BioCatch is forecasting a flurry of new account fraud ahead of the 2020 holiday season. The company specifically predicts that fraudsters will be trying to take advantage of changing customer behavior, and the increasing number of new credit card applications in particular.
In that regard, BioCatch cited research that suggests that 44 percent of Americans are planning to apply for a store credit card during the 2020 holiday season, a figure that has gone up 20 percent in the past two years. The numbers reflect the broader shift towards digital services during the COVID-19 pandemic, with e-commerce expected to grow 25-35 percent over the course of the year. The current surge in COVID-19 cases, coupled with the onset of cold weather, will continue to drive people toward online shopping options.
That increase in remote activity has coincided with an increase in new account fraud, as BioCatch has pointed out several times over the course of the year. New account fraud occurs when cybercriminals use stolen or synthetic identities to open seemingly legitimate accounts that they will then use to commit fraud. Unfortunately, it is difficult to differentiate those fraudulent accounts from real customers because new users do not yet have an established history with a financial institution.
The problem will only become more pronounced as credit card companies try to attract new customers with promos and discounts during the holidays. Those offers will also attract fraudsters, which is why the Aite Group believes that the 2020 fraud losses from false credit card applications will come to roughly $2.1 billion in the US alone.
For its part, BioCatch is pitching behavioral biometrics as a potential solution to the problem. The technology is able to identify certain behavioral patterns that fraudsters tend to display during the account opening process, allowing financial institutions to prevent fraudulent activity without creating additional barriers for legitimate customers. That will reduce overall fraud losses while still enabling e-commerce during the pandemic.
November 18, 2020 – by Eric Weiss