Small Business Impacts - Experian
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Small Business Impacts
Small Business Impacts
Executive Summary
US Economic and Regulatory Highlights • Fuel prices are up 49% since January and continue to
rise as motorists get back on the road and trucking
• The administration and party leaders are presenting a companies ramping up engagement as supply chain
trimmed down climate and social spending package that challenges rack the U.S. entering the holiday season.
is expected to be
Macroeconomic
Overview
Core inflation held September unemployment Business confidence in Consumer sentiment
constant 4% in September down to 4.8% September down 1% down 2% in October
U.S. Bureau of Labor Statistics U.S. Bureau of Labor Statistics NFIB University of Michigan
New starts bring new entities that have little commercial history
Business Applications — U.S. Total
The Pandemic sparked an unprecedented
number of new business applications
Up 49% since
September 2018
Source: https://www.census.gov/econ/bfs/index.html
• Lenders look for ways to grow portfolios, these emerging businesses will be in their sights.
• Fraudsters will target lenders as they attempt to verify emerging businesses with less history.
Credit Card Fraud
% Increase Year-Over-Year in
Identity Theft Reports
10/29/21 | Commercial Pulse | Page 3Small Business Impacts
Fraud spiking
Consumers and business owners targeted by fraudsters
Number of FTC Fraud, Identity Theft and Other Reports by Year
Up 52% since
September 2018
Source: https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2020/csn_annual_data_book_2020.pdf
FTC Complaints
Source: https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2020/csn_annual_data_book_2020.pdf
Fraud is on the rise, post pandemic, as the economy grows. In Q2 2021 we saw fraud up 14% YOY
*Other rankings exclude subcategories that are classified as fraud
Page 4 | Commercial Pulse | 10/29/21Small Business Impacts
Number of Reports by Type
Up 45% since
September 2018
Up 212%
Source: https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2020/csn_annual_data_book_2020.pdf
Fraud spiking
What segments of small business are experiencing high impact
Telecoms and retail card show the highest incidence of fraud
10/29/21 | Commercial Pulse | Page 5Small Business Impacts
Fraud spiking
How are fraud scores differentiating risk
Example: First-Party Fraud Rates Commercial Credit Risk Score
Low Risk High Risk (Bottom 20% of Scores)
Commercial Low Risk 0.4% 1.0%
First-Party Fraud Score
5.0% “Low“ Credit Risk,
High Risk (Bottom 5% of Scores) 5.1%
but High Fraud Risk
High-risk segment undetected by credit-only underwriting
For illustration purposes only.
Example gathered from a random data sample of new commercial accounts across multiple lenders. Results may vary from client to client.
• Entity & identity resolution mixed with blended risk assessment
• Focus on CX and a reduction of false positive rate
• More commercial lenders investing in increased automation
Page 6 | Commercial Pulse | 10/29/21Small Business Impacts
Addressing fraud spike
Layered fraud detection deters 1st, 3rd, and Synthetic Fraud
Meet regulatory obligations and Prioritize highest risk accounts by using
Verify business and owner
comply with OFAC, KYC, FinCen decision strategies that support your unique
data through one inquiry
and Red Flags requirements processes and underwriting criteria
An integrated decisioning system
Automating business value by converting data into actionable insights
Commercial lenders can make quick industry focused decisions with enhanced automation and heightened CX
10/29/21 | Commercial Pulse | Page 7Small Business Impacts
What I found interesting
About the author What I am watching for will be short term supply chain improvements.
Consumers will be challenged to continue spend velocity as inflationary
Brodie Oldham pressure and commodity price volatility will put a crimp in the consumers
ability and willingness to spend. Gas (Up 49%), winter heating bills (Up 54%),
Sr. Director of Commercial Data Science food price increases, supply shortages in general will increase pressure
Experian Business Information Services on consumer discretionary spend as these costs are passed along to the
end consumer. Small businesses be challenged during the holidays with
consumers lighter wallet, as well as competing with larger competitors, as
As Sr. Director of Analytics Consultancy, Brodie Oldham leads a team their costs rise disproportionately to the markets they operate. Delinquency
of statistical consultants with diverse skills to provide clients with rates for small businesses are expected to rise. Creditors should monitor
businesses and suppliers, through commercial monitoring, industry profiling,
leading edge analytic-driven information solutions, services, and and trended performance, as new events and COVID policy decisions impact
actionable insights. He is an industry expert, who speaks on behalf of U.S. business productivity.
Experian at industry conferences.
First Party Fraud will rise with small business delinquency rates, as struggling
businesses become more prone to poor behavior under stress. Fraudsters
Contributor will also masquerade as businesses, so placing strong identity and verification
solutions in-front of these bad actors will be a powerful deterrent to targeting.
Javier Rodriguez-Paiva
Strategic Analytic Consultant Commercial Data Science
Experian Business Information Services
Click down below to check out our
Commercial Insights Hub, a one-stop location for
Javier leads fraud analytics consulting in the Commercial Decision
Sciences team at Experian. In his role, he assists clients with up-to-date credit insights on U.S. small businesses
comprehensive fraud management strategies, with an eye on
both loss mitigation and business growth. Javier has 10+ years
Get your credit insights now
of experience in the analytics consulting role and in the financial
industry, with a wide breadth of hands-on experience in risk,
financial, sales and marketing data-driven strategy development.
Supply chain challenges, both global and domestic, will impact small
businesses ability to deliver this holiday season. These pricing pressures will
begin to be passed on to consumers as the margins are already paper thin for Click down below to get access to your small business
many small businesses. We saw the US inflation rate again hit a 13 year high
of 5.4% in September as core inflation, excluding food and energy, remained credit report at Experian Smart Business Reports
at 4%. New business starts in the U.S. are elevated, but slowing as we enter
the fall. Low barrier stimulus programs, that supported small business
development are not as visible, and supply chain concerns are delaying some Get your report now
from jumping into a new venture. Commodity prices are still volatile across
markets. Oil is trading around $80 a barrel as US producers slow investment
and global oil cartels are keeping production low to keep the prices elevated.
Commercial identity and first party fraud are on the minds of our clients as
fraudsters refocus efforts away from government stimulus programs and
back to creditors. We have seen increases in incidence across our customer
base as well as industry trends highlighting the seriousness and relevancy of
preventative tactics. Global tasks forces are being established to combat cyber
and ransom-ware attacks, due to the acceleration in volume and boldness of
the bad actors. Don’t forget to subscribe to our Experian YouTube Channel
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Page 8 | Commercial Pulse | 10/29/21About Experian’s Business Information Services
Experian’s Business Information Services is a leader in providing data and predictive insights to organizations, helping them mitigate risk and improve
profitability. The company’s business database provides comprehensive, third-party-verified information on 99.9 percent of all U.S. companies.
Experian provides market-leading tools that assist clients of all sizes in making real-time decisions, processing new applications, managing customer
relationships and collecting on delinquent accounts. For more information about Experian’s advanced business-to-business products and services,
visit www.experian.com/b2b.
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