Plaid is looking to fight fraud with its Thursday launch of a network-based tool to help financial institutions take a collective approach to a problem that cost consumers nearly $8.8 billion in 2022, according to the Federal Trade Commission.

Plaid Beacon allows the data transfer company’s clients to share information about potentially fraudulent users with one another, helping deter a “chain reaction” of fraud that can occur when FIs attempt to go it alone, Plaid Head of Identity Alain Meier said at the company’s Threads 2023 event on Thursday. 

“We want to take a network approach to solving fraud by offering a new way for digital finance companies to share and report critical fraud data, including instances of stolen or synthetic IDs and account takeover,” Meier said.

Users will report fraud using Beacon’s API or their Plaid dashboard, creating a database of information that will allow partners to screen specific identities and check whether they have a history of suspicious activity, Meier said in a blog post Thursday.

Participating institutions will be able to see the timing and frequency of reported incidents, as well as the industries in which they were reported, though not the names of companies attacked, according to Meier.

This data-sharing tactic mirrors the strategy employed by anti-fraud companies like Sift, which uses what Sift Vice President of Digital Trust and Safety Kevin Lee told Bank Automation News is a “better together approach” to compile insights from its clients and pinpoint identities and patterns deemed high risk.

Plaid is initially rolling out Beacon with a group of 10 members, including credit card payment company Tally, buy-now–pay-later provider Uplift and Veridian Credit Union, according to the post.

The tool will eventually be available to all of Plaid’s more than 8,000 clients. Meier noted in his post that “the approaches that exist today only work for the largest banks and card networks.”