How to Mitigate Familiar Fraud in Remote Onboarding featured image

How to Mitigate Familiar Fraud in Remote Onboarding

Various enterprises have adopted digital onboarding processes to streamline operations and keep up with the changing landscape of industry practices, technology, and consumer preferences. Remote onboarding harnesses digital platforms so organizations can cater to a broader audience and attract more individuals to use their services at a lower-cost.

However, fraudulent individuals often try to take advantage of remote onboarding for illegal activities. Fraud remains a persistent threat across critical industry sectors and is driven by numerous motives, including financial gain, personal reasons, and other illicit purposes.

It is devastating when criminals use someone else’s identity for felonious acts, but it is even more detrimental when the victims personally know the culprit. Fraud perpetrated by someone’s family member, friends, or close associates is known as familiar fraud.

In 2018, familiar fraud cases in the U.S. rose from 7% of fraud to 15%. It accounted for 51% of new account fraud reported in the same year.

According to the Center for Victim Research, about 46% of victims felt less able to trust their families after their identities are stolen and used illegally. Moreover, the negative impacts of fraud affect not only social relationships but also the integrity of organizations.

pilot study revealed that victims of familiar fraud often develop strong distrust towards both the perpetrator as well as the employees and institutions that facilitated the fraud, as the victims feel that these entities cannot safeguard their sensitive information. The fear of revictimization also arises as a result of familiar fraud, and thus victims may look to end the relationship with the enterprise.

Organizations that handle sensitive data and valuable assets are obligated to observe due diligence with regulatory compliance to protect their clients’ information and prevent various types of fraud, including familiar fraud.

Verifying the identity of users in remote onboarding can be challenging. Still, with the right processes and by leveraging the power of identity verification technology, enterprises can mitigate fraudulent attempts right from the beginning of a customer relationship.

 

Establish a Comprehensive User Profile

Enterprises must collect extensive data that are useful in authenticating users’ identity when going through the remote onboarding process.

Know Your Customer (KYC) and Know Your Business (KYB) regulations are mandated to curtail fraud and other security risks to critical industry sectors. Adhering to these requirements helps in risk management and increases an institution’s ability to verify users accurately.

However, institutions must refrain from relying solely on traditional KYC processes like asking for the user’s address history or performing credit checks. When the perpetrator is someone familiar to the users, there is a higher chance of obtaining this information and using the data to pass conventional KYC procedures.

Organizations must use stronger identity verification solutions to authenticate the true identity of the person trying to create a new account.

 

Use a Multi-Layered Defense Approach

Deploying mobile facial biometric identity verification in onboarding processes adds an extra barrier to prevent fraudsters from circumventing security measures. Moreover, it enables enterprises to exercise regulatory compliance and can enhance inefficient KYC processes.

Most users feel inconvenienced by tedious procedures. However, modern identity verification solutions can perform the proofing process in a few seconds, thereby providing a hassle-free user experience. These solutions streamline the remote onboarding procedure while retaining security and accuracy, and mitigating fraud.

 

Leverage Mobile Biometric Technology in Remote Onboarding

Enterprises can take advantage of the user’s mobile devices to verify the identity of applicants when going through remote onboarding. Users can be prompted to use their camera-enabled mobile devices to capture a selfie as part of biometric identity verification.

Mobile biometric identity solutions will conduct a comparison of the user’s selfie against the photo extracted from the ID. Facial biometric algorithms then match the selfie to the presented document in real-time to prove that the person in the ID photo is the same person being onboarded. According to the National Institute of Standards and Technology (NIST), facial recognition technology has already achieved greater than 99% accuracy rate and continues to improve annually.

However, with easy access to social media images and print image doctoring, fraudsters can spoof a facial recognition system. To plug this security gap, identity verification solutions often require the user perform an active liveness detection test such as a turn of the head, a blink or smile, to verify the presence of a real human being.  More sophisticated identity verification solutions often include additional passive liveness and anti-spoofing attempts that work in the background, so fraudsters are not aware the liveness detection is occurring. With these liveness features, fraudulent individuals are prevented from cheating the system, and a seamless user experience is delivered.

