Total Identity Fraud Losses Soar to $56 Billion in 2020

The 2021 Identity Fraud Study, released today by Javelin Strategy & Research, part of the Escalent family, reveals a daunting new threat to consumers and businesses: identity fraud scams. While total combined fraud losses climbed to $56 billion in 2020, identity fraud scams accounted for $43 billion of that cost. Traditional identity fraud losses totaled $13 billion. The reduction in transaction activity in 2020, combined with financial institutions’ more robust antifraud measures, made it harder for criminals to succeed in their usual fraud activities. They opted instead to interact directly with their fraud victims via identity fraud scams. The scams can sometimes be averted when consumers are more sensitive to misspelled email addresses, suspicious requests for money, or random messages through social media from criminals claiming to represent a financial institution.

With traditional fraud, consumers often have no idea how their identities were stolen. With scams, they can often tell, upon reflection, the exact moment when they interacted with a criminal via email, phone, or text.

“The pandemic inspired a major shift in how criminals approach fraud,” said John Buzzard, Lead Analyst, Fraud & Security, with Javelin Strategy & Research. “Identity fraud has evolved and now reflects the lengths criminals will take to directly target consumers in order to steal their personally identifiable information.”

Pandemic changes consumer behavior
The global pandemic has had a dramatic impact on consumer financial behavior. Consumers spent more time at home in 2020, transacted less than in previous years, and relied heavily on streaming services, digital commerce and payments. They also corresponded more via email and text, for both work and personal life.

“Criminals follow current events, and unfortunately the pandemic has provided them a host of new storylines to employ online,” said Kathy Stokes, director of the AARP Fraud Watch Network. “Helping consumers know how to spot the red flags of scams is an important step in stopping fraud before it has a chance to happen.”

The reduction in transaction activity, combined with financial institutions’ more robust antifraud measures, made it harder for criminals to succeed in their usual fraud activities. They opted instead to interact directly with their fraud victims via identity fraud scams. The scams can sometimes be averted when consumers are more sensitive to misspelled email addresses, suspicious requests for money, or random messages through social media from criminals claiming to represent a financial institution.

Consumers begin to embrace advanced authentication
Growing acceptance of various digital payment channels presents an opportunity to increase consumer awareness of stronger forms of authentication. Fingerprint scanning and facial recognition, for example, are growing in popularity with consumers.

“Identity verification, throughout the consumer’s digital account engagement, is more vital than ever,” said Cindy White, Chief Marketing Officer at Mitek. “Consumers are willing to do their part to let go of traditional methods and leverage advancements in AI and new biometric technology such as facial scanning. This is good news for them and for their financial institutions.”

As consumers become increasingly savvy online, safe digital transactions will form the foundation of a productive and secure remote financial ecosystem.

“Static forms of consumer authentication must be replaced with a modern, standards-based approach that utilizes biometrics,” said David Henstock, Vice President of Identity Products at Visa. “Businesses benefit from reduced customer friction, lower abandonment rates and fewer chargebacks, while consumers benefit from better fraud prevention and faster payment during checkout.”

With thanks to Business Wire. The full story is here: https://www.businesswire.com/news/home/20210323005370/en/Total-Identity-Fraud-Losses-Soar-to-56-Billion-in-2020

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