Some of the numbers surrounding fraud and identity theft are so big they are numbing.
In fact, if you have read the 2018 “Report to the Nations: Global Study on Occupational Fraud and Abuse” you probably know that globally fraud is a $4 trillion dollar problem making it one of the biggest industries on the planet.
Here are a few facts about that:
*Fraud costs organizations about 5% of top line revenue (and as the Report to the Nations explains, that varies by industry
*For every $1 in fraud loss, companies incur another $2.66 in indirect costs (LexisNexis) to say nothing of reputation loss
*5% of top line revenue amounts to $928.5 billion against a US GDP of $18.57 trillion,
*Using global GDP numbers, that’s where the $4Trillion comes from
That’s the current “velocity” of fraud.
What are companies doing to combat it? Not enough. the more shocking statistic is that spending on fraud detection and prevention is around $15 billion in the US, which is about one 66thof the impact.
While we will get into the revenue growth opportunity – a 66x gap is shocking,
What can be done to close this gap of 66:1?
That traces back to the roots of where fraud happens. Much of fraud happens because either in person or online, someone, a so-called “bad actor” is trusted when they should not be. This is what some people are calling the “trust economy” and much of it happens because companies still use simple ID/password for authentication and literally skip the step of verification.
What do we mean they skip the verification step? It means few companies other than banks and airlines today make any effort to verify that you are who you say you are. And for good reason. Until recently it was hard and inconvenient, and not a great way to get new customers to make them verify that. Today it can be done in seconds with the leading ID verification software from AuthenticID.
This verification is what we call the “first mile” of trust – and most companies have always skipped it. Once you have verified the person is who they say they are, then you can collect biometric information – finger print, face, palm, voice, that you can then later use for authentication – instead of those easily stolen ID/passwords.
It sounds obvious because it should, it just wasn’t possible until now. And because many businesses are a little different and will want / need at least a little personalization of their trust model, or trust architecture, and AuthenticID supports this.
We will get more into this in another blog later, but it should come as no surprise that trust is a two way street. You need to trust people to give them some sort of privileged access, but the customer also needs to trust you. Here’s a graphic from an Experian fraud report.
27% of people abandoned enrollment or a transaction because of lack of security – which means lack of trust. We will have more to say on that later.
So look at some of this data and see if you need to be doing more to stay ahead of the velocity of trust. If you are like most, you need to be doing a lot more, and AuthenticID is an easy way to start.