Although technology is undoubtedly making our lives easier, it’s also creating a significant problem in the form of online fraud. As more of our day-to-day interactions move into the digital space, hackers, and identity fraud perpetrators have easier access to our information which may include our customer retention rate.
To help us understand the threats of the modern world, I’m talking with Adam Elliot, CEO of ID Insight. He works within the banking world, which has much more at stake than other industries. I pick his brain about how security measures can help improve a company’s customer retention rate. Here are some highlights from the episode.
Why Credit Monitoring Isn’t the Best Anti Fraud Solution
A lot has changed in the last 10 years or so. Before, whenever a client would complain about hacks or identity theft, Adam would recommend signing up for a credit monitoring system. Unfortunately, after the Equifax hack, it became evident that even major entities like that could be susceptible, which leaves users in a bit of a lurch.
These days, Adam has his own tactic for avoiding potential fraud claims – freezing his credit. In the United States, individuals can put a freeze on their credit score, which means that no one can run a check or open an account without substantial verification. Because Adam isn’t opening a bunch of new accounts regularly, it’s not too much of a hassle.
For an individual, that method can work, but what about for a SaaS company? Well, the answer is a bit more complicated.
Controlling Fraud Through Vigilance
While it’s nice to assume that third-party companies and watchdogs are fighting the good fight, the reality is that no system is impermeable. I’ve frozen my credit before and still found out about fraudulent accounts after the fact.
So, when it comes to SaaS customer service, a company has to be extra vigilant about monitoring its accounts and those of its clients. Taking an apathetic or passive approach to online fraud is almost a guaranteed way of getting hacked or victimized by identity fraud.
Adam remarks about how he and his wife signed up for a credit card recently, and she activated the charge alerts. On the one hand, it’s a little annoying to have to ask each other about all purchases, but on the other, it’s nice to be notified, just in case. I believe that that will be part of the future of fraud prevention. As long as companies and individuals are proactive, it’ll be more challenging for hackers to take hold.
Synthetic Fraud and the Future of Online Banking
Unfortunately, fraudsters are an adaptable and motivated group. The world is always in a perpetual state of whack-a-mole. As soon as one trick is uncovered and removed, another one will pop up.
As an example, synthetic fraud has taken off in recent years. If you’re not familiar with the process, this is when a hacker sets up and maintains a fake identity for several years. By building up a history and a paper trail, the person can open new accounts and get money from banks and other agencies before disappearing. Because the identity isn’t tied to a real person, there’s little recourse for those affected.
There’s also a bit of an arms race for utilizing technology in the fight against identity fraud. New tech and software are coming around to beat the hackers at their own game, but there has to be a balance of security and low-friction interactions. Users want a streamlined experience – so the harder a business makes it to open an account, the fewer customers it will have—just another part of customer retention rate strategies.
We talk a lot more about online security and fraud, so check out the episode here. You can also find out about Adam and his company at www.idinsight.com.