The Simility Blog

Fraudulent Accounts: Threat to Online Business
fraudulent accounts
Kedar Samant
Kedar Samant
October 02, 2018

Businesses need a solution that drives customer acquisition with minimal friction while keeping fraudsters at bay 

Technology is transforming customer experiences and business models through innovations in the financial sector. These innovations are empowering customers to open new accounts anytime, from anywhere, regardless of device. However, in the process, the susceptibility to fraud and losses — due to cyber threats such as identity theft, phishing, card scans, social engineering and bot attacks — increases. 

Easy to Fake Online Identity 

According to the latest 2018 Identity Fraud Study, in 2017, the number of identity fraud victims rose to 16.7 million in the US, an increase of 8% over last year with $16.8 billion of stolen amounts. The study states that for the first time ever data breaches resulted in more social security numbers (35%) being compromised than credit card numbers (30%) and that new account creation was one of the major areas that fraudsters focused on in 2017. 

Online transactions are happy hunting grounds for fraudsters to steal valuable personally identifiable customer credentials including date of birth, social security numbers and residential addresses. Cyber criminals use these credentials to open fraudulent accounts and/or compromise existing customer accounts to siphon off money, seek loans or launch other cyberattacks. 

New account fraud is on the rise. This is largely because easy availability of stolen data and tools on the dark web has made it possible to create a fraudulent account in less time than it takes to make a cup of coffee. 

Fraudsters are also easily able to get around identity verification using doctored videos, which many businesses accept as a means of providing friction-free verification and onboarding. In the absence of physical documentation as required in the offline world, online businesses face difficulty in differentiating a fraudulent account creation request from a genuine one.  

The After Effects on Businesses and Customers 

Businesses need more customer accounts to fuel growth. The larger the number of unique customer accounts, the greater the reach of a business. However, with fake accounts, the true success of a business cannot be ascertained as the overall numbers get skewed. Businesses incur increased ‘clean-up’ and operational costs, which hits the bottom-lines. 

The losses are not limited only to online businesses. Unsuspecting customers lose their money through unauthorized transactions, signing-up for paid services or paying for loans they never solicited. They are charged fees for accounts they never opened themselves. Similarly, when stolen credit cards credentials are used for synthetic fraud, customers’ credit scores are negatively impacted due to unpaid annual card fees. This means customers end up paying a higher interest rate when they do apply for a loan. 

By the time the extent of loss is determined, it’s too late. The customer feels betrayed for poor security of her sensitive personal data; and the provider not only suffers a loss of revenue, but also takes a hit on the brand, which is rather long-term and irreplaceable. 


To succeed in the digital economy, businesses need more unique accounts and a solution that allows for fraud prevention and frictionless onboarding of new customers. Simility’s Adaptive Decisioning Platform provides businesses with a flexible, intuitive, and visually configurable solution that enables them to easily stay abreast of evolving fraud patterns and prevent fraud. 

Using transaction, device, and customer data together in real time, Simility’s cutting-edge platform empowers businesses to successfully balance fraud prevention and customer experience. 

To learn how Simility can help make customer acquisition process secure, download the New Account Origination Solution Brief.