ATLANTA—Nearly 10% of all new account openings and 5% of password resets represent a fraud attack, according to a new report.
The new report demonstrates just how digital transactions have dominated the global marketplace as the pandemic-driven trend of consumers migrating to online interactions became commonplace behavior—and how fraud has also followed.
LexisNexis Risk Solutions released the findings as part of its first Global State of Fraud and Identity Report, which explores research and insights from industry experts on recent statistics and trends from its studies on the Global True Cost of Fraud and transaction data, which is based on more than 39-billion transactions from the LexisNexis Digital Identity Network from January 2022 to June 2022.
Digital transactions in the LexisNexis Digital Identity Network rose by 37% YoY for the period, the company said.
A Big Jump
“Pandemic-driven digital transaction growth continued to attract fraud attacks, with global businesses recording a 32% jump in the human-initiated attack rate over the past 12 months, while high-velocity automated bot attacks were up 38% YoY,” LexisNexis said. “Shifts to mobile channels continued to increase, reaching 76% of all transactions in the Digital Identity Network. Consumers today use an average of four connected devices to facilitate digital economy transactions.”
The analysis added that the addition of new ecommerce channels via marketplaces and within the wider banking ecosystem, along with a proliferation of payment options such as Buy Now Pay Later (BNPL), digital wallets and QR codes, contributed to a growth in transactions across mobile channels.
“As consumers adopt multiple digital channels and payment formats, they expect a positive experience and trusted security measurements at every touchpoint,” LexisNexis stated. “Identification and authentication solutions across the entire customer journey are becoming mandatory, as fraudsters build attack strategies at every stage. One in 12 new account openings and one in 20 password resets represent an attack.
Key Findings
Among the other key findings in the LexisNexis Risk Solutions Global State of Fraud and Identity Report:
- Bot Attacks Continue Rising. Businesses globally experienced a 38% increase in malicious bot attacks in the past 12 months. Ecommerce businesses in particular face a bigger threat as the bot attack rate increased 155% YoY. Regionally, EMEA recorded the highest growth in bot volume (98%), followed by LATAM (83%), Lexis Nexis said.
- Human-Initiated Attacks Also Continue to Grow. Human-initiated attack rate grew 32% YoY globally. North America showed the highest YoY increase of 52%, followed by EMEA (19%), the report states.
- Fraud Evolves with New Payment Methods. Increased adoption and strong demand for contactless payment methods in APAC are major contributors to the rise of QR code fraud. QR code payments and peer-to-peer transfers are becoming the leading payment channels in Southeast Asia and India. BNPL is gaining traction globally and in EMEA particularly, leading to an increase in New Account Opening fraud, LexisNexis said.
- Risks Across the Customer Journey. Fraud networks are increasingly industrialized and pervasive in the omnichannel digital ecosystem leading to a dramatic rise in scams including social engineering, identity theft, password reset and account takeover fraud. The escalating risk of account takeover fraud is one of the biggest threats, as mobile app logins attack rates increased 211% YoY, the report found.
- Identity Verification Remains the Top Hurdle. Customer identity verification remains a top challenge for global businesses across APAC, EMEA, LATAM and NAM. Global businesses cited limited real-time third-party data (46%) and limited real-time transaction tracking (43%) as the two biggest challenges in verifying customer identity in online channels, LexisNexis reported.
- Industrialized Fraud Networks Attack Businesses Across Border. “Fraudsters work within complex networks. Every piece of data used is linked to the next valuable piece of data on a mass global scale,” LexisNexis reported. “Therefore, businesses and industries need greater collaboration globally to fight the fraud network but also to understand who the trusted consumers are. Gaining visibility of trusted consumers allows businesses to open up new revenue channels and upsell to a loyal consumer base.”
The Need to be Flexible
"Digital fraud has continued to grow as economies around the world re-opened in 2022, as we anticipated in our H2 2021 Cybercrime Report. The latest surge in scams shows how the fraud landscape will continue to morph. Organizations need to use flexible fraud prevention models coupled with an adaptive authentication approach," said Stephen Topliss, vice president, fraud and identity, LexisNexis Risk Solutions. "Using digital identity intelligence can improve the omnichannel consumer experience by providing a unified and persistent view of associated risks, helping to drive conversion rates, customer satisfaction and loyalty. A solution approach deep in layers, combining behavioral biometrics with global digital identity data and risk-appropriate authenticators, enables businesses to confidently make risk-based decisions while delivering a friction-appropriate customer journey."
For info: Global State of Fraud and Identity Report.
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