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In 2008, the number of complaints about online fraud jumped from 200,000 to more than 375,000 one year later, according to the FBI. Imagine what that looks like 11 years later.

In times of great uncertainty, how are financial institutions going to cope and combat the impending surge in financial crime and fraud due to COVID-19? There is a startling connection to financial crime and the economy during times of volatility. The criminal economy is closely interrelated to the global economy. Statistics show that criminals are closely watching market performance and adapting as needed to ensure maximum profit, which puts financial institutions at risk. Recessions are painful for most consumers and businesses, while fraudsters increase their activity with new and evolving techniques. This puts Credit Unions and Banks in a vulnerable position, but FiVerity.ai can help. We automate enhanced fraud detection using artificial intelligence with our solution, SynthID® Detect.

New account fraud, identity theft, cybersecurity risks, imposter and money mule schemes, and mobile banking application fraud are on the rise as a result of the opportunities related to the ongoing COVID-19 pandemic.

“Close scrutiny will show that most ‘crisis situations’ are opportunities to either advance, or stay where you are.”

– Maxwell Maltz

Synthetic ID’s behave like legitimate accounts and may not be flagged as suspicious using traditional fraud detection models. This allows fraudsters to cultivate these fake identities, build positive credit histories, and increase their borrowing or spending power before “busting out” – maxing out their credit lines with no intention to repay.

Historically, during times of financial crisis, online crimes increased sharply. The recent virus pandemic has created a perfect storm for massive fraud in online consumer lending. Drastic interest-rate cuts; financial instability from economic recession; and a jump in online loan applications from remote workers has created the perfect environment for cyber-criminals to open fake accounts for defrauding Credit Unions and Banks.

In 2008, the number of complaints about online fraud jumped from 200,000 to more than 375,000 one year later, according to the FBI. Compounded with a 300% expected growth in consumer lending, per the Mortgage Banking Association, this creates a “perfect storm” scenario for synthetic identity fraud to likely double over the next 12 months.

Economic slowdown means 75 – 100% increase in financial fraud (per FBI in 2008 – 2009)

The effects are felt globally with disruptions to financial services capabilities, especially in the loan and payments systems. Digital banking has changed the game by creating openings for criminals, but lenders must fight back to win.  [Per “IBM webinar: surge in fraudulent account opening for the purpose of defrauding the bank”]

FiVerity helps you fight back with SynthID® Detect by limiting your exposure to the fastest growing type of fraud and positioning your organization to withstand financial shocks. Our solution is developed specifically for Credit Unions and Banks. We implement an effective system that enables financial institutions to detect and prevent fraud while continuing with operations as smoothly as possible. SynthID® Detect is a key part of a fraud risk management framework. Our intelligent automation improves effectiveness of fraud detection workflows by “Scaling the Analyst” – continuously learning from experts to detect fraud and other patterns of financial crime while reducing false-positives so business users can focus on high-value risks.

Fraud and other financial crimes are a dynamic and changing landscape. Our models continue to improve and adapt. When financial crime spikes, will your financial institution be safe?


Sources of information for this article: IJBMER  |  Forbes

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