Blog: Fraud Trends to Watch
By John Dancu, IDology
Fraud? Oh no … couldn’t happen to me!
Is that how you or your organization approaches potential fraud? Well … if it is, it might be time to take a closer look.
In our recent “Fraud Report,” which polled senior executives from our customer base of financial service providers and companies in health care, retail, telecommunications and utilities, among others; 66 percent of organizations reported suspected fraud attempts in the past 12 months. And —35 percent of respondents cited an increase in these attempts.
Today, there seems to be a perfect storm for potential fraud—and, it is up to you to put the right processes and systems in place to prevent it. As more and more organizations expand their online business and more and more users share their information on and offline, it’s easier than ever for fraudsters to get hold of sensitive information.
How do fraudsters use that information? As our Fraud Report discovered, 78 percent of suspected fraud attempts occur in Website applications. The fraudster steals your personal information and then targets businesses operating in a customer-not-present environment (mainly online or in a call center). After all, as the fraudster believes … how does the organization REALLY know that they aren’t who they say they are?
The first step in fraud prevention is always awareness. We recently released an infographic (at right) detailing some important trends in fraud, including the key challenge executives cite in dealing with fraud: shifting tactics.
Credit, debit and/or prepaid card fraud was cited as the most prevalent type of fraud attempted receiving 57 percent of responses, with “account takeover” ranked second at 35 percent. Although the majority of organizations reported that credit, debit and prepaid card fraud is the most prevalent within their industry, many businesses (51 percent) believe they are the most prepared to prevent this type of suspected fraud, followed by money laundering at 37 percent.
According to survey respondents, 45 percent estimate that the average transaction value of suspected fraud attempts in their industry is under $1,000. Only 12 percent pegged average transaction value of suspected fraud at $35,000 to $50,000. However, when you drill down and look specifically at medium enterprise organizations, you see a much higher average fraudulent transaction value—22 percent say fraudulent transactions range from $35,000 to $50,000, a whole 10 percentage points higher than the overall average.
Your organization doesn’t have to be a fraud victim. Staying ahead of the fraudsters requires vigilance and the right fraud-prevention technology.
John Dancu has served as president and CEO of IDology since 2005. The company, which provides identity verification and fraud prevention solutions, is helping prepaid processors and program managers increase approval rates while lowering overall costs and improving manual review inefficiencies. A serial entrepreneur, Dancu previously guided Synchrologic (mobile enterprise infrastructure software), NetZip (consumer compression and downloading technology) and K&G Men’s Center (superstore retailer of men’s apparel) in their rapid growth and successful sale, including the public offering of K&G. He can be reached at [email protected].
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