Plaid launches Beacon, an anti-fraud network

The latest offering is specifically designed to put an end to the ongoing cycle of fraudulent activities that stem from identity theft and compromised accounts. To do this, Beacon leverages a set of APIs that enable real-time, secure information sharing throughout the ecosystem to reduce recurring fraud targeting businesses, safeguard consumers and create a reportedly safer digital finance ecosystem.

The pain point that Beacon seeks to resolve

As cited in the official press release, a study from Javelin Strategy & Research has recently outlined that in 2022 alone, identity fraud affected 40 million US adults.

To put this in perspective, one in ten US adults has been a target of identity fraud. A significant number of individuals remain unaware when their personal identity information is stolen or misused, indicating a widespread lack of awareness regarding such incidents. Even more worryingly, each case of identity theft frequently leads to several instances of fraud attempts.

According to the research, fraudsters don’t just exploit the existing visibility gaps to defraud apps, but rather, in a chain reaction type of attack, they use the compromised identity information to further defraud other apps and systems. 

To prevent this from happening, Plaid argues that there is a need for a network that is accessible to fintechs and financial services providers so that they can identify the compromised identity information across the overall ecosystem.  

What does Plaid Beacon bring to the table?

Plaid is a data network and payments platform that offers its services to a wide array of players in the ecosystem, from banks, credit unions, fintech apps, and millions of consumers. 

With its new offering, Beacon, the data network aims to bring together the ecosystem, enabling the sharing of fraud insights among digital finance providers. On top of this, Plaid aims to create a mechanism that enables the verification of whether personal identifiable information has been abused, re-used, or recycled across platforms.

Users can thus use Beacon to report instances of fraud via the Beacon API or the Plaid Dashboard. Contributors can screen against the Beacon’s network to detect in real-time if a specific identity has been linked to fraud.

Even more so, participating members have visibility over the frequency, industries involved, and the timing of reported fraud instances, without disclosing the reporting organisation's name or the full underlying personal information associated with the fraud report.

Apart from this, Beacon can additionally enable members to shield their platforms from fraudsters using their own identities to commit repeat first-party attacks. 

This is not the first identity-verification offering made available by the company this year, as earlier in 2023 the data network launched a 'verify once, verify everywhere' system.

For more information about Plaid, please check out their detailed profile in our dedicated, industry-specific Company Database.