Why customer education is a critical line of defence against identity theft

Identity fraud awareness matters now more than ever, with one in three Australians falling victim to identity fraud in the past year.

The rising number of identity theft victims reveals a concerning problem – consumers' vigilance hasn't kept pace with the ever-evolving risks. There's a society-wide lack of caution when preventing identity fraud, and fraudsters are taking advantage of consumers' complacency and lack of risk awareness.

So, what's the answer?

Organisations need to bring consumers on board in the battle against fraud. While there are sophisticated methods to help minimise the risk and rapidly detect fraud, such as identity verification technologies, identity theft risk and prevention education for customers should be one of the first lines of defence in any fraud prevention plan.

In this article, we'll discuss why educating customers is crucial for organisations and share some tips on educating customers on identity fraud risks.

The high cost of customer complacency

GBG's 'Global State of Digital Identity 2023' report found that 94 per cent of Australian respondents are concerned about future fraud attempts, and 69 per cent are concerned that their personal information is available for sale by criminals on the internet.

More Australian respondents (86 per cent) than the global average feel that it's the responsibility of businesses they interact with to protect their data. But 80 per cent also believe that responsibility lies with themselves.

However, this feeling does not appear to translate to the necessary proactive behaviours to protect themselves from identity theft. Many consumers do not think it could happen to them, even though they witness others falling victim to fraud. The resulting complacency puts them at more risk of fraud.

For example, a 2023 survey by Google Australia revealed that 34 per cent of Australians were using the same or similar passwords across multiple accounts. The same study revealed that more than one in three did not take any steps to improve their account security after the major consumer data breaches in 2022.

Some consumers don't know what steps to take to improve their account security. Google Australia search trends revealed growing interest in online security – web searches for "password strength" are at an 18-year high.

Another major challenge is that while, for the most part, consumers are alert to dodgy emails and fake messages requesting banking information, they are less aware of the newest trends in fraudulent behaviour.

As the nature of scams becomes more complex, a lack of awareness of the latest threats means customers cannot take the necessary precautions to protect their personal information, which can lead to identity fraud and significant financial losses.

This lack of awareness can also have severe consequences for businesses. A single mistake from your customer could lead to severe consequences that could damage your brand reputation and customer loyalty. On the other hand, educating customers can help improve the customer experience and build stronger loyalty and trust with the organisation.

How to Educate Customers on Identity Theft Risks

1. Start with the basics

Ensure your customers understand what personal information to protect. For example, personally identifiable information (PII) includes your full name, driver's licence number, passport number, date of birth, phone number, address, and more. At the very least, customers should know it is essential to keep PII safe because it can be used for identity theft or fraud.

One of the most effective and simplest ways to protect personal information is using strong passwords and enabling multi-factor authentication (MFA) to enhance the security of customer accounts and help prevent unauthorised access.

Educate your customers regarding strong passwords regularly. Also, encourage them to periodically review privacy settings on social media and other online accounts to prevent sharing sensitive information with unauthorised individuals.

2. Reach customers through channels they use

It's important to consider how you communicate with your customers to ensure your messages are seen and heard. What channels do your customers engage with?

Consider how you can use these channels to get messages in front of them. For example, you might leverage push messages, emails, and updates via digital channels, such as apps and articles on your website. 

3. Keep customers alert to the latest threats

Scams and types of information criminals target constantly evolve, so it's critical to keep consumers abreast of emerging scams as soon as you know about them.

For example, some Australian banks have dedicated web pages informing customers of the latest email, SMS and phone scams relating to the bank. These pages show examples of the scammers' messages so customers know exactly what to look out for.

4. Train consumers to slow down and be suspicious of urgency

Consumers should be trained to slow down and pick up on cues that might suggest they are being scammed. One of the common traits of fraudsters is a sense of urgency. Many fraud victims feel rushed and pressured to provide the data requested quickly.

However, by slowing down, customers give themselves time to reason, observe, and pick up on red flags. Ensure customers understand that your organisation will never pressure them to provide personal information quickly.

5. Focus fraud risk education for specific customer groups

Everyone is susceptible to attacks, whether they are digitally savvy or not. However, some scams target certain demographics, so educational messaging needs to be tailored to different customer groups.

Younger consumers are much more likely to accept social media friend requests from individuals they don't know and to engage in riskier online behaviours. In a 2020 study published in the International Journal of Cybersecurity Intelligence and Cybercrime, researchers compared the self-reported online safety behaviours of millennials and Gen Z, the two digitally native generations. Gen Z had a high awareness of online security but fared worse than millennials in implementing many cybersecurity best practices in their own lives.

On the other hand, older consumers are more likely than younger generations to be targeted by phone scams that involve calling the victim and convincing them to divulge personal information.

However, with the proper educational training, consumers of all ages can be better equipped to identify a scam and protect their identity information.

Make customer education part of your fraud prevention strategy

Consumers today are constantly exposed to evolving and increasingly sophisticated frauds. A fraudster only needs to get hold of a couple of pieces of a customer's personal information to start creating a fraudulent identity. That's why identity security is the first line of defence. Customer education should form a critical part of your organisation's fraud prevention plan to ensure customers are taking the proactive steps they can take to protect their identity information and fight fraud.