“Experian’s study explored consumers' online interactions and expectations regarding security and customer experience.”
Why this is important: More than 50 percent of consumers are more concerned about fraud now compared to a year ago, according to a study by Experian, a multinational data analytics and consumer credit reporting company.
Experian’s “2023 U.S. Identity and Fraud Report” found consumers and businesses were worried about fraud and online security, with nearly two-thirds of people surveyed reporting that they are concerned or somewhat concerned with online security. The report is based on survey responses from more than 2,000 consumers in the U.S., as well as a separate survey of more than 200 businesses in North America, ranging in size from $10 million to above $1 billion in revenue. The report comes as most financial institutions and other lenders are preparing to increase spending on compliance measures and projects to combat different types of fraud.
The Experian survey found consumers were most concerned about identity theft (64 percent), followed by stolen credit card information (61 percent) and online privacy (60 percent). Among the businesses surveyed, nearly 70 percent reported that fraud losses have increased in recent years. Another finding was that authorized push payment fraud was the leading fraud event type, experienced by 40 percent of businesses (“push payment fraud” occurs when fraudsters deceive consumers or individuals at a business to send them a payment under false pretenses to a bank account controlled by the fraudster). Most businesses said they would increase their fraud budgets by 8 to 19 percent, likely responding to the high expectations of consumers, with 85 percent saying they expected businesses to respond to fraud concerns.
Experts anticipate that a portion of the increased spending will go towards research and the application of machine learning to fraud identification strategies. The study found nearly 60 percent of businesses were already emphasizing or are looking to build machine learning capabilities. The rise of “AI” in fighting financial crime has been supported by businesses, with 90 percent of the businesses in the Experian survey currently using machine learning models reporting a high level of confidence in their effectiveness at fraud detection and prevention. 87 percent of those businesses reported high levels of confidence at customer authentication.
Kathleen Peters, chief innovation officer for Experian’s decision analytics business in North America, said: “With the right identity and fraud prevention solutions in place, businesses can take a multilayered approach to verify identities, properly treat fraud and provide a frictionless customer experience that builds trust.” --- Bryce J. Hunter