The impact of identity fraud could be reaching a ‘tipping point’, according to a new report from GBG – the world-leader in identity intelligence. The comprehensive study, GBG State of Digital Identity: 2020, found that a ‘trust gap’ may be widening between businesses and consumers, as identity theft becomes prevalent and businesses become overconfident.
The report highlights how a digital acceleration in 2020 has seen new cohorts of customers join the digital economy for the first time: a third of consumers aged 75 or older signed up to a new online account this year, for example. Despite a fifth of the public being hit by identity fraud this year, businesses are prioritising experience over security: more than a quarter (28%) say ‘high’ or ‘extreme’ levels of fraud are still accepted within their organisation.
The findings come as the UK and US join a growing list of countries accelerating policy initiatives designed to address the challenge of digital identity. And GBG’s findings suggests that time is of the essence: the public has become more concerned about fraud as a result of COVID-19, and despite many instances of overconfidence, businesses feel unprepared for emerging threats such as ‘social engineering’ and ‘synthetic identity fraud’.
Key findings from the GBG State of Identity 2020 include:
- Digital acceleration in 2020
47% of consumers opened an online shopping account this year, followed by social media (35%) and online banking (31%). They increasingly see their mobile number (50%), email address (48%) and biometric data (28%) as core parts of their identity - Identity theft is sweeping across Europe
1 in 5 consumers were affected by identity fraud this year - Businesses putting COVID-cautious consumers at risk
1 in 3 have become more worried about fraud, as a result of COVID-19. Yet, but businesses are prioritising experience and sales over security: more than a quarter (28%) of companies say ‘high or extremely’ levels of fraud are accepted by their organisation - Black market for personal data contributes to anxiety
33% of the public now believe their personal information is currently available for sale online; research suggests that identities are ‘for sale’ on the dark web from as little as £10 - The threat matrix is evolving
Businesses say credit and debit card fraud (56%), phishing attacks (46%) and e-transfer fraud (37%) are most prevalent today – but they are now least prepared to fend off synthetic identity fraud (26%), IP piracy (26%) and social engineering attempts (25%) - Banking and government fraud top concerns list
Banks are streets ahead of new ‘fintech’ challengers for accounts opened this year. But they are also most at risk of losing trust, topping the chart for consumers’ fears over fraud risk (36%) – followed by government fraud (11%) - Brits exposed in run-up to Christmas
GBG’s eCommerce experts predict retailers will be hit by an average of 20,000 fraud attempts each, during the festive shopping period (November-January) this year. It could see up to 24million customers falling victim to eCommerce fraud during this period
“The complex set of data points which shape our identity are now vital in keeping the wheels of commerce turning. They create digital trust, allowing people and providers to interact safely without opening the floodgates to fraud”, says Gus Tomlinson, GM of Identity Fraud, Europe at GBG, who led on the research.
Tomlinson cites the concept of ‘friendly friction’ as key to economic growth, post-pandemic: “The research shows that not only is identity fraud already prolific, the ‘trust gap’ it creates poses a risk to industries which will depend on digital trust if they are to thrive in 2021 and beyond. For some businesses and even entire sectors, we are nearing a tipping point: get this balance wrong, and lose trust – and therefore customers – for good.”
With 57% of businesses seeing fraud levels rise this year, the cost is adding up: each individual identity fraud attempt can costs an average of £1,000 – £4,999 to the organisation. To help businesses better navigate this challenge and tackle identity fraud, GBG has launched its Identity Fraud Cost Calculator – an interactive tool allowing businesses to understand how much identity fraud is costing them, and visualise the impact of adapting their fraud prevention strategy.
The findings and full report are now available here.
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