 

Improve Identity Document Authentication

While some individuals may use counterfeit documents and other credentials to create new accounts, family members and close associates can use their relationship with someone to obtain a valid ID document and exploit that possession for fraudulent purposes.

Enterprises can ensure that the provided identity document truly belongs to the individual trying to create a new account and that it possesses the security features of genuine government-issued credentials.

Identity verification solutions should offer automated scans of the identity document as reliance on manual inspections by untrained personnel could result in human errors and false positive authenticity claims. An enterprise can step up the document validation with services that compare the credential’s security features – such as imprinted data, holograms and images to ensure they conform with the issuing authority’s technology. It’s a simple, yet important solution that keeps your business protected from fraud and helps you verify the authenticity and even age of customers.

Automated document scanning and authentication can also help to automatically and accurately populate back-office systems using the data retrieved from the ID document. This helps provide a quicker, easier and smoother remote onboarding experience to customers when opening accounts, applying for credit, and even for enrolling in customer loyalty programs.

 

Conduct Anti-Fraud Checks

When individuals attempt to use a family member’s or close associate’s information and identity credentials, fraud patterns may be noticeable.

Institutions must be vigilant in determining irregularities in the data and documents presented by the perpetrator, like inconsistent addresses and contact information. Unusual behavior and the refusal to undergo specific identification processes like a document verification or liveness detection are also possible signs of fraud.

A legitimate user with an honest intention of using an enterprise’s services will provide up-to-date credentials that can be verified from trusted sources like government registries, credit bureaus,  and watchlist databases.

 

Conclusion

Institutions must deploy necessary security measures and utilize effective technology to mitigate familiar fraud in remote onboarding.

Users too should not be complacent with entrusting their personal information and important documents to other people, even those they are close with.

Proof™ by Ipsidy harnesses mobile technology, active liveness tests, additional, passive anti-spoofing liveness confirmation, and NIST certified biometric matching of a selfie to verified credentials to streamline authentication processes and detect fraudulent individuals.

Proof also allows an enterprise to step up certainty with automatic identity document authentication, with robust credential validation of 1500+ government IDs and non-chip passports from 200 countries, connections to government registries and US, Canadian or Mexican driver’s licenses authentication. Proof helps establish a rooted trust identity so an enterprise can grow its business with the highest level of integrity and assurance—every time.

 

Schedule a Demo with Ipsidy  

Ipsidy Inc. is a provider of an Identity as a Service (IDaaS) platform that delivers a suite of secure, mobile, biometric identity solutions, available to any vertical, anywhere. Ipsidy’s identity proofing solutions enable enterprises to determine various types of fraudulent attempts in onboarding processes and mitigate them from the starting point. Contact Ipsidy today at 1 (516) 778-5639 or click here to schedule a demo.

 

 

References:

https://newprairiepress.org/cgi/viewcontent.cgi?article=1237&context=jft

https://www.forbes.com/sites/tomgroenfeldt/2019/03/18/credit-card-fraud-is-down-but-account-fraud-which-directly-hurts-consumers-remains-high/#639fbb1520bf

https://ncvc.dspacedirect.org/bitstream/handle/20.500.11990/1544/CVR%20Research%20Syntheses_Identity%20Theft%20and%20Fraud_Report.pdf

https://www.finextra.com/blogposting/17086/preventing-financial-crime-and-delivering-seamless-customer-onboarding—can-you-accomplish-both

https://www.advancedfraudsolutions.com/knowledge-center/the-warning-signs-and-growing-threat-of-new-account-fraud#

https://www.ipsidy.com/blog/why-upgrade-to-multi-factor-authentication

https://www.nist.gov/news-events/news/2018/11/nist-evaluation-shows-advance-face-recognition-softwares-capabilities