New fraud threats, synthetic ID fraud and AI fraud are all on the rise and research from IDology finds senior executives believe their companies are ill-equipped to handle these problems.
In its annual fraud report, based on feedback from more than 250 business and finance executives and security professionals, IDology reports 40 percent of businesses across an array of industries experienced an increase in synthetic identity fraud (SIF) over the last 12 months and 92 percent expressed concern over SIF. The study found 33 percent believe that the fraudulent use of artificial intelligence and machine learning will be the most severe form of fraud in the next three years.
The study also found big data breaches and fraud are eroding consumer trust as 49 percent of businesses reported a decline in customer trust over the past year.
A possible negative impact on transactions
As more transactions take place online, the report also finds fraud vectors are shifting away from point-of-sale (POS) and 58 percent of businesses report fraud is increasing in their online channels.
“With close to half of companies surveyed experiencing a loss in consumer trust, businesses have added pressure in the fight against fraud to create extra checkpoints for digitally verifying customer identities,” said IDology in a statement. “But too many fraud prevention measures result in friction for consumers and loss of revenue. This can result in costly cart abandonment and decrease the likelihood that consumers will use features that drive repeat business, such as keeping a credit card on file.”
The report also finds fraudsters are adapting and looking for smaller scores. The IDology study found that fraud transactions under $500 have increased 50 percent as criminals evolve their strategies and look to fly under the radar of legacy fraud detection approaches. At the same time, mobile attacks continue to be a top form of fraud among businesses surveyed with the prevalence of mobile text SMS interception surging by 40 percent compared to last year.
Compliance is an increasing burden
Many respondents also expressed concerned over coming regulatory pressure. CCPA compliance will be more burdensome than GDPR according to 28 percent of executives, while 30 percent believe it will be equally as burdensome.