The materials available in this article are for informational purposes only and not for the purpose of providing legal advice. You should contact your own advisors with questions regarding the fraud protection content herein. The opinions expressed in this article are the opinions of the individual authors and may not reflect the opinions of MeridianLink, Inc.
A recent Risk officer survey conducted by the Federal Reserve Financial Services revealed widespread and intensifying fraud challenges, with increasing activity across all payment channels.
For financial institutions, this update signals a need to take a closer look at how fraud is detected and prevented. Every dollar lost to fraud costs an institution $5. That’s a 5x hit to your bottom line. But the cost of fraud isn’t measured in dollars alone. As tactics become more sophisticated, consumers face greater risk, and financial institutions face the challenge of protecting them without adding unnecessary friction.
More sophisticated tactics lead to more stressful experiences
One in six U.S. consumers reported losing money to digital fraud in the past year, with a median reported loss of $2,307. Stolen credit card information remains the leading driver of U.S. consumer fraud losses. Followed by identity theft (29%), account takeover (27%), and third-party seller scams on legitimate ecommerce sites (24%).
Fraud is no longer concentrated in a single channel or driven by a single tactic. Criminals can combine stolen personal information, compromised credentials, synthetic identities, phishing, device manipulation, and other techniques to make fraudulent activity harder to distinguish from legitimate customer behavior.
For financial institutions, the more sophisticated the threat, the more context they need to accurately assess risk.
A single identity check may not tell the whole story. Neither will a device signal or behavioral pattern on its own.
That’s why effective fraud protection requires multiple signals working together.
A layered approach to fraud protection
An effective fraud strategy requires multiple layers of protection working together throughout the customer journey.
These layers can include:
- Identity verification to confirm customers are who they claim to be
- Device risk assessment to identify suspicious devices and digital activity
- Behavioral analytics to uncover patterns that may indicate fraudulent behavior
- Risk-based authentication to apply additional verification when risk warrants it
- Real-time decisioning to respond quickly as risk emerges
Together, these capabilities provide a more complete view of risk and help institutions make informed decisions at critical points. The goal isn’t simply to add more fraud controls. It’s to apply the right level of protection at the right time.
By distinguishing between legitimate and suspicious activity, institutions can apply additional scrutiny where it matters most while helping lower-risk customers move through the experience with less friction.
Extend your fraud strategy with MeridianLink Marketplace
Fraud intelligence is most valuable when it reaches the right decision at the right time. Connecting fraud capabilities to existing workflows helps teams act on risk faster, without adding unnecessary work or friction for customers.
MeridianLink® Marketplace makes it easier to extend your fraud strategy. With hundreds of third-party solutions that integrate with the MeridianLink platform, institutions can access additional capabilities without disrupting the workflows and technology they already rely on.
Protect customers without creating unnecessary friction
From stolen identities and compromised accounts to lost money and lost trust, today’s fraud can have lasting consequences for consumers and financial institutions alike.
When one in six U.S. consumers has lost money to digital fraud, protecting trust is part of protecting the relationship.
Financial institutions need to give customers confidence that their money and personal information are secure, without making legitimate customers jump through unnecessary hoops to access the products and services they need.
That takes more than another manual check or point solution. It takes a connected, layered strategy that brings together identity intelligence, behavioral and device signals, risk-based authentication, and real-time decisioning to help institutions recognize risk and respond with greater precision.
And when those capabilities integrate into the workflows and technology institutions already use, they can strengthen fraud protection while keeping legitimate customers moving.
