Identity theft for digital fraud is on the rise in Brazil, says FICO

São Paulo, March 22, 2024 - FICO, a leading global analytics software company, presents the study "Fraud, Identity, and Digital Banking." The research provides insights into the behavior of Brazilian consumers regarding fraud and risk situations. According to the data, 5%, or 8 million Brazilians, have already been victims of identity theft and fraud, representing a growth of 1.2% compared to the last edition of the survey published in 2022. Another 19% claim to have "probably" (9%) or "possibly" (10%) fallen victim to this type of scam. Frauds involving the use of identity to open an account by a scammer are the most concerning among Brazilians (34%).

While we see this number of identity thefts rising, on the other hand, we have data showing that 62% of Brazilians say it is "unlikely" that they have been victims (31%) or "definitely" have not been exposed to this type of action (31%).

According to the study, fraud protection continues to be a competitive advantage for banks. For 35% of Brazilians, being aware of financial institutions' efforts to mitigate risks can be decisive when opening a new bank account. And for 75% of respondents, combating fraud is among the top three factors considered when making decisions.

Luis Silvestre, a business consultant at FICO, explains that the anti-fraud market is extremely dynamic. "With every new technology developed to combat fraud, there is a fraudster testing new ways to bypass the system. The use of tools that contribute to real-time fraud mapping, such as instant communication with consumers and new ways of understanding customer behavioral profiles, are great allies in the fraud combat process," he says.

Identity Verification and Customer Experience

Detecting signs of identity fraud or even suspicious purchases requires increasingly agile and secure verification processes. However, among the validation options, none fully meet consumers' desires. The study reveals that the verification methods are quite varied, but for 46% of people, fingerprint scanning is the most used, and 61% believe the method is secure. Facial scanning comes next, with 43% preference and 60% perceiving it as secure.

"To minimize risks, it is necessary to confirm and validate that the person making the digital transaction in the financial system is indeed who they say they are. Promoting a positive experience with the customer with as little friction as possible is essential," reveals Silvestre. He adds, "If the identity verification experience is poor, there is a great chance the customer will abandon the request and/or service."

Indeed, about 35% claim to have reduced or stopped using an account due to difficult or time-consuming identity verifications. Another 33% followed the same path with credit cards.

Brazilians signaled an increase in verification processes. According to the study, identity verifications for online purchases were 62% more frequent than in 2022. For bank accounts, this number is 59%.

Time is Money

Banking digitalization has brought speed and convenience to financial services, and consumers are more demanding about the fluidity and validations necessary to use the service. Despite a decrease of about 12 percentage points, Brazilians remain positively inclined to open a digital account, with about 73% trusting this process. "In other countries, such as the United States, for example, although with a more robust culture of using digital services, the propensity to open a digital account is 58%, a lower index than in Brazil," Silvestre points out.

However, 65% of people expect to spend less than 30 minutes opening a bank account. When looking at individual service results, 39% abandoned the bank account opening process because they considered the identity verification too time-consuming or difficult. Credit card application and personal loan requests appear in second and third place, respectively, with 36% and 34%.

Personal Frauds Grow in Brazil

To get more credit or benefits in the market, Brazilians are willing to inflate income information. Personal fraud, as this type of information bias is known, is considered normal by 44% of respondents. Home financing and vehicle financing are the ones that appear with the highest percentage for this practice, with 25% and 23%, respectively. Compared to the previous survey, this form of fraud has grown by 3%.

The "Fraud, Identity, and Digital Banking" survey was conducted online with 1,000 Brazilian adults in November 2023 and conducted by a specialized company. In addition to Brazil, the survey was conducted in 12 other countries, including Mexico, Canada, Colombia, India, the Philippines, Spain, the United Kingdom, and the USA, totaling 13,000 interviews globally.

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About FICO 
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, insurance, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 100 countries do everything from protecting 2.6 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by 90% of top US lenders, is the standard measure of consumer credit risk in the US and has been made available in over 40 other countries, improving risk management, credit access and transparency. 
Learn more at https://www.fico.com/. 

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Public Relations – FICO
ThaisSabatini@fico.com

Agency
In Press Porter Novelli
Cibely Toller
+55 11 3323 1596 / +55 11 99858-8500
cibely.toller@inpresspni.com.br