As digital security concerns expand, Experian's most recent research highlights significant dangers, such as deep fakes and increased cybercrime, emphasizing the difficulty of securing organizations and consumers alike.
The Federal Trade Commission (FTC) estimated that customers lost more than $10 billion to fraud in 2023, a 14% rise over the previous year and a new high. According to Experian's research, over half of consumers are moderately to significantly concerned about engaging in online activities, with identity theft (84%) and stolen credit card information (80%) topping their list of security concerns—both of which have increased by more than 20% since last year. Other top worries are online privacy (67%), phishing schemes (65%), and the propagation of misinformation or false advertisements (49%).
The need for strong security measures
While customers appreciate the convenience of digital transactions, they continue to emphasize the importance of strong security measures. The expectation that businesses will address fraud concerns remains high, with 82% of consumers anticipating a proactive reaction. Moreover, 63% of respondents say that a company's ability to recognize them online is crucial to providing a good customer experience.
Building trust requires accurate and consistent identification, as 81% of consumers are more likely to trust businesses that can do so. The survey also names financial services as the most trusted sector, with retail banks, peer-to-peer lending platforms, and buy now, pay later services receiving particularly high marks from US consumers.
High AI investment, low fraud prevention focus
In addition, the research shows that organizations are aggressively investing in Gen AI and AI-driven security solutions, with these technologies playing an important role in improving customer decision-making. However, the rise of AI-related fraud is a major concern, with 70% of organizations citing AI fraud as their second-most pressing issue.
Despite these concerns, investment in Gen AI fraud detection and prevention is relatively minimal. When asked about their top investment objectives for 2024, organizations ranked Gen AI fraud and deepfake prevention as the 12th most critical topic, lagging attempts to tackle more traditional forms of fraud such as identity theft and first-party fraud.
Consumer preferences
At the moment, the most widespread fraud prevention measures are multifactor authentication (48%) and regular passwords (45%). Physical analytics (71%), PINs transmitted to mobile devices (70%), and behavioral analytics (66%) are the strategies that elicit the most confidence from consumers. Security questions (63%) and passwords (58%) also make the top five. Interestingly, while consumers have stronger trust in physical biometrics and behavioral analytics, fewer than 30% of businesses have implemented these solutions, indicating an opportunity for enterprises to invest in these areas to improve identity verification and combat fraud more effectively.
