Fraud related to brokerage and retirement accounts leapt in 2018, as scams affected fewer people but out-of-pocket costs soared, according to a recent study by the Greenwich Associates firm Javelin Strategy & Research.
Retirement account scams tripled and made up 9 percent of non-credit and debit card fraud last year, up from 3 percent in 2017. Meanwhile, brokerage account schemes grew to 10 percent of non-card fraud in 2018, up from 7 percent the prior year, according to the Javelin 2019 Identity Fraud Study. The study, in its 16h consecutive year, has surveyed 79,000 consumers since its inception in 2003.
Company loyalty and reward points and brokerage and retirement accounts are considered "second tier" targets for fraudsters because they are more difficult to monetize relative to credit or debit cards, the study said. But embedded electronic chips have contained card-related fraud— 14.4 million consumers fell victim to these scams in 2018, a notable drop from the record-breaking 16.7 million in 2017—so criminals are looking for other opportunities.
Crooks find the path of least resistance or seek out better returns for their effort. As a result, non-card fraud is growing and victims’ out-of-pocket fraud costs have more than doubled in two years to $1.7 billion in 2018.
“Given the agility and tenacity demonstrated by fraudsters in 2018, financial institutions should assume that every account type will be under greater pressure going forward,” said Jim Johnson, executive vice president of FI Payments and Wealth at FSI, a technology company that sponsored the study. “Adequately defending customers from these new security assaults will require the development and adoption of next-generation fraud mitigation strategies.”
Among other protections, many companies have added two-step authentication to make digital access accounts more secure, but scammers have evolved in response. The rate of fraudsters taking over mobile phone accounts, and then intercepting temporary passwords through text messages, nearly doubled to 680,000 victims in 2018.
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