What is identity fraud?
Identity fraud commonly refers to criminal activities committed using stolen information of users such as their name, national identity number, credit card details, and so forth.
What is the difference between identity theft and identity fraud?
Stealing users’ personal or financial information is called identity theft, whereas using this information to impersonate users for criminal activities and fraudulent transactions is called identity fraud.
What are the dangers of identity fraud?
Identity fraud is on a steady rise with businesses losing billions of dollars every year to various identity related scams. According to a study businesses lost $52 billion to identity fraud in 2021, which rose 79% over the previous year. Notably new account fraud rose 109%, account takeovers registered a 90% increase and a 69% in credit card fraud.
Over the years, identity fraud has become more sophisticated and strategic. With a thriving cybercrime ecosystem, fraudsters have access to the latest tools, techniques, and support services to not only launch more complex attacks but also fool the verification mechanisms that businesses have deployed. Increasing reliance on digital channels for several daily-life activities is further adding to the rise in the incidents of identity theft fraud.
Financial services and fintechs are especially vulnerable as more and more users are conducting KYC and other verifications online. Fraudsters are exploiting this convenience by using deepfake videos and voices to gain unauthorized access to user accounts and siphoning off money.
Identity theft not only results in loss of money for users, it can also ruin their future prospects of transacting online or opening new lines of credit, and can even result in legal action for criminal activities done using their accounts. This can take a toll on the users’ mental peace as even after spending time and effort trying to restore their digital identities, they may not succeed.
What are the common types of identity theft?
Broadly there are three main types of identity theft, namely: financial identity theft, medical identity theft, and online identity theft. Some of the commonly stolen user information includes national identity numbers, child identity, emails, tax-related information, among others which are then used for a number of scams such as new account fraud, account takeovers, unemployment and government benefit fraud, online shopping fraud, elderly fraud, tax fraud, and so on.
How do fraudsters steal a user’s identity?
Fraudsters use several methods to steal users’ personal information. Some of the common methods they employ are:
Data breach: Fraudsters hack into business networks to steal databases of customer details.
Phishing: Pretending to be a representative from a user’s bank or another service provider, a fraudster fools the user to extract personal information.
Vishing: Also called ‘voice phishing’, fraudsters call up users on the phone to trick them into sharing their personal information.
Social engineering: Fraudsters build trust with the potential victim through fake promises of providing a job, winning a lottery, contests and surveys, high returns of investment schemes, mortgage schemes, obtaining credit reports, and even romance.
Malware: Links or attachments laced with malware when clicked or downloaded install malicious software on users’ devices to collect sensitive data, steal passwords, and log keystrokes. This data is then collected by the fraudsters.
Shoulder surfing: Watching over a user work on a public computer or a smartphone can allow fraudsters to steal personal information.
Physical theft: Lost documents and stolen mail or discarded papers such as old bank statements, medical records from trash can be a treasure trove of information for fraudsters.
Man-in-the-middle attacks: Public wifi networks such as those at airports, cafes, etc, are generally unprotected and provide fraudsters with a great opportunity to intercept user information.
How does identity theft result in account fraud?
Fraudsters use stolen user information to open new accounts or take over existing accounts. They also combine fictitious information with stolen data to create synthetic identities of non-existent people. These fake and compromised accounts provide fraudsters with ample opportunities to launch a number of identity related fraud such as money laundering, money transfers, receiving government benefits, making expensive purchases, applying for loans or credit cards, launching phishing campaigns, disseminating spam and several other criminal activities.
Who is a target for identity theft?
The prime targets for identity theft are usually children and elderly people. Since children have clean credit histories and the elderly rarely keep track of their credit, fraudsters can easily manipulate them without raising suspicion.
What are the most common causes of identity theft?
While the prime motivation behind identity theft is to make money, in many cases fraudsters steal user credentials to show their might and to hide other criminal activities.
Why is it hard to prove identity theft?
Identity theft is difficult to spot, which also makes it hard to fight. Often, victims do not realize that their identities have been compromised unless they are denied credit or lose the ability to transact online or in worst cases, receive legal notices. These unsuspecting victims face a tough time as it is difficult for investigators to trace the fraudsters who exploited the victims’ details to commit the crime.
What are the three Ds of identity theft?
Deter, Detect, and Defend are the three Ds usually practiced to prevent identity theft and protect user information.
What is identity theft protection?
Identity theft protection is a safeguard measure where a bank or a financial institution will reimburse the money lost by a user who has not shared the details carelessly with an imposter. Identity theft protection can be bought as a standalone cover or as part of home insurance and usually covers the cost of reestablishing a user’s identity.
How are businesses fighting identity theft fraud?
To fight the growing instances of identity theft, businesses are deploying several checks and measures that help step-up user security. This is especially true for banks, credit unions, fintechs, and e-commerce retail stores. For example, financial institutions in the US must comply with The Fair and Accurate Credit Transactions (FACT) Act, which requires them to create and implement an identity theft prevention program that helps detect, prevent, and mitigate identity theft while opening new accounts and operating existing accounts.
Regardless of the size of the business, digital businesses need adequate measures to safeguard their companies and users from identity theft. Digital businesses are investing in additional security measures such as firewalls, anti-virus, spyware protection, encryption, and data protection software that record network activity and monitor log data and audit trails to spot any suspicious activity. Multifactor authentication is yet another measure that adds a layer of security.
Robust technology-driven identity verification solutions can empower digital businesses to prevent fraudsters from using stolen or synthetic identities to register fake new accounts, log in to existing accounts or make online purchases.
Identity verification solutions that leverage artificial intelligence, machine learning, facial biometrics, and other technologies are enabling digital businesses to effectively identify and stop identity fraud, before it can affect their users or brand equity.
These technology-driven solutions are not only faster and more accurate in detecting fraud but also reduce the burden of manual reviews, which helps reduce operational costs and improve productivity of security teams. Automated verification reduces friction, improves approval rates, and enhances user experience. A PYMNTS study confirms that automated anti-fraud solutions provide businesses with a competitive edge in terms of customer experience.
Why work with Caf to fight identity theft fraud?
Caf helps digital businesses prevent identity theft so that their users are in total control of their digital identities. With end-to-end user verification, Caf ensures only genuine users can access a business network and experience the most optimal user onboarding experience.
Leading businesses leverage Caf’s best-in-class proof of identity platform to verify user identities, identify genuine users and block fraudsters right at the entry gates. Using an orchestration layer, businesses can create identity and authentication workflows aligned with their unique needs to improve user acceptance rates and onboarding experience.
Our proven biometric identity verification system is iBeta certified and being used by several businesses to on-board millions of customers every year.
Trust Caf’s suite of identity verification solutions to protect users against identity theft, improve conversion rates, ensure regulatory compliance and optimize customer experience.
To see how our ID proofing solutions outplay identity theft attempts and learn how they can provide the level of protection your business needs, talk to a Caf expert and book a free demo now.