June is fraud awareness month here at Demyst! This means we're releasing a series of whitepapers and webinars on topics including application fraud, transaction fraud, and anti-money laundering. Fittingly, the topic for this week's Feed is a recent report commissioned by Equifax on trends in digital identity protection in the aftermath of the global pandemic.

36 billion records breached

In 2020, social media websites were breached to the tune of 36 billion records. Data breaches such as these fuel myriad types of fraudulent activities as fraudsters combine real PII with fake data to create synthetic identities. Given the substantial increase in online activity across e-commerce, banking, and payments, these synthetic identities, nurtured over time, provide fraudsters with a golden opportunity to commit identity-based financial crimes.

What will organizations do?

The Equifax report surveys over 300 auto dealers, banks, credit unions, and P2P lenders and asks them specific questions about their planned investments to fight fraud. Overall, 43% of respondents indicated they plan on investing in digital identity solutions, and 79% of firms indicated that they prefer to "increase the security of digital transactions even if it means acquiring fewer newer customers." However, the report also finds that one of the key issues organizations face is the "lack of coordination between fraud and risk and customer-facing operations" which "hinders identity verification and authentication processes." This means that many larger institutions will require a substantial retooling of their end-to-end identity verification workflows.

Demyst's Opinion

The Equifax survey supports our real-world experience discussing fraud with prospects and clients since the onset of the pandemic. The number of attacks has increased considerably, and application fraud committed through synthetic identities is of particular concern for many organizations. Luckily, there is also more external data than ever to verify a person's name, address, relationships, assets, and employer, among other attributes. We posit that as long as organizations commit to maintaining a flexible infrastructure that enables rapid integration of new data products and the modification of existing attribute-based rules, they'll be able to adapt as quickly as fraudsters.

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