- The 9th annual report found over half of consumers say they’re somewhat or very concerned about conducting activities online
- 70 percent of businesses saying that AI fraud is expected to be the second greatest challenge for their business
Last month, Experian released its 2024 U.S. Identity and Fraud Report revealing that generative AI (Gen AI), deepfakes and cybercrime are critical threats putting intensifying pressures on businesses.
The ninth annual report found over half of consumers say they’re somewhat or very concerned about conducting activities online with identity theft (84 percent) and stolen credit card information (80 percent) as their top online security concerns, an over 20 percent increase from the previous year.
Rounding out the top five concerns were online privacy (67 percent), phishing emails or phone scams (65 percent), and false information or fake news and ads (49 percent).
Gen AI Fraud
Experian officials reported high engagement and investment from businesses in Gen AI, Gen AI security solutions and AI models that improve customer decisions. Businesses recognize the challenges of Gen AI with 70 percent of expected to be the second greatest challenge for their business—and Tier 1 businesses listed Gen AI fraud as their top stress point.
But funding for Gen AI fraud detection and prevention is lacking. Businesses ranked detecting and preventing Gen AI fraud and deepfakes as the 12th most important investment area behind prevention for legacy fraud types like identity theft and first-party fraud.
“With digital transactions increasing every day and new technology changing the fraud landscape, our latest report underscores the need for businesses to review their current strategies and invest in the right tools to address the evolving complexity of fraud schemes of the future,” said Kathleen Peters, Chief Innovation Officer for Experian in North America, in a press statement.
Fraud Prevention Methods
The report comes as the FTC reported consumers reported losing more than $10 billion to fraud in 2023, a 14 percent increase over the previous year and the highest dollar amount ever reported.
Currently, multifactor authentication (48 percent) and the use of passwords (45 percent) are the most used fraud prevention methods. Among the methods used most recently, physical analytics (71 percent), PINs sent to a mobile device (70 percent) and behavioral analytics (66 percent) evoke the highest sense of security for consumers, with security questions (63 percent) and passwords (58 percent) rounding out the top five.
While consumers have greater trust in these methods, less than 30 percent of businesses are using these solutions — showing companies could consider investments in physical and behavioral analytics to verify identities and combat fraud, said Experian analysts.
Multilayered Approach Needed
Consumers’ expectation that businesses will react to their fraud concerns has remained high at 82 percent. People understand the connection between identity verification and a positive customer experience with 63 percent responding it’s extremely or very important for businesses to be able to recognize them online.
The ability to repeatedly identify consumers can translate to trust—81 percent of consumers say they’re more trusting of businesses that can accomplish easy and accurate identification. Additionally, the report found that financial services companies were the most trusted, with retail banks, P2P lending and buy now, pay later financing all listed as top trusted organizations by U.S. consumers.
“Companies need to take a multilayered approach to fraud prevention that leverages the right data, analytics and technology in an orchestrated way to combat fraud and build trust and positive experiences with legitimate customers,” said Peters.