The millions associated with identity authentication failures

The millions associated with identity authentication failures
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August 13, 2021

With millions of devices around the world connected to techno-financial services, attackers have targeted consumers, causing losses of US$56.000 million in the US just in 2020 through sophisticated fraud techniques.

Preventor, a company dedicated to the authentication of digital identity, considers that identity fraud generates an impact at all levels, threatening companies with a loss of credibility by exposing critical user data, while impacting their productivity.

In fact, last year at least 49 million Americans were victims of identity fraud, mainly in attacks related to digital wallets and peer-to-peer (P2P) accounts, according to a recent report from Javelin Strategy & Research.

"Identity fraud has evolved" alerts Javelin Strategy & Research analyst, John Buzzar, who notes that "the pandemic inspired a major change" in the way criminals act.

A turning point was in 2020 since, during the lockdown, consumers opted for digital channels to make their essential purchases, taking the number of online buyers from 209.6 million in 2016 to 227.5 million in 2020 in USA.

The number of individuals performing transactions, searches, and price comparisons of products, will reach 230.5 million in 2021 and will make the US become the world leader in terms of the extent of e -commerce activity, which is more and more challenging for those who are dedicated to ensuring the security and traceability of operations.

Many attacks, few actions

A survey carried out by PwC in 2020 in almost a hundred territories across the world shows that crimes related to fraud are growing dramatically. Indeed, 47% of the companies surveyed suffered an attack of this type in the last 24 months and these crimes represented costs of US $42 billion.

Beyond statistics, the most worrying issue about the situation is that once they are attacked, the organizations are not acting with the same speed, as evidenced by the fact that only 56% of them have investigated their worst incident and only a third part reported it to the board.

"What is the message? For any business, including yours, the threat of fraud is present and growing. It is a risk that companies ignore or underestimate thus putting themselves in danger. And too many companies are doing just that,” he warns.

The costs are more than monetary

The costs associated with identity authentication and failures in security strategies, which arise from neglecting authentication systems with alternatives such as facial and voice recognition, go beyond being simply monetary, according to Preventor analysts.

Lance Spitzner, a specialist at the SANS Institute, an organization focused on information security, warned that "undoing identity fraud can take an average of six months and 100 to 200 hours of a person's time," as stated in the British publication The Economist.

These exposures can be avoided by implementing a comprehensive Know Your Customer (KYC) strategy, for which it is key to have a professional guide that allows organizations, for example, to authenticate documentation across jurisdictions, an exercise that, combined with high-tech biometric matching, ensures reliability.

Indeed, Visa's vice-president of identity products, David Henstock, has said in the Javelin Strategy & Research study that “static forms of consumer authentication must be replaced by a modern standards-based approach using biometrics”.

As explained by Preventor, not knowing your customers can lead to strong financial and reputational penalties for organizations that are under pressure from regulators to prevent bribery and money laundering based on risk analysis.

Considering the costs associated with ignoring the efficiency of identity authentication, one of the most viable options is to seek advice from the most experienced firms to comply with regulations. In this way companies can save money if one considers that deploying a team of professionals who are 100% dedicated to this task can represent a multi-million investment.

The key is to recognize the risks associated with your operation, to identify failures in time, mainly those that may put the critical information of your clients at risk, and to act now with the help of a strategic partner that has the experience and the adequate infrastructure to face this challenge in a society that increasingly depends on fintech solutions in its day-to-day activities.

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