Criminals are ahead of financial institutions’ methods to identify and respond to fraud and schemes that hijack consumer accounts. Javelin Strategy & Research’s 2020 Identity Fraud Report finds fraud losses grew 15 percent in 2019 to $16.9 billion, even as instances of fraud fell from 14.4 million in 2018 to 13 million in 2019.
The study found account takeovers were responsible for the highest loss rate, up 72 percent over the prior year.
“This is due in large part to technological advancements that have made it easier for criminals to manipulate and socially engineer information, while making it harder to detect account takeovers without additional security infrastructure. And criminals work quickly — 40 percent of all fraudulent activity associated with an account takeover occurs within a day,” Javelin authors said in a summary of the research.
The study also found that peer-to-peer payments (P2P) fraud is skyrocketing. Financial institutions have found that P2P systems, which allow one person to send payments to another person, have seen a 733 percent increase in fraud between 2016 and 2019.
“We’ve learned that criminals are very shrewd and adept at capitalizing on current events and new platforms, including peer-to-peer payment apps,” said Kathy Stokes, director of fraud prevention programs with AARP, a lead sponsor of the study. “Using these payment apps for anything other than sending money to someone you know presents significant fraud risk for both consumers and financial institutions.“
Javelin said the findings point to the need for a marked shift in how financial service providers, merchants and technology companies fight the ever-evolving battle against fraud.