Multilayered approach needed to manage rising fraud threats
Statistics released in 2019 by the Southern African Fraud Prevention Service revealed a rise in identity fraud using both real (99%) and fabricated (48%) identity documents compared to 2018.
The South African Banking Risk Information Centre highlighted a similar trend, with 23,466 banking fraud incidents reported across banking apps, online banking and mobile banking in 2018, which amounted to more than R262m in gross losses, along with an 18.4% rise in credit card fraud and an 17.5% increase in debit card fraud over 2017.
“To mitigate the risks posed from identity theft and credit application fraud and best serve empowered consumers, credit providers are deploying a multilayered approach to managing fraud threats, but there is no ‘silver bullet’,” says Keith Wardell, director of fraud, ID and acquisition for TransUnion Africa.
New research by Experian and Forrester Consulting affirms that 85% of companies polled in Europe, Middle East and Africa (EMEA) consider identify fraud prevention and detection a top priority.
However, fraudsters are both inventive and relentless, with new opportunities emerging as transactions increasingly shift online.
“Many organisations feel they are locked in a digital arms race with fraudsters and recognise the need to invest in innovation and technology to manage fraud effectively,” says Mark Naicker, Global Fraud Consultant at Experian.
Experian’s research revealed that 51% of respondents in EMEA are planning to invest in artificial intelligence and machine learning solutions in the next three years, alongside single-access modular platforms (55%) and capabilities to prevent fraud.
Alfred Ramosedi, CEO of Bayport Financial Services, explains that credit providers also employ automation to identify risks. “Our originations processes and systems have built-in fraud triggers and we apply linking software in the background to identify potential identity fraud, document manipulation and employment misrepresentation,” he says.
Wardell adds that companies are also using online and offline datasets to create a single 360° view of a consumer’s personal and digital identity.
“This entails validating the consumer and the risk associated with the device they use to access digital channels. Sharing insights on fraudsters is also beneficial because collaboration, not competition, is key for credit providers to fight fraud.”
Darren Abrahams, CEO at Transaction Capital Business Solutions, elaborates that this process should also include obtaining copies of proof of residence and ID documents and verifying these against the person’s identity who signs the requisite documentation.
“To prevent credit application fraud, we research related businesses on the web, and also visit the actual business to ensure it exists. Another key element is the relationships we hold with our clients and their debtors through on-site visits and continuous engagement via our dedicated credit controller team,” explains Abrahams.
However, rising consumer expectations around customer experience and fraud prevention requires businesses strike the right balance between fraud prevention and positive, frictionless customer experiences.
Says Naicker: “Security measures that cause friction negatively impact on their experience.” As a consequence, he expects the transition from legacy systems to emerging technologies, automation, advanced analytics and biometrics will accelerate to help meet the demands of friction-free fraud prevention across every channel.