The current state of fraud
The US Federal Trade Commission (FTC) recently announced that consumers reported $8.8 billion worth of fraud losses in 2022. With a significant percentage of the world’s total population online—there are approximately 8.01 billion people in the world and 5.16 billion of them use the internet—and the rapid digitalization of services, the significance of a secure digital identity is more important than ever for businesses and consumers.
From fraud schemes, identity fraud, cyberattacks, crypto scams and more, personally identifiable information (PII), money and other sensitive data are actively at risk for theft and exploitation. In our recently published State of Fraud 2023 we looked at some of the biggest scams, cyberattacks and dollars lost from the past year to help inform the preventative fraud strategies to implement on an ongoing basis.
Fraud: when it comes to exploiting sensitive data online, fraudsters have a wide pool to choose from. Sadly, there has been no shortage of successfully executed fraud schemes, so it’s no surprise that fraudsters have gotten away with billions of dollars. Businesses are not exempt from being targeted; in fact, a report found that 46% of companies experienced some form of fraud in the past two years. Whether it’s online scams, identity theft or synthetic identity fraud, to name a few, individuals and businesses have to constantly be on guard to avoid exploitation and losses.
Cyberattacks: phishing, ransomware, data breaches and other forms of cyberattacks are becoming increasingly pervasive and are a real threat to companies across all industries. In 2022, companies in the US experienced over 1,800 data-related compromises, impacting the information of hundreds of millions of people. More, a very significant percentage of companies have been breached more than once. The importance of following cybersecurity best practices and having protective protocols and policies in place to protect data and prevent illicit access cannot be overstated.
Data privacy: with the ongoing threat on personal and other sensitive data, data privacy and protection are becoming a higher priority for government officials, including for different states in the US. Since companies handle consumer data, it is critical that they have effective protocols and processes in place to secure PII. However, a lack of a federal initiative, and different states introducing their own privacy-related legislation—not to mention the different global privacy standards that also exist—means that there is a lot companies must keep track of to ensure compliance and avoid hefty fines.
Cryptocurrency: 2022 was a volatile year for the crypto industry, in large part due to significant market fluctuations and major money laundering scandals. This has not deterred fraudsters in the slightest; in fact, criminals stole billions worth of cryptocurrency in the US alone in 2022. While the industry is not as heavily regulated as other financial industries, this is changing. Regulators are increasing their scrutiny on the industry and are enforcing new regulations as part of wider anti-money laundering (AML) efforts to prevent financial crime.
Taking a proactive approach
Having a proactive approach and the right technology to combat fraud, cybercrime and financial crime are imperative for companies that want to stay competitive while protecting their business and customers. Fraudsters are evolving their methodologies to adapt to advancing technologies, so depending on ineffective processes can result in fraud, unhappy customers and financial losses.
An advanced multi-layered set of solutions of identity verification, regulatory compliance and fraud management, is essential for businesses to effectively circumvent overwhelm fatigue from fighting a multitude of fraud attacks while still maintaining a competitive edge.
Identity verification with data verification, document authentication and selfie + ID verification helps to verify the genuine presence of an identity and quickly establish trust. Regulatory compliance that includes Know Your Customer (KYC) and transaction monitoring addresses the full AML lifecycle and fights financial crime. Orchestration with machine learning enables a layered defense against evolving and sophisticated fraud.
By leveraging an inclusive platform, businesses can unlock growth, reduce financial crime and fight fraud no matter the use case.
For more insights into the state of fraud, download our State of Fraud 2023 today.