According to US-based consumer credit risk watchdog FICO’s most recent global consumer fraud study, as many as five million adult Filipinos or 4.5% of the country’s entire population have experienced identity theft. Some 6% of respondents or 6.7 million Filipinos believe their identity has been exploited to create a fake account.
Public awareness growing
Moreover, FICO said that public awareness of identity theft fraud is growing, with two in five Filipino consumers saying they prioritize fraud and scam protection when opening a new bank account. Meanwhile, one-quarter of respondents feel it is the second most significant factor.
This comes at a time, post-pandemic, when the majority of customers indicate they will continue to conduct all of their banking online and are becoming more conscious of the need for robust protection against online fraud.
Survey respondents also stated that banks are doing more fraud checks to protect them against identity theft, account takeover, and card fraud. Some 61% of surveyed Internet shoppers have faced additional identification checks, and 56% have experienced heightened checks when logging into their accounts. Filipinos are likewise aware of Authorized Push Payment (APP) fraud, in which scammers deceive clients into transferring money.
More security, more difficulties
However, the cost of increased security is oftentimes frustration and disengagement on the part of consumers. According to FICO, Filipinos believe that rigorous or time-consuming identification checks make them think twice about opening accounts. Some 27% of respondents said they gave up altogether from opening a savings account, 27% from getting a credit card, and 32% from acquiring a personal loan.
Meanwhile, around 25% of surveyed Filipinos have limited or altogether ceased using their bank accounts due to difficult or time-consuming identification verification procedures, while 28% said they have reduced or halted credit card usage.
“As new scams and frauds emerge, banks are increasingly challenged with balancing customer experience needs against managing fraud risks and controls such as securing payment verification,” said CK Leo, FICO’s lead for fraud, security and financial crime in Asia Pacific. “Implementing effective account security technologies that reduce friction is therefore a priority.”
Perception is key
The poll also found a link between perceived security efficacy and user preference: While biometric security and facial scans was recommended by 65% and 60% of Filipino respondents, many still preferred more conventional but less secure authentication methods. A total of 41% of Filipinos prefer old-fashioned usernames and passwords, while 47% prefer SMS passcodes.
“People develop a sense of trust and comfort around a way of doing things, especially if it has protected them from scams so far,” Leo explained. “As a result, it takes a while for customers to develop confidence in new security methods even if they are better. Banks need to remain flexible but find ways to show new channels are trustworthy, effective and more convenient.”
The FICO study was conducted in August 2022 and included some 1,000 Filipino participants, as well as respondents from Brazil, Canada, Chile, Colombia, Germany, Indonesia, Mexico, South Africa, Thailand, Peru, Sweden, the UK and the US.
