According to Experian, GenAI, deepfakes and cybercrime are critical threats that are increasing the pressure on companies.
Consumers’ biggest online security concerns
According to the FTC, consumers are expected to lose more than $10 billion to fraud in 2023 alone, up 14% from the previous year and the highest dollar amount ever reported. Experian research shows that more than half of consumers say they are somewhat or very concerned about online activity, with identity theft (84%) and stolen credit card information (80%) as their top online security concerns, up over 20% from the previous year.
In addition, online privacy (67%), phishing emails or phone scams (65%), and false information or fake news and ads (49%) are among the top five online security concerns of U.S. consumers.
While consumers value the convenience and accessibility of digital transactions, they don’t want to compromise on security, so consumer expectations that businesses respond to their fraud concerns remain high at 82%. People understand the connection between identity verification and a positive customer experience: 63% say it is extremely or very important that businesses can recognize them online.
The ability to repeatedly identify consumers can build trust. 81% of consumers say they trust companies that allow for easy and accurate identification more. The report also found that financial services companies are the most trusted, with retail banks, P2P lending and buy-it-now financing listed as the most trusted organizations by U.S. consumers.
Lack of resources for fraud detection and prevention through GenAI
This year’s data showed that companies reported high levels of engagement and investment in GenAI, GenAI security solutions, and AI models that improve customer decisions. Yet companies are aware of the challenges of GenAI: 70% of companies said AI fraud is expected to be the second biggest challenge facing their business. In fact, Tier 1 companies cited GenAI fraud as their biggest stressor.
Despite these concerns, funding for GenAI fraud detection and prevention remains lacking. When asked about the top potential investment areas for 2024, companies ranked GenAI fraud and deepfake detection and prevention as the 12th most important investment area, just after preventing traditional fraud types like identity theft and first-party fraud. As GenAI adoption continues to grow, companies must be prepared to combat this evolving fraud.
Fraudsters have also realized that GenAI gives them advantages in conducting fraud on a broader scale. Just as it does with businesses and consumers, fraudsters can use the technology to quickly create images, text and videos to create fake bank statements, IDs, duplicate company websites and even deepfakes of company executives using their voice and image.
Currently, multi-factor authentication (48%) and the use of passwords (45%) are the most commonly used fraud prevention methods. Among the most recently used methods, physical analytics (71%), PINs sent to a mobile device (70%) and behavioral analytics (66%) give consumers the highest sense of security. Security questions (63%) and passwords (58%) round out the top five.
Interestingly, while consumers have a higher level of trust in physical biometrics and behavioral analytics, less than 30% of businesses use these solutions, indicating that companies could consider investing in physical and behavioral analytics to verify identities and combat fraud.
“As the number of digital transactions increases daily and new technologies change the fraud landscape, our latest report underscores the need for companies to review their current strategies and invest in the right tools to address the increasing complexity of future fraud systems,” said Kathleen Peters, chief innovation officer at Experian in North America. “Companies must take a layered approach to fraud prevention that leverages the right data, analytics and technology in an orchestrated manner to combat fraud and build trust and positive experiences with legitimate customers.”
