Fraud consortia – you need a network to defeat a network
Professional cybercriminal fraud syndicates are growing in size and complexity, with increasing levels of collaboration. This unfortunate reality was highlighted in the European Union Agency for Cybersecurity’s most recent Threat Landscape Report. The impact of these criminal alliances is evident in the alarming rise in fraud losses over the last year.
Experian’s latest fraud research indicates that nearly three-quarters (73%) of the senior fraud leaders surveyed have seen an increase in fraud losses during the previous financial year. A similar number of leaders (71%) state that they are struggling to keep up with the rapidly evolving fraud threat. These alarming figures indicate that the threat of organised fraud is becoming more severe.
One of the most effective ways to counter this growing threat of transnational professional fraud rings is for businesses to join forces for mutual protection. By joining a fraud consortium and sharing real-time fraud data, businesses can move onto the front foot and proactively defend themselves against attacks. This article explores the benefits of fraud consortia and why they have become essential tools in safeguarding businesses and their customers.
For a brief overview of the benefits of joining a fraud consortium, we invite you to watch the interview below. It features Neel Kamal, the Head of Identity and Fraud for Experian India. He manages a highly effective consortium and discusses how they can elevate fraud prevention for their members.
What is a fraud consortium?
A fraud consortium is a network of organisations that share information relating to fraud attacks, fraud detection technology and fraud prevention strategies to improve their ability to combat fraud. By combining their resources and data, the consortium members can fight fraud far more effectively than they can as individual organisations.
This real-time sharing of anonymised fraud data allows all of the members to proactively update their defences whenever one of them is attacked. This collective approach to fighting fraud can help to significantly improve fraud detection and reduce fraud losses.
Experian operates a number of fraud consortia around the world, with a FinTech-focussed consortium recently launched in the U.S. When new members join one of these consortia, they see, on average, a 20% uplift in their fraud detection accuracy. In addition to this improvement, many participants also report a pronounced reduction in their fraud attack rates, as organised cyber criminals choose to avoid targeting businesses within the consortium.
Fraud consortia overview across EMEA and APAC
For a better understanding of the current state of fraud, Experian recently commissioned Forrester Consulting to survey over 300 fraud decision-makers across the EMEA and APAC regions. The results of this study indicate that only a third of respondents (33%) are currently members of a fraud consortium.
However, half of the respondents (50%) stated that they plan to invest in joining a fraud consortium in the next twelve months. This encouraging trend shows that many fraud leaders recognise the value of collective fraud data sharing and are actively pursuing this goal in an effort to reduce fraud losses.
This will help to address another key finding from the research – that many businesses do not have access to enough data to effectively identify fraud. 70% of the fraud leaders in the survey agree that their organisation lacks quality data to prevent fraud. A clear indication that there is an urgent need for more fraud data sharing between businesses.
What are the benefits of joining a fraud consortium?
For Financial Services and Telco providers to successfully identify and prevent fraud, they require large databases. In most countries, there are only a handful of Telco providers, which means that each organisation usually has a large database. In contrast, there are often dozens of financial institutions, with each organisation having a much smaller database.
This is where a fraud consortium can be particularly effective as they allow FinTechs access to a collective pool of fraud data. For example, Experian India has one of the largest consortia networks within Experian, with over 250 million application records. This highly successful consortium is growing at around 12 million applications per month. As a result, its members are at the cutting edge of fraud trends, and new members can see an immediate reduction in their fraud losses.
Some of the main benefits of being involved in a consortium include the following:
- Sharing of anonymised fraud data between members
- Access to additional expertise from a collective pool of fraud specialists
- Real-time fraud trend identification across the consortium
- Optimisation of fraud detection strategies
- Sharing of regulatory updates and compliance
- Greater influence in negotiations with regulatory authorities and law enforcement
- Sharing of best practices and the adoption of new fraud prevention technology
Is your business interested in joining a fraud consortium?
Experian has a number of active fraud consortia around the globe. Contact us today to speak to a local representative and find out how your business can strengthen its fraud prevention by joining one of our established consortia.
For more information about the latest fraud challenges and solutions, simply fill in the form below, and we will send you a complimentary copy of our latest fraud research: Defeating Fraud: AI as the guardian at the gates of digital business.
