Digital businesses can create more secure platforms with automated identity proofing and user verification solutions that offer faster and more accurate risk decisioning
Identity theft, also called identity theft fraud or simply identity fraud, refers to a criminal impersonating a genuine customer by using wrongfully obtained information, such as social security numbers and credit card details. Fraudsters also use fake and stolen information to stitch together synthetic identities, in effect creating digital identities of non-existent people for criminal activities and economic gain.
With increasing reliance on online services for everyday activities – like work, shopping, banking, remittances, social interaction, and entertainment – users end up creating numerous digital accounts across websites, apps, and other digital platforms. Creating – and remembering – so many passwords can be difficult; as a result, many users create easy passwords and/or reuse and recycle them across platforms. However, if a password that’s used across several digital accounts gets stolen, fraudsters can use it to compromise all of these accounts in no time.
Fraudsters tend to be technically savvy, and use the latest tools and techniques such as phishing, social engineering and data breaches to steal consumers’ personal information, which can then be used for identity-related scams.
Identity theft continues to grow globally
Identity theft is a growing challenge for digital businesses globally. As per the Identity Theft Resource Center, crimes related to identity theft rose steadily during 2022 with fraudsters impersonating genuine users to create new accounts and circumvent defenses using stolen information. In 2022, social media accounts were the worst hit by identity scams and phishing campaigns, resulting in a 1000% increase in account takeover attacks, and financial losses for 27% individual users and 87% businesses.
According to the Federal Trade Commission (FTC), in 2021, identity theft was the top reported fraud with 1.4 million incidents, constituting 25% of all the fraud reported with the FTC during the year.
Problems arising due to identity fraud
Identity theft affects millions of users around the world every year and there are criminal rings specializing in identity theft. The most common method that fraudsters use to elicit information from users is through phishing campaigns. They may call up a user posing as a representative from their bank or another service provider and ask them to share the details lest their account be closed. In 2021, FTC reported 646, 440 cases of phone scams that resulted in losses worth US$ 699 million.
Stolen personal information provides fraudsters with ample monetization opportunities as they can sell it to third parties or use it themselves to commit identity theft and other cybercrimes.
Once fraudsters gain access to users’ personal information, they can use it for account takeover, open new fake accounts, max out credit cards, impersonate users to get medical treatments, open new lines of credit, collect tax refunds, and so on.
While it is possible to cancel credit cards, getting a new national identity number (such as social security number in the US, National Insurance Number in the UK, CPF in Brazil, Social Insurance Number in Canada, and so forth) is not easy. Further, users may need to spend disproportionate efforts to get their digital identities restored, which in worst cases, may not even happen.
Fighting identity fraud is difficult
Often, identity theft is difficult to detect until the crime has been committed and losses incurred. In addition to causing financial losses to businesses, consumers run the risk of their entire digital lives getting jeopardized.
Digital businesses are facing a tough task trying to fight identity theft. In their effort to fight identity fraud by stepping up ID verification measures, they risk introducing additional friction that can disrupt user experience. As a result, businesses find themselves caught in a dilemma of trading user experience for security.
Most of the identity proofing solutions available on the market today are ineffective against the innovative techniques that fraudsters use to bypass defense mechanisms. This is because fraudsters study the solutions deployed by the businesses and create workarounds to circumvent them. For instance, during new account registration, they use forged and fake documents to clear verification checks. They even use images from photos and videos of users to fool authentication.
Balancing fraud prevention with a great customer experience is proving to be a difficult task for businesses, as fraudsters are continuously evolving their evasion tactics.
Businesses are fighting a resourceful opponent
It is clear that businesses are fighting a tough battle against a technically superior opponent. To make matters worse many businesses continue to use manual verification processes that are not only time-consuming but also error-prone and susceptible to human biases.
On the other hand, supported by a thriving cybercrime ecosystem that provides fraudsters with the tools, techniques, expertise, and even fraud-as-as-service, they can launch a number of identity scams while evading detection.
Build capabilities to fight identity fraud
In the digital-first world, customers expect businesses to process their requests instantly. Any delay can lead to customer dissatisfaction, and in worst cases customer churn.
Verifying every user manually not only slows down the user approval process but also impacts business growth. Using solutions that leverage the latest digital technologies, businesses can automate the validation process for faster, more accurate, and user-friendly identity verification.
To be able to detect and stop identity fraud, it is essential that businesses have the required capabilities to quickly and accurately distinguish between genuine users and fraudsters. They need technology-driven solutions that enable them to ascertain the truth whether users are actually who they claim to be.
Protect your business and users against identity theft fraud with Caf
Leading businesses trust Caf’s best-in-class ID proofing capabilities to fight identity fraud with confidence. Our suite of identity verification solutions, including KYC, document verification, fraud prevention, and continuous monitoring enables businesses to upgrade user onboarding process, ensure regulatory compliance and optimize customer experience.
Using Caf’s industry-leading proof of identity platform, businesses can verify user claims to identify true users and block fraudsters right at the entry gates. Our platform delivers the most optimal identity onboarding experience and improves user acceptance rates through an orchestration layer which allows businesses to create identity and authentication workflows aligned with their unique business needs. Our proven biometric identity verification system is iBeta certified and used by several businesses to on-board millions of customers every year.
To learn how our market-leading ID proofing solutions can protect your business against varied identity theft fraud, while maintaining a great user experience, talk to a Caf expert and book a free demo now.