COSTA MESA, Calif.-- Deepfakes and cybercrime are critical threats putting intensifying pressures on businesses, according to the new 2024 U.S. Identity and Fraud Report from Experian.
In releasing its findings, Experian cited FTC data showing consumers reported losing more than $10 billion to fraud in 2023 alone, representing a 14% increase over the previous year and the highest dollar amount ever reported.
Experian said its research shows more than half of consumers say they’re somewhat or very concerned about conducting activities online with identity theft (84%) and stolen credit card information (80%) as their top online security concerns, a more than 20% jump from the previous year.
Additionally, online privacy (67%), phishing emails or phone scams (65%), and false information or fake news and ads (49%) round out the top five online security concerns for U.S. consumers, Experian reported.
What Consumers Want
“While consumers want the convenience and accessibility of digital transactions, they don’t want to compromise on security,” the company said. “As such, consumers’ expectation that businesses will react to their fraud concerns has remained high at 82%. People understand the connection between identity verification and a positive customer experience with 63% saying it’s extremely or very important for businesses to be able to recognize them online.”
The Trust Translation
According to Experian, the ability to repeatedly identify consumers can translate to trust, with 81% of consumers saying they’re more trusting of businesses that can accomplish easy and accurate identification.
The report also found that financial services companies were the most trusted, with retail banks, P2P lending and buy now, pay later (BNP) financing all listed as top trusted organizations by U.S. consumers, the report added.
Additional Findings
Among the other findings in the report:
Businesses recognize the importance of Gen AI but there’s a lack of focus on fraud prevention.
“This year’s data found that companies reported high engagement and investment in Gen AI, Gen AI security solutions and AI models that improve customer decisions,” Experian said. “With that said, businesses recognize the challenges of Gen AI with 70% of businesses saying that AI fraud is expected to be the second greatest challenge for their business. In fact, Tier 1 businesses listed Gen AI fraud as their top stress point.”
Despite those concerns, funding for Gen AI fraud detection and prevention is lacking.
“When asked about the most important potential investment areas for 2024, 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,” the company stated. “As the widespread use of Gen AI continues to accelerate, businesses will need to be prepared to address this evolving fraud.”
Consumers want more behavioral and physical analytics verification.
“Currently, multifactor authentication (48%) and the use of passwords (45%) are the most used fraud prevention methods,” Experian reported.
The report found the methods used most recently include:
- Physical analytics (71%)
- PINs sent to a mobile device (70%)
- Behavioral analytics (66%), which evoke the highest sense of security for consumers
- Security questions (63%)
- Passwords (58%)
Time to Invest
“While consumers have greater trust in physical biometrics and behavioral analytics, less than 30% of businesses are using these solutions — showing companies could consider investments in physical and behavioral analytics to verify identities and combat fraud,” Experian said.
The full report can be found here.