It’s evident that identity fraud isn’t going away until something is done, and the threat of identity fraud is changing day by day. The number of cases of identity fraud has significantly increased in recent years. It is a really alarming situation. The total cost of identity fraud to enterprises is $42 billion which is way too much.
Now that the pandemic has had a negative impact on businesses, the potential of identity fraud appears to be even greater. These sorts of identity fraud will become more prevalent as more firms move toward digital transformation. Financial institutions’ ineffective and inefficient digital systems function as a magnet for fraudsters. Identity fraud is on the rise, and businesses must be prepared.
Identity Fraud: Six things to keep in mind
Businesses and financial institutions who fail to keep up with the latest identity fraud developments. Here’s everything a company needs to know about fraud as it evolves.
1. Fraudsters will keep coming with new techniques:
As more clients rely on online solutions as a result of the pandemic, the environment is becoming more tempting to scammers.
Customers presenting documents and biometric IDs manually can’t merely happen in a digital world. It’s nearly impossible to detect symptoms of fraud, and identity theft is more scalable online. This is advantageous to con artists.
Document verification and fraud is being perpetrated by bad actors using advanced tactics. Fraudulent documents and false ID cards will become more common in the coming years. This demonstrates that fraud strategies are becoming more complex, and the epidemic has resulted in the emergence of first-time fraudsters in need of financial assistance.
Businesses in this digital age are under attack from two directions. Experienced fraudsters with evolving types of fraud and sophisticated strategies, as well as first-time fraudsters with low-level fraud and naive techniques.
2. Biometric fraud will grow in coming years:
Currently, organizations utilize AI and machine learning solutions to verify customer IDs using biometric data. Using intelligent solutions, current biometric fraud is straightforward and quick to detect. Deep fakes, on the other hand, will make things more difficult.
Deep Fakes are digital material, such as videos, in which someone else’s movie or photo can be substituted for the original. While most social media users use this technique to create amusing films. This can, however, be used for malevolent purposes, such as circumventing ID verification systems. In the actual world, sophisticated attempts like these are less common since they involve too much time and money.
3. Synthetic Identification fraud will catch fire:
One of the most serious risks is synthetic identity document verification and frauds, which involves combining stolen information with fictitious details such as names and addresses to establish an entirely new identity. The identity can then be used to apply for loans, credit cards, and other services.
Synthetic fraud has exploded in popularity in recent years. In recent years, data breaches have aided in the spread of synthetic ID fraud. One such example is the hacking of the United States Census Bureau. Credit and database checks will not suffice to authenticate identity due to the large amount of stolen consumer data available online. Other kinds of verification, such as third-party technologies, will need to be considered by businesses.
4. Coercion Attack will be great threat:
Coercion attacks pose a significant threat to enterprises since they require no technical knowledge and are difficult to detect. Rather than stealing an identity, fraudsters induce victims to register legal accounts, which they then use for illegal purposes.
Businesses must check the intent of account opening to detect coercive assaults, which is nearly impossible for people to do. If someone else is in the shot when a biometric check is being conducted, that’s a hint of coercion, but that’s still a stretch. This invisible scam must be addressed by businesses and ID providers.
5. Cash Incentives will give rise to more fraud:
Frauds promising cash rewards may appear to be a thing of the past, yet they continue to impact businesses. Fraudsters take advantage of a marketing effort that encourages people to give money away. They do so by focusing on bonus campaigns for new account openings, referral bonuses, or significant currency volatility. Fraudsters create multiple accounts with the same identity but different details such as email addresses and addresses. They open the account and receive the financial benefits.
6. Finance Companies will be favorite prey to fraudsters:
Online fraud has had the greatest impact on the financial sector of all industries. The financial industry is always vulnerable to identity theft, but changing spending habits have made suspicious conduct more difficult to detect. Businesses are having difficulty distinguishing between genuine and phone users. Businesses require effective bank account verification software that facilitates security and agility to successfully onboard customers.
This is one of the key reasons why companies are putting more emphasis on channel transformation. Instead of using username and password, most firms use machine learning with biometric verification. This is one approach for distinguishing between legitimate and malicious users.