2019 IDENTITY FRAUD STUDY:

Fraudsters Seek New Targets and Victims Bear the Brunt

Study overview“Given the agility and tenacity demonstrated by fraudsters in 2018, financial institutions should assume that every account type will

be under greater pressure going forward.” – Jim Johnson, EVP, FI Payments and Wealth, FIS

Post-EMV Reality “Digital is the battleground of fraud for the foreseeable future. Criminals know

it and members do, too. An institution’s accounts and onboarding need to be secured or its reputation and bottom line are at risk. The time is now to

implement the right tools and processes and to empower members.”– Al Pascual, SVP, Research and Head of Fraud & Security, Javelin Strategy & Research

Planning for the Future of Fraud and Risk “In the ever-evolving Fraud world, in which a fraudulent transaction can hide in plain sight – along with the pressing needs for real-time decisioning and new fraud schemes being deployed – we need to be able to combat and anticipate

them with AI and cognitive learning tools.”– Norm Marraccini, GM, Retail Digital Payments, ACH and Real Time Payments, FIS

RemediesFraud-fighting technologies in existence or on the near-term horizon can help

mitigate the burden on credit unions and their members:

FIS co-sponsored Javelin’s 2019 Identity Fraud Study which harnessed information from approximately

Decline in fraud across the industry – driven by reduced card fraud

Existing Card Fraud Incidence and Losses Decline

As a result, here is some insight to guide you in combating fraudulent activity for your credit union members.

5,000 CONSUMERS.

3.14%

2012 2013 2014 2015 2016 2017 2018

$11.99

$8.00

$9.85

$8.85 $9.21

$8.05

$6.53

4.60%4.42% 4.45% 5.07%

5.47%

4.40%

Fraud incidence (percentage of consumers) Fraud losses (Billions of U.S. Dollars)

As counterfeit fraud took a cliff dive, where

do attacks migrate?

EMV accomplished what it set out to do

New Account Fraud (NAF) stands as only major fraud type to increase YOY

(Top growth areas)

Online Accounts, e.g. Amazon

Mobile phone accounts

How effective have self-service fraud tools been for consumers? Focus on closing the

Awareness GapEducate/Deputize

consumers to be the 1st line of defense

Transition from physical to digital fraud

0% 20% 40% 60% 80% 100%

Unsure Feature is Available

Not Available

Have Feature-Do Not Use

Have Used-No Longer Do

Currently Use

ChannelLimits

MCC &Geolocation

Limits

TYPE

OF

CON

TRO

L

SURVEY RESPONDERS

CardOn/Off

SinglePurchase

Limit

9% 7% 14% 14% 57%

9% 9% 16% 14% 52%

18% 9% 24% 12% 37%

21% 8% 20% 10% 40%

Victim out-of-pocket expenses are skyrocketing

It is expensive to be a victim of fraud

Disproportionately weighted to younger consumer segments

Accounts with little or no liability

protection targeted

Align Channel Strategy with Appropriate Detection and Prevention Technology

Address authentication risk at all end-points for service and money movement

Expand fraud monitoring surface area to include cyber realm

Companies are nearly 3 months behind in detecting intrusions

Opening channel preferences will

shift as community demographics mature.

Rich stores of data make this sector a

major target.

Willingness to adopt and adapt to new innovations

will pivot in parallel.

Average time until detection (in days)

Evaluate cybersecurity of

third-party partners

Loyalty will increasingly be correlated to experience –

balancing security and ease will be more critical than ever.

Cyber monitoring must be more robust than the deep/dark web –

think social

of familiar fraud victims personally bear fraud lossesMore than70%

Other fraud victims

Familiar fraud victims

2015 2016 2017

57.6 80.6 92.2

Member card controls Improved authentication to prevent mobile phone account takeover

Better methods for verifying identities to mitigate the increasing fraud around digital account opening such as more document scanning safeguards and digital identity documents (eIDs)

More use of out-of-brand biometric pushes using a communications channel separate from the primary channel used to establish authentication

3-D Secure 2.0, which enables data sharing among merchants and credit unions for authentication

Federated identity schemes, which enable credit unions to use third party data to capture a better picture of an applicant’s identity

FIS can help equip your credit union with the most effective means

of fraud prevention, detection, and resolution.

TO FIND OUT MORE, CALL (877) 776-3706 OR EMAIL getinfo@fisglobal.com

Source: Javelin Strategy & Research, 2019

Source: Javelin Strategy & Research, 2019

Familiar fraud doubled in 2018, from

of all fraud victims

7% 15% TO

More than

of NAF victims personally knew the perpetrator

50%

Source: Javelin Strategy & Research, 2019

Source: Javelin Strategy & Research, 2019

Source: FIS Business Risk Intelligence

74% 14%

32% 12%

Fraud victims that personally paid out

of pocket

Fraud victims that spent 10 hours or

more resolving fraud

All Fraud VictimsNAF Victims

Percentage of Familiar Fraud Victims

23%

16%

12%

16%

31%

51%

7%

4%2%

5%7%

15%

201820172016201520142013

Impact of Fraud on Members“With the evolving fraud types highlighted in the Javelin study, it is becoming

increasingly critical for institutions to maintain a holistic risk management playbook inclusive of all payment channels. Member empowerment should

also play a complementary role in the fight.”– Eric Kraus, VP, Fraud Management, FIS