Category: Fraud

Categories

Best Practices to Prevent Credit Card Fraud

credit card fraud prevention

Credit card fraud was the most frequent type of fraud reported in 2020 according to the Federal Trade Commission. And the amount lost annually to credit card fraud is a staggering $149 million. While it’s vital to ensure the security of their financial accounts, if you do end up being a victim of credit card fraud then you should know what to do next. And what would be the best practices for credit card fraud prevention?

What is Credit Card Fraud?

Credit card fraud is when a fraudster uses credit cards without the authorization of the card owner. They can use it to purchase products/services or obtain funds without the cardholder’s consent.

Difference Between Credit Card Fraud vs. Identity Theft

Both of these types of fraud are similar, but identity fraud is broader in reach. An identity thief steals your personal information, such as your Social Security Number, Opens a new account, gets a loan approved, and files for tax returns.

Credit card fraud is a different type of identity theft that happens when your credit card is used for unauthorized purchases. Customers who rarely check their credit card account online may notice some anomalies in the account that you didn’t make. While the majority of credit card issuers offer zero liability on fraudulent purchases, it doesn’t mean that you will turn a blind eye. This also raises the question of how banks prevent credit card fraud.

There are no particular credit card fraud prevention strategies that provide you total credit card fraud protection, but some small actions can lead to an increased risk of fraud, thus you should take time out of your schedule to learn how to secure yourself.

How Consumers Can Prevent Credit Card Fraud?

There are several methods and techniques that fraudsters utilize to steal your personally identifiable information. Fraud reports for 2020 increased over the previous year which isn’t surprising because most of the world went towards a digital transformation. Bad actors always look forward to weak moments for a customer to steal personal information.

Sometimes, being aware of the red flags and things that seem suspicious will help you make better decisions and avoid credit card fraud. Here are some common things to look out for:

1. Don’t Use Unsecure Websites

This is something that you can easily do. If any shopping site is secure you’ll see a padlock on the top left side before the address bar. Also, the web address will begin with HTTPS. Do not enter credit card numbers on a website that you see isn’t secure. And let’s be honest, if a business isn’t offering data security, you shouldn’t invest your time in it. Not using insecure websites is the primary credit card fraud prevention.

2. Beware of Phishing Scams

Phishing scams are very common and they can happen on the phone, email, texts, or anywhere else. The scammers might call and pretend they are from some government body and try to gather your personal information.

Scams as of today are very sophisticated, customers often get scam emails from what seems like their bank. If the email requests you reply with your credit card account number, you know it’s fake.

3. Beware of What You Post on Social Media

While social media is extremely exciting, it does have its downfalls. Fraudsters keep deriving new methods of stealing personal information through social media. Kids often end up sharing sensitive data on social media without being aware of it. To prevent credit card fraud, parents need to have a serious talk about what they share on social media. 

Anything you post about your personal life can be pieced together by fraudsters to build a profile for financial fraud.

4. Use Mobile Payment Apps

There are some chances that your card information may be skimmed by an in-store card reader, but it can still happen. Thus, it is better to increase the protection of credit cards by using mobile payment apps such as PayPal.

All the mobile payment apps use a technology named tokenization, which allows you to pay without exposing the actual card number. This way, your account stays safe from fraudsters even if the transaction data is exposed.

5. Don’t Save Credit Card Information Online

This may take some time to master, you have to stop, find your credit card number, and type it in every time you wish to make a transaction. It doesn’t matter if it’s a retailer that you trust, a data breach can put your private information at risk. This is an effective method of decreasing the risk of fraud.

6. Use a Password Manager

One of the primary rules with using passwords is that you shouldn’t use the same password or a combination of the same passwords over and over again. If a fraudster gets access to one of your passwords, then they’ll be able to gain access to all your accounts.

A password manager can help you generate and remember complicated passwords easily. Having a variety of complicated passwords can assist you in saving yourself from financial fraud.

7. Don’t Use Public WiFi for Financial Transactions

Public WiFi is riddled with fraudsters, trying to steal any information that they can find. If you conduct any kind of financial transaction on public WiFi, you’ll be vulnerable to hackers because these networks are often unencrypted. Whatever financial transactions you need to conduct you should do it on your personal network.

You can also use a virtual private network or VPN to encrypt the public WiFi. A VPN encrypts your incoming and outgoing traffic thus securing the transactions.

