The Complexities of Building Customer Loyalty Amid Pandemic-Induced Surges in Fraud


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With COVID-19 came unexpected changes to consumer behavior as millions of Americans, many for the first time, migrated to digital services. According to recent research by IDology, 93 million Americans signed up for online services that were once carried out in person. This astounding shift happened nearly overnight, bringing both opportunities and challenges for engaging, onboarding and serving an influx of new customers. And, as businesses began to realize that digital would be their only customer touchpoint, fraudsters were already taking advantage of stressed systems and vulnerable consumers.

On a positive note, IDology research also found that 75 percent of consumers who signed up for online services as a result of COVID-19 expect to continue using them after the pandemic, presenting a significant opportunity for businesses to gain loyalty among new customers. However, establishing loyalty requires trust, which puts digital identity verification at the cornerstone of today’s customer experience.

Understanding COVID-19’s Impact on Fraud

The same research from IDology features key insights from the company’s survey of American consumers in March 2020 and again in July 2020 that paint a clear picture of the impact of COVID-19 on consumer expectations and habits, as well as fraud, including:
– Smartphone use increased: 105 million Americans are using their smartphones to sign up for new services.
– Fraud surged: Thirty-two million Americans (14 percent) were victims of new account fraud in only four months compared to (19 percent) in the 12 months leading up to COVID-19.
– Phishing attempts became pervasive: Eighty-four million Americans were victims of a phishing attack attempt in the months following the beginning of the pandemic, with an average of four per person (one per month) between March and June.
– The adoption of newer forms of identity verification accelerated. Among consumers who were required to provide further proof of identity, 62 percent did so by mobile ID document scan, between March and early July, compared to 57 percent in the 12 months leading up to COVID-19.
– Many consumers acted to protect their information. With concerns over fraud, 120 million Americans have taken stronger action to improve new online account and login credentials.

Dynamic Consumer Behavior, Increasing Expectations

Although significantly more consumers are transacting online, other important shifts in consumer behavior that have emerged in recent years should also be considered. For example:

– Mobile identities are highly regarded and increasingly important but bring added risk. With use on the rise, more than half of American consumers report smartphones are increasingly important to their identities. The research showed that 35 million American adults would be more concerned if their phone number was compromised or stolen than their Social Security number and yet, 25 million American adults have had their mobile phone or service compromised in the last 12 months.
– A lack of trust in the identity verification process has negative downstream consequences on customer engagement and cross-selling. When consumers mistrust the process businesses use to verify them during onboarding, it not only leads to abandonment, but also to negative downstream impacts on revenue and relationship engagement, such as opting for one-time guest checkouts (54%), being less likely to keep a payment card on file (37%) and less likely to purchase additional products/services (21%).
– Consumers want companies to do more to safeguard their personal information. One hundred forty-seven million American adults with Internet access don’t think companies do enough to safeguard personal identity information, increasing the pressure for businesses to do more. This so-called “trust gap” has wide-reaching impacts for both businesses and consumers. According to IDology research, the biggest casualty of large-scale breaches and settlements is the loss of customer trust. While most consumers are more aware that digital fraud is increasing and their personal information is potentially already available on the dark web, their expectations for the processes that businesses use to identify and authenticate them is less and less forgiving.

Striking the Balance

What does this mean for companies as they increasingly interact with digital, mobile-first and mobile-only consumers who demand better security without added friction?

Although the intention is to prevent fraud, requiring too much effort can backfire. IDology research shows the abandonment rate among consumers has steadily grown each year. Nearly half of Americans have bailed out of signing up for a new account because the process was untrustworthy or too time consuming. Now more than ever, consumers desire trust, security and ease. Consumers want businesses to know and believe who they are and at that pivotal trust moment, during verification, they expect ease and simplicity. Second-guessing a consumer’s identity with additional hoops and barriers is a recipe for mutual distrust.

Essentially, it’s important that new customers aren’t scrutinized as potential criminals during onboarding. Of course, potential customers must be verified, but not at the expense of a positive experience that helps them feel trusted. At the same time, basic identity proofing and data matching are no longer sufficient methods for verifying identities. Key to balancing fraud and customer experience is identity verification technology that runs in the background and can quickly locate, match and authenticate legitimate customers with less friction by leveraging multiple layers of data, including mobile network data, device information and geolocation, as well as the integration of machine learning and artificial intelligence to improve the processing of that data. By utilizing smart layers of identity attributes and analyzing disparate identity characteristics behind the scenes, additional authentication methods are used only when necessary so that legitimate customers are quickly verified.

In the effort to continue evolving identity verification, anti-fraud processes and technology to combat fraud, it’s more critical than ever to lower effort and build trust for longstanding customer loyalty.

Christina Luttrell
Christina Luttrell is the chief executive officer for GBG Americas, comprised of Acuant ( and IDology (, the premier identity verification, regulatory compliance and fraud prevention provider for all industries to establish trusted digital identities.


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