UK businesses frequently bemoan the losses they incur as a result of customer identity fraud. However, they may often be to blame for such occurrences.
According to global information services company Experian, to crack down on instances of identity fraud businesses need to stop relying on paper-based process-es and begin investing in electronic authentication.
Polling 70 anti-fraud, risk and compliance decision makers across the financial services, retail and telecommunications sectors, Experian found that half still rely heavily on paper-based authentication methods – even though the vast majority named ID fraud as a major challenge. Perhaps most surprisingly, 70% of those from the technology-receptive financial services industry said their organisation continues to rely heavily on paper processes.
The financial and retail services industry also appears sanguine about the impact of identity fraud on their business. The report found that over one third of companies from that sector believed that any publicity resulting from the theft of customers’ identities would have little or no adverse effect on their reputation. Customers take the diametrically opposite view, though. When 1,500 customers were surveyed, over three quarters said they were unlikely to use a company in the future if it had received negative publicity regarding a sensitive breach of customer information.
The good news is that change appears to be on its way – 40% of financial services organisations currently using paper-based checking plan to adopt electronic authentication in the next year. This contrasts with the plans of retailers, where less than 10% are planning to move to electronic authentication soon and over 70% do not anticipate any such move in the foreseeable future.
The drivers for the deployment of electronic tools vary, but the most commonly cited benefits were cost effectiveness (63%) and fraud reduction (58%).
Identity fraud continues to be one of the fastest growing types of crime, with the cost to the UK economy alone running at £1.7 billion a year.