Fraudsters leverage an array of schemes to conduct financial crimes, including digital methods like botnets and brute force hacks as well as old-school ones like social engineering. One of the most pervasive — which also affects customers as much as or more than banks — is identity theft. This tactic can do more than just compromise customers’ bank accounts: It can also cost them untold hours by forcing them to meticulously change their account passwords and contact customer service to have fraudulent charges revoked.
This damage done to banks as well as the customers they serve has forced financial institutions (FIs) and security companies to make curbing identity theft a top priority. However, identity theft methods are as numerous as they are diverse, ranging from trial-and-error password checks that fraudsters use to test stolen identities purchased in bulk to opening accounts or applying for loans with fictitious identities. The following Deep Dive explores the myriad identity fraud schemes that bad actors harness as well as the technologies that banks are leveraging to keep them at bay.
Methods Of Identity Theft
Identity theft is well-known to Americans, who have been educated their entire lives to keep their personal data secure so strangers cannot impersonate them. Data shows that U.S. consumers made approximately 651,000 identity theft complaints in 2019, consisting of credit card fraud, mobile phone account fraud, impersonations for personal loans and a host of other scams. The rate of identity theft fell by 24 percent from 2015 to 2017, but it skyrocketed 46 percent from 2018 and 2019. Fraudsters used these stolen credentials to pilfer $16.9 billion last year, up 15 percent from 2018.
Consumers often think of identity theft as involving fraudsters hacking directly into customers’ accounts, for example, but most bad actors do not acquire stolen identities themselves. They instead buy them in bulk from dark web marketplaces, where stolen credentials are sold for as little as $15 each. A recent study found that there are more than 15 billion such credentials available on the dark web, of which 5 billion have never been used and are considered much more valuable. Unique bank credentials, for example, can be sold for as much as $500 each.
The identities circulating among these dark web marketplaces are often acquired from large-scale data breaches, which can leak hundreds of millions of credentials. Many individuals use the same username and password combinations for multiple accounts, meaning their bank accounts could be put at risk due to breaches at completely unrelated companies.
Synthetic Identity Fraud
Some identity fraudsters utilize fabricated synthetic identities instead of leveraging customers’ credentials wholesale to open accounts or pose as them. These synthetic identities often incorporate disparate elements of real identities to look more realistic, such as using a valid U.S. Social Security number and address but with each detail being stolen from different victims. Banks hit by synthetic identity application fraud often have no victims to notify them that fraudulent applications were made in their names, making this fraud type difficult to notice until it is too late.
One 2016 study found that identity theft resulted in up to 20 percent of all credit losses for a total loss of $6 billion. The Federal Reserve has also pinpointed synthetic identity fraud as the fastest-growing financial crime, with industry watchdogs estimating that it costs banks and other FIs $6 billion annually. Boston-based Aite Group asserts that each instance of synthetic identity fraud costs lenders between $10,000 and $15,000, and Brian Vitale, Notre Dame Federal Credit Union’s chief risk and compliance officer, said it cost the credit union roughly $200,000.
Banks and other FIs are deploying numerous tools to keep identity fraud at bay, but individual users can also employ proper password hygiene to take their security into their own hands.
Identity Theft Prevention Methods
One of the most promising technologies in the identity fraud fight is artificial intelligence (AI), which can be taught to look for minor inconsistencies in customer identities to see if they are stolen or fraudulent. AI-based systems can even scan physical identity documents like driver’s licenses or Social Security cards to ensure their authenticity faster and much more accurately than human analysts can. Biometric tools — especially those with liveness detection, which cannot be fooled by a static picture — can also hinder identity fraudsters.
Many of these identity theft prevention methods have seen success. Synthetic fraud, for example, rose from $1.01 billion in Q2 2018 to only $1.02 billion in Q2 2019. This is its slowest growth in years and marks a sharp contrast from Q2 2016, when it skyrocketed to $854.4 million from $524.5 million in Q2 2015 — a staggering 62.9 percent jump. The decline in growth is largely attributed to the rising prevalence of identity databases, which track whether identities have previously been used to commit fraud.
Bank customers can also take the initiative to protect their identities from theft. Many leaked credentials are used for services from which they did not originate, meaning that utilizing different passwords for different accounts can limit the damage done if an individual’s password is breached. Two-factor authentication is also effective because fraudsters cannot access customer accounts with stolen passwords alone.
Curbing identity fraud’s rise will require the marriage of advanced technologies at FIs and due diligence from customers. It may never be stopped entirely, but even stalling it could save millions of dollars and untold hours.
As the calendar flips to March, college basketball fans are gearing up for another exhilarating NCAA tournament.
In the future, artificial intelligence and cutting-edge technology could change March Madness as we know it. Let’s break down how the digital revolution could transform the Big Dance.
AI is already being used to predict brackets. Gone are the days of agonizing over your picks based on team mascots or your alma mater’s colors. In 2025, AI-powered bracketology is the name of the game. Fans can use algorithms that crunch data points, from player statistics to historical upset probabilities, all at the click of a button.
But beware, bracket enthusiasts. While these AI tools promise to boost your chances of winning the office pool, they can’t account for the quintessential March Madness chaos. You know, the instance where AI can predict everything except the inevitable Cinderella story that ruins everyone’s bracket by the second round.
In a move that would be sure to ruffle some feathers, AI-generated commentary could be used for games. Digital play-by-play announcers would never need a bathroom break and potentially be able to recall obscure statistics from the 1957 tournament in an instant.
Can’t make it to the Final Four? Ten years from now, games might happen in a digital stadium, Forbes reported. With virtual reality (VR) technology, fans could experience the thrill of courtside seats from the comfort of their living rooms.
“AI-generated athletes, inspired by the procedural generation techniques of video game developers … could perform in virtual arenas, exhibiting strategies and plays conceived by advanced predictive algorithms,” Forbes reported.
Just be careful not to get too caught up in the moment with streaming. Wouldn’t want to have reports of fans attempting to rush the virtual court after buzzer-beaters have led to an uptick in living room injuries — especially when that flat screen falls over.
While human coaches still call the shots, AI assistants could one day be indispensable members of the coaching staff. In the next five years, these digital strategists could analyze opponent tendencies and more.
“Building on existing technologies … AI will provide coaches and players with intricate, multi-dimensional data patterns that dramatically enhance both offensive and defensive strategies,” Forbes reported. “These advanced algorithms will analyze vast datasets from numerous games to uncover hidden trends, strategic insights, and predictive cues about opponents’ potential moves.”
Say goodbye to controversial calls. Advanced computer vision systems could assist referees in making split-second decisions, from determining if a player’s toe was on the line for a three-pointer to detecting the slightest touch on a blocked shot.
The Hawk-Eye system is already used in tennis and cricket to help determine fouls, Viso.AI reported.
“This system uses a network of cameras to track the ball and then compares the trajectory of the ball to a virtual model of the playing surface,” the report said. “This system is accurate within a few millimeters, which is much more accurate than the human eye.”
As we dive into March Madness 2025, it’s clear that technology will change the way we experience the tournament. From AI-powered brackets to virtual reality arenas, the digital revolution is coming for basketball. But at its core, the magic of March Madness remains the thrill of competition, the joy of unexpected victories, and the heartbreak of last-second defeats.
So, whether you’re relying on an AI to pick your bracket this year, or screaming at a holographic referee in the future, remember to enjoy the ride. In the unpredictable world of college basketball, sometimes the best strategy is to embrace the madness — digital or otherwise.
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