Consumers have readily adopted digital commerce. Routes to interact and transact now converge into omnichannel ecosystems featuring multiple and sometimes hybrid, customer touchpoints. These touchpoints now also encompass more in-person interactions as consumer behavior begins shifting back towards pre-pandemic patterns in many parts of the world. Unfortunately, fraud networks continuously adjust and adapt to capitalize on all touchpoints and leverage newer digital norms to their advantage.
Organized fraud groups utilize the anonymity of digital ecosystems to carefully nurture stolen and synthetic identities. Fraudsters leverage these low-barrier entry points to launch highly nuanced scams to acquire or strengthen consumer identity information. These efforts lead to many types of fraudulent activity, including taking over established consumer accounts and creating fraudulent accounts using actual consumer information or by creating synthetic identities.
Synthetic fraud is a complex form of identity theft in which a criminal imitates a person using a combination of stolen personally identifiable information from a legitimate person and fake information, such as a false name, incorrect address, made-up date of birth or new phone number to create a false identity.
These fraudulent identities emerge across consumer touchpoints. Many organizations are preparing for both digital and physical attacks while others continue shoring up the digital perimeter. Today’s interconnected omnichannel ecosystems are driving a need for a more unified, holistic and persistent identity view that can be dynamically assessed across the consumer journey.
Consumer identities at their core are multi-dimensional. Three broad types of data points, namely digital, physical and behavioral attributes, define most consumer identities. Understanding and risk-assessing consumers through these three lenses positions businesses to enable safer and more efficient transactions over multiple channels.
- Digital identity encompasses a consumer's presence in digital channels. Digital identities tie to digital data elements, such as email address or device attributes. Digital identity intelligence includes how consumers engage with organizations while interacting in a digital channel, intelligence on which devices they use, the manner and frequency with which they use devices and location information on where they use them, for example.
- Physical identity refers to the data elements tying a consumer to a physical environment, such as an address or date of birth. This data is critical to understand because behind every legitimate consumer is a physical person.
- Behavioral identity recognizes how individual consumers interact with their devices and pinpoints behaviors, such as typing, swiping or clicking patterns. This helps differentiate between a bot, fraudster or legitimate consumer. Cutting-edge behavioral biometrics technologies can authenticate individuals based on these behavior patterns, meaning the technology can identify that a person is who they say they are or create a risk signal if a fraudster is attempting to access an account.
Ripple effects of networked fraud underscore the importance of every identity dimension
Widespread cybersecurity breaches provide a seemingly endless supply of personal identity information that serves as the raw material powering an array of synthetic and stolen identity fraud schemes. Sophisticated, highly connected fraud networks and innovative, more localized fraud rings are leveraging the proliferation of easily accessible identity data and low-barrier digital channels to test, nurture and perfect stolen and synthetic identity credentials.
Synthetic and stolen identities are becoming more difficult to uncover when businesses lack the context and insights linking consumers across the dimensions of physical, digital and behavioral identity on a global scale. Any dimension of identity information could be the lynchpin in helping to detect and expose individual fraud or even a much larger fraud. A recent report illustrates a real example of how 63 phone numbers and physical locations were linked to seven IP addresses and one email. Without analyzing the email and tying these disparate addresses to that account, these multiple network losses would have only continued to increase.
Digital commerce opens opportunities for synthetic and stolen identity fraud to thrive
As digital interactions continue to increase, large scale cybersecurity breaches and fraudsters’ heightened focus on scams create the ideal incubator for synthetic and stolen identities, two of the most pervasive identity challenges contributing to the upswing in account takeover and account creation fraud.
The global growth in identity fraud is also facilitated by unique factors at play in digital commerce, such as a wide range of disparity in consumer scam awareness and technical sophistication. Omnichannel ecosystems provide fraudsters with an optimal and readily available framework to monetize stolen or synthetic identity credentials by executing fraud schemes at high velocities.
Today's consumers have uncompromising expectations for well-protected, trusted customer experiences over every channel and interaction. The patterns and behaviors that traditionally formed the parameters around customer recognition and identity trust are becoming more varied and unpredictable as touchpoints to transact expand. A multi-layered solution approach can underpin a more holistic and unified view of physical, digital and behavioral identity that enables businesses to achieve a more responsive fraud defense to effectively mitigate emerging identity fraud threats and enhance the customer experience.