DALLAS, TX – GIACT Systems, the industry leader in payment fraud reduction, today announced the results of an industry analysis that showed the growing costs of identity fraud to consumers and the payments ecosystem. Based on analysis of multiple data sources, identity theft and identity-related payments fraud will continue to increase in 2018.
"The industry needs a new model of identity-proofing to close the security gaps. Most of the tools currently deployed are outdated and create vulnerabilities that savvy fraudsters can easily exploit."
The volume of fraud attempts and the cost-per-incident of losses have increased in recent years. According to Javelin Strategy & Research’s, 15.4 million consumers in the U.S. were victims of identity theft in 2016 at an estimated cost of $16 billion.
New Account Fraud is on the rise
One area that is particularly vulnerable is new account fraud (NAF). Fraudsters have become increasingly adept at evading detection systems that prevent fraudulent enrollments. Fifteen percent of consumers who are victims of NAF only become aware after reviewing their credit report. Another 13% only discovered the fraud when contacted by a debt collector. This illustrates how financial institutions are failing to protect consumers at the point of enrollment by allowing fraudsters to open new accounts using stolen personal identifying information (PII).
Increases in stolen PII are fueling true name fraud attempts
Losses tied to stolen PII also increased with higher losses per person than in previous years ($263 average), a 61% increase in total losses to victims, and a total of 20.7 million hours spent resolving incidents involving stolen PII. With the frequency and severity of recent data breaches, fraudsters now have a vast database of stolen PII that can be used for fraud for years to come.
Synthetic Identity is increasing with high losses per incident
Synthetic identity fraud is one of the most lucrative areas that fraudsters have now turned to, especially since point-of-sale fraud has been mitigated with the popularization of new card technology. The estimated cost to the credit card industry alone was over $6 billion with extremely high loss-per-incident ($15,000). Using fictional PII, fraudsters use synthetic identities to open accounts that they nurture for months or longer in order to establish a seemingly legitimate credit history. Once credit has been established, they take full advantage of open credit lines to buy goods and services that are never paid for. Credit card companies often only discover that a customer account is based on a synthetic ID after incurring thousands of dollars in losses and costly, time intensive investigations.