Javelin Strategy & Research, the financial services advisory, has hit a significant 20-year milestone in delivering its assessment of identity fraud research. It’s now post-pandemic America, which means we’ve already gone digital-first and had a massive financial stimulus get pilfered by bad actors on top of the impact of decades of our adversary’s maturity. And what this study squarely suggests is that the fraudsters are experts at taking aim at our identity controls. 

The net-net: We’re not doing so great at making significant progress as an industry, and major challenges remain before we can claim any victories. Buckle up, this report is a big read, but I’ve summarized the key points for you here.

The theme of the report is “The Butterfly Effect” which alludes to the amplified outcomes of a decision or action previously made way back that reflect and result in the present environment. Some of these elements include the maturity of the “Fraud Services” ecosystem which, if you have been following recent events such as the Genesis Market takedown, has been evolving quite quickly. Essentially, the barrier to entry is lower and brings more sophistication to the journeyman fraud soldier. 

Another interesting observation here is that financial institutions have gone to greater lengths to put identity theft servicing (the point after the ID theft has occurred and the customers remedy/resolution of the event) in the driver’s seat, so prioritizing the victim’s recovery experience may be a theme. This is a bit deflating as it suggests the scale of fraud has become uncontrollable to the point that acceptance is the reality of the threat environment. Put more simply, we can’t prevent identity fraud as much as we can make life a bit easier for those who are already affected. 

This next bit might not give the reader much levity as it highlights the human side of fraud and the impact to victims. One noteworthy element is that there is desperate impact to minority populations, who tend to take more severe actions post-incident, which is disheartening. The growth in identity fraud scams noted in the report also appears to be aligned to the growth that we are seeing internally at BioCatch. People are more frequently engaging and interacting with their fraudster, and this frequently makes it harder for their financial institutions to adequately differentiate the real legitimate activity from that which is coerced, manipulated, or forced. 

Ultimately, the report contains something that it has not previously: victim statements. These narratives from real-life victims paint a picture that is far more human than just the statistics. It is the challenging part of the report to absorb, but it’s also a reminder to fraud fighters why we do what we do. There are some great recommendations in this report that are actionable so there is an upside and a reminder that bringing the fight back to the fraudster is possible. 

The report also reported encouraging news in that the average loss per event is frequently decreasing and we’re staying flat to decreasing on the affected population. We are faster to detection and that is meaningful to containing damage and more rapidly righting the harm done. What is driving this? Well, Javelin’s own suggestions and recommendations include investment in controls and prevention including better notification, awareness and analytics that include behavioral biometrics. 

Many of us have joined the space to be a part of the solution and driving change that impacts people. This report may be a take on the pulse of identity fraud in North America, but it also serves as a reminder of why we do what we do, and for who. Thanks to Javelin for capturing the state of affairs and telling us this story. Knowing that we’re doing the work that will create change in identifying fraud outcomes – and prevent people from ever experiencing this hardship in the first place – is an important part of our story too!  

Join the webinar on April 26th to get a full readout of the results from the Javelin Identity Fraud Study.


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