COSTA MESA, Calif.— More than half of consumers feel they’re more of a target for fraud than a year ago, according to a new report.
The findings were included in Experian’s 2023 U.S. Identity and Fraud Report, which further found “consumers and businesses alike are keeping fraud and security top of mind amid uncertain economic conditions with nearly two-thirds of people surveyed reporting they’re very or somewhat concerned with online security.”
Consumers’ top concerns include identity theft (64%), stolen credit card information (61%) and online privacy (60%), Experian reported.
The Findings
Among the other findings:
- Just over half of businesses report a high level of concern about fraud risk with leading areas including transaction fraud, cybercrime and identity theft.
- Nearly 70% of businesses report that fraud losses have increased in recent years and authorized push payment fraud is the leading fraud event type experienced by 40% of businesses.
Higher Expectations
Meanwhile, Experian found consumers have higher expectations for security.
“Consumer expectations continue to rise with 85% of people expecting businesses to respond to fraud concerns,” the company reported. “Most businesses say they’ll increase their fraud budgets by 8% to 19%, but they’ll also need to align with consumer expectations. For example, 85% of people said physical biometrics are the most trusted authentication method, yet only a third of businesses use it.”
Investing in Biometrics
The report found though that some businesses are listening to consumers, with 32% of them saying they’ll be investing in physical biometrics solutions, Experian said.
“Businesses also need to ensure they’re delivering seamless online customer experiences,” Experian said. “In fact, 51% of consumers considered abandoning a new account opening because of a negative experience, and 37% said a bad experience caused them to take their business elsewhere.”
Machine Learning
Experian said the report found machine learning is now integral to fraud prevention
“To help address fraud in 2023, nearly 60% of businesses are already emphasizing or are looking to build machine learning capabilities into their fraud identification and prevention strategies,” Experian stated. “Machine learning can help businesses analyze large numbers of transactions and data sets so that fraud risks can be identified.”
For those businesses currently using machine learning models, Experian said it found:
- 90% reported a high level of confidence in their effectiveness at fraud detection and prevention
- 87% reported high levels of confidence at customer authentication. This shows that incorporating this innovative technology into fraud prevention strategies will be table stakes for businesses to keep up with growing fraud risks and consumer expectations.
The Loss Estimate
Last year, Experian said it estimates its fraud prevention solutions helped clients save at least $12 billion in fraud losses globally.
The full report can be found here.
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