How Identity Fraud Targets 401k Participants

401k, fraud, retirement, identity

It’s a scary problem.

Identity fraud is increasingly targeting 401k participants, with employees in workplace retirement plans squarely in criminals’ sights.

Recent cases involving Abbott Laboratories and Estee Lauder, who both used Alight Solutions as their recordkeeper, are high-profile examples.

401k advisors now also need to protect participants from scams specifically related to the COVID-19 pandemic, as fraudsters are targeting those in—or nearing—retirement differently than those not as close to retirement.

Indeed, Javelin’s 2020 Identity Fraud Study found that in 2019, retirement and brokerage account fraud showed a clear split between those closer to retirement age and the younger generation.

SEE THE FULL REPORT HERE

For consumers age 55 and over, retirement and brokerage account fraud each totaled only 3% of the total non-card account fraud.

Meanwhile, for those age 18-54, retirement and brokerage account fraud totaled 16% and 8% respectively of non-account fraud.

Conversely, consumers 55 and over are at greater risk of bank fraud, accounting for 51% of all non-card account fraud, versus 45% for their younger counterparts.

“During the next twelve months, criminals will strike at the heart of the financial services industry and negatively affect consumers,” the report notes. “Areas of concern range from fraudulent account openings (synthetic identities), person to person (P2P), and full takeover of all accounts, not just checking or cards but also investment accounts and other high-dollar balances.”

Key findings include:

The report then offers several recommendations, including forcing consumers away from static passwords, focusing less on card transaction monitoring and increasing the use of analytics across the entire consumer relationship, and the implementation of two-factor authentication to reduce the likelihood of account takeover.

Exit mobile version