As Fraud Rises, More Executives Paying Attention: Veriff

Most U.S. businesses are seeing an increase in fraud, and key decision-makers see the need for vigilance. Those are among the findings of Veriff’s U.S. Fraud Industry Pulse Survey for 2024.

Almost 87% of companies saw an increase in online fraud in 2023, while 78% saw an increase in AI-based attacks. It costs costs almost 90% of companies between 1-9% of annual revenue. Close to half, 45.9%, saw a hit of 3-5%.

AI can also be used to defend a company from attacks; 79% already use AI and machine learning and prevention, with an additional 11% planning on doing so this year. Benefits include identifying patterns (69.4%) and automating the customer identity verification process for more robust checks (57.9%).

Executives are preparing. Less than 1% say they are unprepared for an attack, with 32.2% believing they are very prepared and face no risk. There’s a large mushy middle here, as 56.1% say they are somewhat prepared and face little risk of attack, while a further 10.3% say they are somewhat unprepared and face quite a few risks of attack.

Three types are most common. Companies identified authorized fraud (52.5%), impersonation fraud (46.1%) and malware (44.9%) as the main culprits.

“Fraud leaders at businesses in the US are clearly experiencing a massive increase in fraudulent attacks using AI, and, sadly, this trend is only going one way,” said Ira Bondar, senior fraud group manager at Veriff. “But there are ways to fight this, and businesses must do all they can to stay ahead of the fraudsters and adopt an approach  that combines biometrics with broad datasets that encompass diverse threats.”

Sometimes, those at lower corporate levels see the benefits of a new technology, but struggle to convince the C-suite. This isn’t the case with AI-based fraud prevention tools, as close to 87% of CEOs are onboard, with 9.4% planning to do so within a year. They see AI helping with identifying patterns (69.4%) and automating the customer identity verification process for more robust checks (57.9%). Only 1.4%) see no way AI can help.

“These results show that decision-makers understand the importance of the type of AI-backed technology used by Veriff – and point to clear potential for growth in the near future,” Bondar added.

There is room for growth. More than half of respondents, 56.1% say they are somewhat prepared and face little risk of an attack. Roughly 10% say they are somewhat unprepared and face a more significant risk.

Companies can do a better job of combining identity verification and biometrics. Only 28.4% of respondents overall use both biometrics and identity verification. Just 19.5% use biometrics alone, and 49.7% use IDV alone.

“Any prevention strategy needs to be holistic,” explained Bondar. “No single tool can fight the multitudinous threat that is the modern fraud landscape, so it pays to create a prevention ecosystem – a flexible, multi-layered stack that brings in biometrics, IDV, crosslinking and other solutions to keep ahead of the fraudsters.”

Executives are getting the point. Virtually all, close to 96% plan to increase dependency on identity verification, biometrics, or both over the next year. What stops some from acting more decisively? At 47.9%, technology is seen as the biggest challenge in fraud prevention. That is followed by cost at 22.1%.

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