Many businesses have shifted to a hybrid or fully virtual environment post-COVID-19, making cybersecurity a priority.
In the past couple of years, fraud and identity theft have become increasingly serious issues, with the Federal Trade Commission (FTC) reporting four million cases of identity theft in 2020. This is a 45% increase from 2019, which had over three million.
For many people, 2020 was a rough year. Millions lost their jobs and struggled to make a living. The high unemployment rate may be one of the reasons why fraud cases have become rampant. People turn to cybercrime through various hacking methods, with phishing and impersonation scams being some of the most common.
Organizations can learn from these experiences to equip themselves with better cybersecurity measures.
Emerging Trends in the Fight Against Fraud
1. More advanced biometric authentication
One of the safest methods for cybersecurity is biometric authentication. This does not involve any physical ID, document, or smartphone app but uses fingerprint, eye, or facial scans. Additionally, you don’t need to remember any codes since you are your own password.
Cybercriminals try to beat the system by using deepfake programs that mimic a real person’s looks. Biometric methods continue to evolve, rendering them useless.
2. The use of passwordless security
When creating online accounts, it’s often necessary to include personal information. If you’re looking into alternatives that will prevent your personal information from being leaked, passwordless authentication can be the ideal route.
Passwordless methods can be from emails, SMS, push notifications, or biometric authentication, making logins easier and more secure since passwords can be lost or stolen.
3. Improved cybersecurity strategies with bigger budgets
In 2022, many organizations aim to allocate more funds to provide better cybersecurity. This has become essential with the massive transition of businesses online, primarily due to remote work. With the significant amount of data being transferred online, cybercriminals are more driven to steal sensitive information.
Having a larger budget for cybersecurity allows organizations to develop more secure methods for identity proofing and fraud prevention.
4. Migration to a Hybrid Cloud Model for better data security
Attackers may focus on one cloud environment, which means whatever data is in the cloud may be exposed. Because of this, many businesses have considered or shifted their attention to a hybrid approach, allowing them to manage and protect data better.
This strategy will spread your company’s information in different areas, making it less susceptible to data breaches.
5. Focus on improved know your customer (KYC)
Synthetic identity fraud has been wreaking havoc across various industries—especially in the financial services sector—making it tougher to fight organized crime. Know your customer (KYC) policies with better identity proofing measures and improved multi-factor authentication implementation can elevate security to lower the chances of cyberattacks.
Losses Against Fraud
1. 4.8 million identity theft and fraud reports in 2020
In 2020, the FTC reported over four million identity theft and fraud cases. The majority of these were identity theft cases, with 1.4 million complaints filed. Before 2020, the year with the lowest number of reports was 2017, with over two million cases.
2. Federal stimulus payments were easy targets, making it the leading COVID-19 scam
Many cybercriminals found new ways to defraud people during the COVID-19 pandemic. Most of the victims were from federal stimulus payments. The Internal Revenue Service has launched a portal to assist fund distribution for those affected.
3. Around 49 million consumers lost a total of US$56 billion to identity fraud in 2020
According to a 2021 Javelin Strategy & Research study, identity fraud scams have become a new threat to businesses and their consumers, with a total combined loss of $56 billion in 2020, $43 billion of it from identity scams.
The COVID-19 pandemic worsened things with the shift to the online setting, making companies more susceptible to these scams.
4. The U.S. Department of Labor lost $26 billion in unemployment benefits from theft
The high unemployment rate has had a considerable influence on the increase in cybercrime. The U.S. Department of Labor reported that $26 billion was lost in unemployment benefits. As COVID-19 continues to ravage the world, it’s expected that cybercrime cases will continue to rise, making it crucial to improve your cybersecurity.
5. Identity theft was rampant in California, Illinois, Texas, and Florida
The population size plays a significant role in this data. In 2020, the three states with the most identity theft reports were California (147,382), Illinois (135,038), Texas (134,788), and Georgia (101,367).
6. Credit card fraud was most common in the United States
In 2019, credit card fraud rose by a staggering 44.7%, with up to 397,207 reports. The following year was no different, with 393,207 reported cases. Bad actors continue to find more creative ways to steal people’s identities and commit credit card fraud.
7. New credit card account breaches rose from 9% to 48% from 2019 to 2020
Another critical finding about credit card fraud involves new credit card accounts. The key figure here is the 39% difference between the new and existing accounts reported. New accounts had 365,597 cases of breach while existing accounts had 33,852 cases.
8. Data breaches hit up to 300 million victims
Despite the numerous frauds and scams, data breaches have significantly dropped from over 2.5 billion in 2016 to over 300 million in 2020. This is a 19% drop, but it does not mean it’s good news. It means the cybercriminals have lost interest in stealing large amounts of information and instead target businesses with considerable payouts.
The Future of Identity Proofing
1. Artificial intelligence and machine learning
AI plays an integral role in identity verification and fraud protection. Cybercriminals have turned to more sophisticated methods to steal information, which can also be AI, so using AI against these criminals can be effective. An example is combating deepfake profiles with built-in algorithms that detect production artifacts in the footage.
2. Remote identity proofing and digital onboarding
Faster identity proofing, verification, and frictionless digital onboarding are the hallmarks of effective identity and access management solutions. These can help identify any suspicious activity, such as a fraudulent attack, allowing you to onboard customers more securely. It acts as another layer of protection while allowing you to speed up your work.
3. Decentralized identity solutions
Blockchain technology is fast becoming a cybersecurity tool for many businesses, using it for identity and access management (IAM). The blockchain is a decentralized system, protecting identity with a user-centric model. This means the user controls their data.
More importantly, this method only asks for the necessary information and guarantees authenticity without storing personal data, lowering the risk of data breaches and scams.
4. Digital IDs
The transition to digital IDs can be safer since there are centralized government locations that distribute these IDs with high levels of security. Canada has started its own verification system, with the Digital Identification and Authentication Council of Canada developing it.
5. More advanced biometrics
As mentioned above, biometric authentication is continuously evolving to play an integral role in the security of many businesses. This may be something you want to consider or integrate into a multi-factor authentication security protocol to keep your data safe.
It doesn’t require a password that you can forget and adds another layer of security, making it harder for cyberattacks to occur.
It’s Time to Reinforce Your Security
Data has become a valuable commodity for cybercriminals to target. There is always that uncertainty that you feel towards the safety of your information in the digital landscape. It is time to learn from the losses and study the trends to improve your cybersecurity.
Starting with a simple biometric method can work wonders. From there, you can include other methods to add more security layers.
Q5id provides an identity verification system to reduce fraud in your organization. If you want to learn more about improving your security, check out our Cost of Account Takeover whitepaper now.
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