Fintech firm Plaid introduces Plaid Beacon, the anti-fraud network for fintechs and financial institutions.
Beacon is designed “to stop the chain reaction of fraud that occurs when identities are stolen and accounts are compromised.” Through a set of APIs, Beacon reportedly “enables real-time, secure information sharing across the ecosystem to mitigate repeat fraud against businesses, protect consumers, and create a safer digital finance ecosystem.”
Identity fraud “affected 40 million U.S. adults in 2022 – that’s a little over one in 10 Americans who are often unaware when their identity information is stolen or abused. And, each instance of identity theft often results in multiple fraud attempts.”
Fraudsters exploit the visibility gaps “that exist across digital finance services to defraud not just one app, but use compromised identity information to defraud multiple apps and services – creating a chain reaction.”
This chain reaction of fraud “calls for a network accessible to every fintech and financial services provider to identify compromised identity information across those services and the ecosystem overall.”
Uniting the ecosystem to fight fraud
Plaid sits at “the center of the multi-sided digital finance ecosystem – spanning banks, credit unions, thousands of leading fintech apps, and millions of consumers.”
With Beacon, they are “uniting the ecosystem to share fraud insights across digital finance providers and create a mechanism to verify if personal identifiable information has been abused, re-used, or recycled across platforms.”
Chris Adjei-Ampofo, Chief Information Officer, said:
“Partnering with Plaid provides additional visibility across the digital finance ecosystem when it comes to addressing fraud at scale. Being part of the Beacon Network gives us valuable new insights that will help to further protect our customers.”
Starting today, Beacon is “available to fintechs, financial institutions of all sizes, and our 8,000+ Plaid-powered customers.”
To help us get Beacon off the ground, they worked closely “with a select group of design partners spanning key use cases like banking, lending and investing, including Tally, Uphold, Possible Finance, Uplift, CreditGenie, and Veridian Credit Union.”
Now, they’re growing Beacon and excited “to partner with more financial services in the ecosystem.”
Real-time fraud intelligence via API
When you use Beacon, you and all other members “contribute by reporting instances of fraud programmatically via the Beacon API or the Plaid Dashboard. Contributors can then screen against the Beacon network to detect if a specific identity has been associated with certain types of fraud, like stolen identity or account takeovers on other Plaid-powered platforms or already within your own organization in real-time.”
Anthony Schrauth, VP of Product, said:
“Fraudsters are constantly trying new and creative ways to exploit the financial system, so participating in the Beacon Network means we can leverage learnings from across the industry to detect those threats early and protect our customers.”
When you screen identities against the Beacon network, you’ll see “whether or not fraud has been reported as associated with different identity data points by other participating members, how many times, the industry(ies) of the reporting organizations, and when it was reported, all without revealing the name of the organization that submitted the reported fraud or the full underlying personal information of that fraud report.”
Protect identities from abuse and combat account takeovers
Stolen identity, synthetic, and account takeover (ATO) fraud are “the most common attacks that businesses struggle to address. Consumers are often not aware when their identity data has been manipulated.”
When onboarding new users to your platform, Beacon allows you “to screen against the network of reported stolen identity, synthetic identity, and ATO fraud to detect if that identity information has been reported as associated with fraud by other apps in the network.”
When Beacon flags relevant reports, you can “take additional steps to prevent fraudsters from gaining access to your services, like a step-up verification if you pair Beacon with an identity verification solution.”
Prevent repeat first-party fraud and duplicate sign-ups
In addition to helping stop the fraud chain reaction across the ecosystem, Beacon can also help protect your platform “from bad actors using their own identity to commit repeat first-party fraud attacks.”
Beacon is powered “by advanced matching and normalization models to help pinpoint duplicate signups within your own platform.”
As noted in the update:
“We correlate data to more accurately match identities even if the data has been manipulated or changed naturally over time. We look at changes such as consumers moving or changing their names, match across multiple fields rather than just relying on date of birth and Social Security Number, and normalize and fuzzy match each field to account for nicknames and typos.”
Kevin Platshon, Chief Product and Marketing Officer, said:
“Here at Possible, we’re on a mission to help our customers break the debt cycle. As part of the Plaid Beacon Network, we can increase access to credit for customers who need it and make more progress towards achieving that mission. We’re happy to partner with Plaid on this—no one better to do it.”
Fraud is “an industry problem and to get ahead of it, we need industry solutions.”
The approaches that exist today “only work for the largest banks and card networks.”
Beacon is now “available to fintechs and financial institutions of all sizes and the 8,000+ Plaid-powered customers.”
There’s power “in numbers, and, together, we can help stop the chain reaction of identity fraud.”