S. consumers experienced this in 2021, according to a new report from Aite-Novarica, commissioned by GIACT (a Refinitiv company).
The U.S. Identity Theft in 2021: Adapting and Evolving report explores the persistent and widespread nature of identity theft and its impact on consumers and businesses alike.
This article highlights some findings from the report.
Identity theft remains pervasive
Identity theft continues to have an extensive impact on U.S. consumers when looking at a variety of financial products, commercial platforms and government subsidy programmes.
In fact, year-over-year (YoY) identity theft rates have remained fairly consistent, only slightly down from 27 percent in 2020 to 25 percent in 2021.
As seen in the chart below, U.S. consumers of all different age groups were impacted. But particularly acute was the rise in identity theft against those 55 and older, where cases doubled from 12 percent in 2020 to 25 percent in 2021.
The rise in this group is most likely the result of the pandemic, with an increase of new accounts being created, as well as consumers, being less knowledgeable on how to protect their data against these types of scams.
Those consumers between the ages of 25 and 44 experienced the brunt of identity theft, making up 46 percent of cases.
What is more, identity theft – which includes application fraud and account takeover – also targeted a wide range of accounts, from traditional financial products (e.g., credit cards, debit cards and consumer loans) to newer accounts, including peer-to-peer (P2P) payments and buy now, pay later (BNPL).
Read the report – U.S. Identity Theft in 2021: Adapting and Evolving
Which products are fraudsters targeting?
The report highlights a few key points that are worth noting.
The first is that traditional banking products, including checking accounts and credit cards, continue to be the vehicle of choice for identity theft.
There are several reasons for this, including the ubiquity of cards and of merchants that accept card, not present (CNP) payments.
The second item worth noting is specific to the buy now, pay later scheme (BNPL).
While checking accounts, credit cards and mobile phone accounts represent the most common targets of application fraud, the report found a significant portion of application fraud via BNPL.
According to the report, 23 percent of those impacted by application fraud schemes were targeted through BNPL payments. With BNPL on the rise, we are likely to see more on this point in the year ahead.
The report has continued to observe identity theft targeting P2P payments. According to the data, 25 percent of those impacted by account takeover experienced a fraudulent P2P transfer, the second most common account takeover response.
Watch the video: Are buy now, pay later (BNPL) firms secure against ID fraud?
Reputational impact
On top of the financial and emotional cost to consumers, which cannot be understated, identity theft also impacts how consumers view organisations. Last year marked a turning point in this regard as consumers have become less tolerant of institutions that do not protect their customers from fraud.
Consumers who experience application fraud are significantly less likely to do business with that institution in the future, regardless of the account type.
Where digital identity verification is needed
Fraud is a game of opportunity; seeking vulnerabilities wherever and whenever they exist. Refinitiv takes a holistic approach in helping customers manage risk across the customer lifecycle.
Refinitiv helps organisations reduce identity theft and improve customer experience by using fact-based decision-making and scoring at every stage of the customer journey, from enrolment to payment, when changes are made to an account, to ongoing KYC compliance and due diligence.
To combat more sophisticated identity theft schemes, Refinitiv enables customers to verify the full identity of their customers using reputable data sources from across the globe, providing real-time responses.
Combatting identity theft will require the industry to continuously innovate to counter the criminals in its approach to digital identity verification. That innovation starts with us.
Read the report – U.S. Identity Theft in 2021: Adapting and Evolving
