GIACT Report: $3.4B Lost To New Account Fraud In 2018

A new report from GIACT Systems has revealed that $3.4 billion was lost due to New Account Fraud (NAF) last year.

According to the report, The Evolution of New Account Fraud, produced by Javelin Strategy & Research, NAF tactics have shifted with the growing popularity of online accounts and payments. In addition, NAF continues to use more sophisticated identity fraud tactics, including  synthetic identities and complete impersonations.

“New account fraud has become the most expensive form of identity fraud for businesses and consumers alike,” Kyle Marchini, senior analyst, fraud management at Javelin Strategy & Research, said in an emailed press release. “Fraudsters have found new and unique ways to bypass the biographical traps set up by organizations, rendering certain validation practices too weak to solely rely upon for protection. Fraud has also migrated, finding less conventional targets, such as loan products, as prime NAF candidates.”

In fact, NAF hit its second highest level ever, affecting 3.2 million consumers in 2018. One factor contributing to the rise is the mobile phone.  The report noted that “for fraudsters, new mobile devices are cheap and new service accounts are easy to obtain. This has made them especially cost-effective tools for committing new account fraud as banks, issuers, and increasingly lenders are not only extending prospective customers the ability to apply online and using mobile apps, but they are relying on increasingly unreliable data from mobile network operators to prevent fraud during account opening.”

And there has also been a rise in familiar fraud, which is where a fraudster personally knows the victim, whether it’s a family member, friend or caretaker.

“GIACT has been closely monitoring the evolution of all types of account-related fraud, including NAF,” said David Barnhardt, executive vice president of product at GIACT. “It’s important that any business processing payments, offerings loans, or exchanging goods and services, rethink and strengthen how they validate their customers’ identities. Enhanced identity proofing throughout the customer lifecycle — from enrollment, payment to a change event — should be applied if fraud is to be challenged.”