Woman using smart phone showing consumer trust

Fraud Is Affecting US and Non-Western Markets Differently: What the US Can Do to Gain Consumer Trust

Fraud hides in volume, and as our everyday lives become further integrated with digital channels as we carry out more activities or transactions online – for example, mobile banking – it’s only logical that this would lead to an increase in online scams and fraud. On the enterprise front, recently, Twitter confirmed a data breach that exposed contact details for 5.4M accounts and Uber experienced a breach due to multi-factor authentication bombing and social engineering. On the consumer front, people are experiencing fraud at an exponential rate through authorized push payment (APP) fraud, romance scams, phishing emails, and more.

As more of these types of security events come to light, consumers’ trust in digital services continues to decrease – especially in the US where digital trust is lowest compared to other global markets, according to Callsign’s Digital Trust Index Report. These non-western markets include the Middle East and Africa (ME&A) and the Asia Pacific (APAC) – where trust in digital services is greater than their trust in physical society. But why do these regions have more trust in digital services and what can the US do to increase digital trust?

Digital trust in the US and non-Western markets

In the US, the uptick in fraud has stimulated an increase in consumer distrust in brands and the digital services they use. According to Callsign’s Digital Trust Index, 36% of consumers in the US have experienced a combined share of online fraud and personal online breaches. In fact, a personal experience with online fraud is the main factor affecting consumers’ distrust of digital services, with only 33% of consumers saying they can trust the digital services they use.

Comparatively, in non-Western markets such as the ME&A and APAC regions, the picture is a lot different with 56% and 45% of respondents, respectively, trusting the online and digital service providers they use. This is likely due to the majority of consumers having experienced much less fraud, and instead only knowing or reading about other people’s  negative experiences with digital services at a combined share of 35% and 37%, respectively.

With fraud happening every day due to a variety of reasons, such as poor authentication solutions or lack of consumer education, even the perceived threat of an attack or fraud is leaving consumers feeling less confident online.

Authentication solutions have failed US digital trust

Historically, businesses have depended on methods like passwords and one-time passcodes (OTPs) to bolster security, but in turn, have created more vulnerabilities for scammers to exploit.

Fraudsters have become so familiar with authentication methods that they know what fraud warning messages businesses, such as banks, are using, making it easier to coach individuals through security protocols and warnings. Familiarizing themselves with the businesses’ processes allows fraudsters to socially engineer and trick users into handing over passwords, OTPs, and more; in turn giving the criminal access to their sensitive information and even bank accounts. Attacks of this nature have grown exponentially, up 600% in the last year.

This type of fraudulent behavior makes it increasingly difficult to spot these ploys. Now, businesses and consumers find themselves in a dilemma where the only way to progress is for businesses to evolve security strategies to match the needs of the modern consumer.  These breaches are also causing consumers to support the creation of a digital identity system with banks at the helm of maintaining the system.

Businesses need the right authentication solutions

Making a meaningful change in authentication strategies means moving away from the dependence on technologies like text message OTPs that are now as ubiquitous in fraudsters’ day-to-day activities as they are an authentication method. Looking to more sophisticated, digital native technologies, we find alternatives designed to protect digital identities and fit seamlessly into customer journeys.

One option is using layered contextual data and tools like behavioral biometrics on top of passwords and device and location data. This provides businesses with a robust way of verifying digital identities; unlike a password alone, behavioral biometrics enables businesses to prove a user is genuinely who they say they are.

Solutions that also work to positively identify customers while weeding out bots and malware can work passively in the background and help businesses offer true personalization of the customer experience while reducing login and authentication friction for employees.

The businesses that will succeed online are the ones that can earn the digital trust of their customers. To earn this trust, businesses must quit authenticating customers using the same channels that fraudsters are using for scams, and implement solutions that will keep them one step ahead of financial criminals. This is the first step in providing customers with the comfort they desire with the online services they use.