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Identity fraud declined 15% annually from the record high 16.7 million US adults who experienced identity fraud in 2017 to 14.4 million US adults in 2018, according to Javelin’s 2019 Identity Fraud Study.Business Insider Intelligence
While the overall rate of identity fraud declined, there were notable increases in certain areas: Since 2016, fraud victims’ out-of-pocket costs have more than doubled to $1.7 billion, while new account fraud increased by $400 million from 2017 to 2018 to reach $3.4 billion.
The study highlighted that while card-present fraud is declining, fraudsters are flocking to other channels.
- The EMV migration has led to a steep decline in card fraud. Card fraud losses dropped from $8.1 billion in 2017 to $6.4 billion in 2018 and the instance of card fraud dropped from 5.47% to 4.40%. The study highlighted the EMV migration as a contributor to the decline in card-present fraud: 68% of US storefronts, or 3.1 million merchants, now accept chip cards as of September 2018, marking a 682% increase from when the EMV migration began in September 2015, according to Visa data.
- But the success of the EMV migration in preventing counterfeit fraud has caused fraudsters to turn to more vulnerable channels. Fraudsters have largely redirected their efforts to other commerce channels and are now taking over accounts: Takeovers of mobile phone accounts nearly doubled from 380,000 victims in 2017 to nearly 680,000 in 2018. Fraudsters intercept alerts and one-time passwords sent by text message, which is one of the most common forms of authentication used today, making it imperative for firms to update their account-opening processes to include risk assessments. And surging e-commerce is driving fraudsters to digital channels — which now account for two-thirds of all payment fraud — necessitating merchants to adopt new fraud prevention solutions and for payments firms to bolster their existing solutions to provide better protection.
Fraud concerns could play a role in perpetuating cash usage.Concerns over fraud have left some consumers wary of using electronic payment methods, which has fed into ongoing cash usage: 22% of consumers prefer to pay in cash because of fears about identity theft or credit card fraud, according to a study by the NBD Group.
Finding new ways to authenticate and verify customer identity without disrupting the customer experience or adding friction is imperative for firms to offer protection while also mitigating their own losses.
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See Also:
- Baby boomers and Gen Xers fuel Zelle
- Facebook is building its own cryptocurrency for real-time cross-border transfers
- Amazon is partnering with the Mexican government on mobile payments
Source: Business Insider – feedback@businessinsider.com (Rachel Green)