Shut the Door on Fraud
Businesses need an effective fraud prevention solution that enables them to block fraud and acquire new customers with minimal friction.
New account fraud remains one of the fastest growing threats today for all online businesses. This is largely due to readily available personally identifiable customer data in the digital world. It is no exaggeration that the online world is full of digital footprints that customers leave behind whenever they sign-up or log-in to online services, shop, or transfer funds online. Personally identifiable customer credentials such as date of birth, social security numbers and residential addresses, are scattered across unsecured channels that fraudsters can access with no trouble at all. These details are then traded in the dark web for financial gain and/or fraudulent activities. On the other hand, businesses are struggling to differentiate between fraudulent and genuine transactions in real time.
Newer Avenues Fueling New Account Fraud
Fraudsters are causing losses to businesses and customers through malicious activities such as the creation of new accounts using fake identities, account takeover, stealing credit card details, and so forth. However, fraudsters are now blurring the lines between fraud types. According to the latest 2018 Identity Fraud Study, “about 1.5 million victims of existing account fraud also had a fraudulent intermediary account opened in their name.” The study further states that fraudsters are increasingly focusing on opening new fraudulent accounts. These may include bank accounts, mobile phone accounts, P2P payment accounts and e-commerce accounts. The prime drivers aiding the scale and sophistication of New Account Fraud include:
Data breach: One of the prime drivers fueling account fraud, incidents of data breach rose 44.7% in 2017 over 2016, according to 2017 Identity Theft Year End Review. Moreover, according to the 2018 Identity Fraud Study, identity frauds were reported the highest at 16.7 million victims in the US. The study also revealed two worrisome facts. One, for the first time ever, data breaches resulted in more social security numbers (35%) being compromised than credit card numbers (30%). And two, fraudsters are now focusing on opening new fake accounts. It is not difficult to sense that these stolen social security numbers are used to open new fraudulent accounts that are then used to launder money, seek loans, for synthetic frauds, and to launch other types of cyber attacks.
Social engineering through phishing is a common method to inflict losses on businesses. According to PhishMe’s Enterprise Phishing Resiliency and Defense Report, phishing attempts have grown 65% in the last year. Unwitting customers fall prey to seemingly genuine messages (through email, SMS, or phone) and share the details asked for. Now, AI-based phishing attacks through bots are evolving and making inroads into the financial realm through distribution of malware, linking to spam sites, etc.
Smartphones are increasingly replacing bank branches; as a result phone frauds are on the rise, suggests the FTC Report. Fraudsters are exploiting the two-factor authentication for identity fraud. All they need to do is call up the carrier and request porting the compromised number to a device under their control. They can then use these phones to create fraudulent accounts without getting detected.
Malware such as Trojan horses are widely used to steal users’ personal information primarily due to easy availability of malware-as-a-service kit on the dark web.
Monetizing Fraudulent Accounts
There are various ways fraudsters use fake accounts. Fraudulent accounts are used to route stolen money through mule accounts to different countries. Money mules are considered authorized push payment scams since a legitimate owner authorizes the payment. Money mules are asked to withdraw the amount and wire it into a new account, keeping a portion of the money themselves. Money mules are usually ‘recruited’ by luring unsuspecting people through fake job postings and social media posts about quick money-making gigs. Europol says that 90% of the money mule transactions are linked to cybercrime.
Fraudulent accounts are also used for money laundering purposes, siphoning off money from customer accounts and disappearing quickly. Fraudsters smurf the stolen bounty across fraudulent accounts to escape detection.
Misusing fraudulent accounts to apply for loans is on the increase. Criminals use fraudulent accounts to seek loans. They then escape with the loan amount, leaving the customer to repay the debt and interest. The worst sufferers are student loans with 121% increase over 2016, according to an FTC report.
Prevent Fraud with Simility
Over the years, fraudsters have become more strategic in approach and are now moving beyond account takeover to creating fraudulent new accounts. Therefore, businesses need a solution that drives customer acquisition with minimal friction while keeping fraudsters at bay. The need is for an effective fraud and risk management solution that enables businesses to increase their customer base and fuel business growth.
Simility’s Adaptive Decisioning Platform empowers businesses to identify evolving fraud patterns and prevent fraud. Businesses get a flexible, intuitive, and visually configurable solution that uses transaction, device, and customer data together in real time. Therefore, using Simility’s cutting-edge platform, businesses can successfully balance fraud prevention and customer experience.
To learn how Simility can help businesses acquire new customers with minimum friction while proactively preventing fraud, download the New Account Origination Solution Guide now.
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