Do you know where your data is? Fraudsters certainly do. Fraud might not be something that you think about every day, but it can impact every area of your life.
International Fraud Awareness Week (Fraud Week) is one of those times I am filled with hope each year. Starting in November annually, people around the globe unite to minimize the adverse financial and social impacts of fraud through anti-fraud awareness and education. I hope we can fight back, together at the industry-level, and protect the vulnerable populations at greatest risk.
As the Senior Vice President of Fraud, Risk and Compliance Solutions at SAS, I have been in countless conversations with customers about evolving fraud threats, complex risk monitoring and the AI hype. To better serve the market, SAS conducted a study to understand key trends in fraud against consumers. The results are eye-opening, capturing consumers’ shifting anti-fraud attitudes – and how businesses can respond to them. This study is called the Faces of Fraud.
Addressing the growing concern of fraud
At the most basic level, fraud is defined as the intentional manipulation of the truth for financial or personal gain. The digital fraud trends that flourished during the COVID-19 pandemic and proliferate today have heightened the public’s fraud anxiety amid what financial services research firm Javelin coined the “global scam economy.”
Rampant fraud is also reshaping individuals’ expectations about organizations’ obligations to protect them – and the compromises they are willing to make to enhance security. This leads to the question, are organizations doing enough to protect their customers against fraud?
The Faces of Fraud study reveals that 70% of consumers have experienced fraud at least once. Among the 13,500 survey respondents, three-quarters fear falling victim to fraud; 9 out of 10 believe organizations should do more to protect them. The survey also revealed that most customers are willing to sacrifice for better security and are ready to embrace advanced technologies like biometrics. The “aha” moment for businesses: Two-thirds say they would switch providers due to a fraud event or if another provider offered better fraud protections.
Organizations have been very focused on creating a differentiated customer experience, providing services embedded within their lifestyles. Unfortunately, many times this comes at the expense of risk management and fraud prevention. As the results of the survey point out, businesses across industries must recognize the gaps in their defenses and usher in a new era of customer experience that includes the risk management and fraud prevention expectations of consumers today.
Using generative AI as a fraud-fighting tool
Generative AI (GenAI) is another innovation that’s commanding attention in fraud-fighting circles. While GenAI technology has tremendous potential to improve customer experience and bolster security, it also comes with tremendous risks. AI-enabled fraud detection has the power to stop fraud in its tracks with improved efficiency and accuracy of real-time detection and prevention strategies.
However, innovation around AI-powered tools must be done responsibly, with full awareness of automation's downstream impacts and consequences. Further, innovations like GenAI can be used against us by fraudsters aiming to outmaneuver traditional fraud detection methods. This is among the reasons organizations must elevate their anti-fraud capabilities to match emerging customer expectations.
Stay informed about evolving fraud trends
In the spirit of Fraud Awareness Week with the Association of Certified Fraud Examiners, I encourage readers to join the conversation online by following #FraudWeek on Twitter/X. Take the opportunity to spread anti-fraud awareness at your workplace and at home. Educating consumers to recognize common scams and their hallmarks remains the best frontline defense for stopping fraudsters in their tracks. For organizations in banking, insurance, government, health care, retail and more, there’s advanced analytics.
Curious to explore the Faces of Fraud through a banking lens? Check out my recent conversation with influential technologist, author and podcaster Theodora Lau, founder of Unconventional Ventures, to consider the implications of the study’s findings in financial services.