Data breaches have become a painful, but regular, fact of life. Estimates continue to grow around how many billions of users have had their personal credentials stolen, while businesses scramble to reassure the consumer population that their sensitive payment details and encrypted passwords are safe.
Sadly, this widely misses the mark. What is evident through analysis of the ThreatMetrix Identity Abuse Index is that cybercriminals are piecing together the jigsaw pieces of identity data (via advanced social engineering, phishing, data bought/traded on the dark web, and stolen via breaches) to create near-perfect simulacrums which are then used in global attacks. Individual pieces of identity data, no matter how apparently insignificant, are being pieced together to perpetrate highly organized and successful attacks.
ThreatMetrix Identity Abuse Index, 2017. An Identity Abuse Index level of High (shown in red) represents an attack rate of two standard deviations from the medium-term trend. Aggregated over all global transactions, this shows that the exploitation of stolen identity information is automated, global and coordinated.
What has become more and more evident this year is that stolen identity data has an almost instant impact on attacks that we see in the Network. Fraudsters capitalize on the new blood of fresh credentials, acting fast with mass identity testing bot attacks, using validated credentials to takeover trusted user accounts, open fraudulent new ones, and make a vast swathe of bad payments with stolen credit card data.
We see this particularly clearly when we correlate the breaches we hear about in the news, with the attack patterns and key spikes in attacks that we see in the ThreatMetrix Identity Abuse Index. It’s no coincidence that the highest attack volumes occur right after the most high-profile breaches; after all, the most valuable time for fraudsters is right after a breach has happened but before it has been discovered and reported.
It makes us ask the question, what constitutes an identity in the age of digital commerce? Are we who our username and password say we are, or are we built from the complex way we interact and behave online? How do our online selves merge with our offline ones? Is someone else using our image, name or email address? Who owns this identity? The challenge for many digital businesses is that they are trying to solve the problem of individual use cases in silos, plugging one gap while others remain vulnerable. At the same time, without a holistic view of your end user across their entire customer journey, it becomes impossible to validate their identity at each touchpoint.
A heightened threat landscape
With 171 million cyberattacks detected and blocked in Q3 2017, an increase of 32% just since the start of the year, cybercrime continues to present a growing and omnipresent threat to global digital businesses. There is strong impetus for organizations to orientate their strategy around preventing attacks, while minimizing the impact on existing, loyal customers. After all, a robust cybercrime defense is virtually useless if it creates a barrier to doing business, or makes users defect to a competitor because they are fed up with an online experience marred by friction, unnecessary step-up authentication and unauthorized transactions.
Businesses are being forced to look beyond traditional authentication methods to find a more holistic, layered approach to establishing true identity. The key imperative for ThreatMetrix is how to detect cybercriminals without increasing friction for legitimate users. We believe it is this dynamic that leads to strong brand reputation, customer loyalty and lifetime value.
Cybercrime outlook for 2018
Taking into account the nuances of this fast-evolving landscape of cybercrime in 2017, the outlook for 2018 looks equally challenging:
1-Click ecommerce will re-orientate payments landscape
With Amazons patent on 1-Click commerce now expired, online retailers will manage to accelerate checkout speeds significantly. But, ecommerce players will need to carefully balance friction and fraud to achieve optimal ROI—without turning away good customers.
Cyber fraud and financial crimes will continue to converge
ThreatMetrix has seen fraudulent new account creations in financial services up 240% in two years (Q3 2017); 2018 will see cyber fraud combine with traditional financial crimes, such as the use of money mules. This may take the form of fraudsters using automated bot attacks to apply for fraudulent loans or hijack existing accounts then transferring money to other countries.
Digital-only and new industries will be prime targets
Among those expected to face issues next year: peer-to-peer and sharing-economy platforms. Fraudsters are capitalizing on new platforms by monetizing credentials between fake driver/rider accounts in ridesharing and creating fraudulent new accounts for phony loan applications that they never intend to repay. The digital-only model of many of these companies make them particularly susceptible to fraud.
Vulnerable Consumers Make Valuable Targets
As online, and particularly mobile, banking continues to drive financial inclusion for the unbanked and underbanked population, cybercriminals will pounce on these fresh and potentially more vulnerable new consumers who are often less adept at spotting the clever nuances of social engineering and phishing attacks.
This editorial was first published in our Web Fraud Prevention and Online Authentication Market Guide 2017/2018. The Guide is a complete overview of the fraud management, digital identity verification and authentication ecosystem provided by thought leaders in the industry from leading solution providers (both established and new players) to associations and experts.
About Reed Taussig
Reed Taussig is President & CEO of ThreatMetrix. With expertise in building high-growth companies at the forefront of technological change, Taussig has led ThreatMetrix since 2008. Under his leadership the company has become the driving force in an emerging digital identity space by leveraging pioneering global shared intelligence technology.
About ThreatMetrix
ThreatMetrix, A LexisNexis Risk Solutions Company, empowers the global economy to grow profitably and securely without compromise. With deep insight into 1.4 billion anonymized digital identities, ThreatMetrix ID delivers the intelligence behind 110 million daily authentication and trust decisions, to differentiate legitimate customers from fraudsters in real time.
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