Strengthening fraud defenses in the era of data breaches

Alain Meier
Head of Identity, Plaid

Alain spent his career building identity and anti-fraud products. Now he’s on a path to lower fraud at scale for the digital finance ecosystem.

Today, we’re excited to announce the inclusion of data breach reports into Plaid Beacon, our anti-fraud consortium, to help organizations of all sizes better protect themselves and their users from fraud and abuse. 

Beacon is dedicated to safeguarding consumer data, decreasing fraud for our customers, and ensuring a secure financial environment for everyone. As data breaches have become more frequent, protecting consumer identity and financial information has never been more critical. 

In response to these growing threats, we built data breach reports directly into Beacon and are including this additional data source free for new and existing Beacon customers. This allows companies to swiftly identify whether certain consumer identity and financial data may have been compromised. 

Data breach reports may reduce potential fraud across several critical use cases:

• Onboarding: During onboarding, companies can query Beacon to determine if an individual’s identity data or bank account information may have been exposed on the dark web.

• Existing Users: Companies can also query their existing users’ information to see if their collected data—identity or account information—may have been compromised. 

• Account Resets: When a user resets their account, companies can query Beacon’s data breach reports to help assess whether an account takeover may be occurring.

• Money Send: If a user chooses to send money to an unknown external bank account, companies can query if that external account may have been associated with a data breach.

Not only can Beacon customers query to see whether the account and routing numbers are associated with an existing data breach report, but they can also query account and routing to see if they are associated with another type of Beacon fraud report (e.g., stolen, synthetic, or ATO reported by other Beacon customers). 

If a user’s personal or financial data is flagged as compromised in a data breach, companies can take several steps to prevent identity fraud and account takeover threats, such as incorporating additional verification steps during onboarding or requiring existing users to re-verify their identity or re-authenticate their account. This helps ensure the user is who they claim to be and that the receiving bank account is trustworthy.

Why Beacon?

Beacon’s mission has always been to stop repeat fraud, limit the abuse of stolen identities, and create a safer financial ecosystem for everyone. The Beacon network includes shared fraud reports from participating companies, bank account insights from the Plaid Network, and now data breach reports. By providing companies with the tools to screen and protect their users, Beacon helps mitigate the risks associated with compromised data. This proactive approach not only enhances security but also builds trust with consumers, who increasingly demand robust protection measures from the organizations they interact with.

Stay tuned for more updates and insights on how Plaid is working to secure your financial future.