How Businesses Can Prevent Credit Card Fraud?

1. Secure Payment Processing

Almost all businesses should have secure payment processing systems. The best options are to use systems that rely on tokenization and encryption to protect sensitive card information during transactions and reduce the risk of data breaches. 

2. EMV Chip Card Technology

Another fraud prevention method is the use of EMV chip cards. Adopting EMV-compliant payment systems can reduce the risk of payment fraud. Chip cards are tougher to copy than magnetic stripe cards. 

3. Address Verification and CVV Checks

Using address verification checks and CVV checks can significantly reduce the number of card-not-present frauds and minimize the risk of fraud.

4. Fraud Detection Tools

Businesses that onboard a lot of customers globally need the help of fraud prevention tools. Technologies like DIRO business verification, online document verification, and utility bill verification can help businesses differentiate between legitimate and fake customers.

5. Employee Training

It is essential to educate your employees to recognize and prevent fraud. If your employees know something is fishy, they can minimize the risk of fraudulent activity, especially in retail environments.

6. Regular Monitoring

Monitoring transactions and customer accounts regularly can help in learning basic fraud patterns and upcoming trends. Identifying patterns is a great way to catch potential fraud early.

7. Chargeback Management

Having a chargeback management process can help businesses track, analyze, and respond to chargebacks. Chargeback fraud can be a major indicator of fraud.

Types of Credit Card Fraud

Credit card fraud can happen in several ways. They’re made specifically to target weak points in payment systems. There are vulnerabilities in each section of a payment system that a fraudster looks to exploit.

Here are some of the most common types of credit card fraud:

  1. Stolen or Lost Credit Cards

As the name suggests, this type of fraud happens when a criminal steals someone else’s physical card. The fraudulent actor then uses the card to make unauthorized purchases. Until the legit owner reports the card as missing or stolen, a fraudster can keep on using the card.

  1. Card-Not-Present (CNP) Fraud

CNP happens when a scammer obtains credit card information (card number, expiration date, or CVV) and uses the card to make illegal transactions. These transactions can be done online, by phone, or by mail without a physical card.

One of the most common ways to obtain card information is through data breaches, phishing, and other methods.

  1. Account Takeover Fraud

Commonly known as ATO, a criminal obtains illegal access to a credit card account or bank account. This is mostly done via ID theft or phishing. Once the account information is obtained, scammers change it, add themselves as authorized users, and request a new card.

They then use the new card to make illegal transactions.

  1. Application Fraud

This type of fraud happens whenever a criminal applies for a credit card using fake information. Once the application is approved and scammers receive the card, they use it for illegal transactions. The legit bank account owner then has to deal with the financial ramifications.

  1. Skimming

Skimming is another type of credit card fraud. Fraudsters use a small electronic device, known as a “Skimmer”. This small device steals credit card information from the card’s magnetic stripe during legitimate transactions. Fraudsters often place these devices at an ATM or a payment terminal.

Criminals can then use the captured data to create counterfeit cards or carry out illegal transactions.

  1. Phishing Scams

These are some of the most common types of credit card fraud. Phishing scams use emails, phone calls, and texts to trick cardholders into revealing their credit card information.

Users receive an email that may look like it’s from a legitimate bank/company/retailer. Most of the time, the motive of the email is to steal the user’s account information.

Emails ask users to “confirm” their account information by clicking a link or a button.

Which Businesses Are Most Susceptible to Credit Card Fraud?

There are specific businesses that are more vulnerable to credit card fraud. Here’s a list of businesses that are more at risk of credit card fraud:

1. eCommerce and Online Retailers

As these businesses conduct CNP transactions, they’re more open to fraud. There’s no way to verify the authenticity of the cardholder, so they’re more exposed to fraud.

Additionally, online transactions are more vulnerable to data breaches, phishing, and malware attacks.

2. Small Businesses

Small businesses don’t have the resources to invest in robust fraud prevention and detection. They don’t even know about the latest developments in credit card fraud trends. This makes small businesses more vulnerable to different types of fraud.

3. High-Risk Industries

Businesses operating in high-risk industries like gambling, adult entertainment, finance, etc tend to experience more instances of fraud. Criminals love to target these industries because the volume of transactions is higher than in other industries.

4. Businesses with High Employee Turnover

Businesses that have a high number of employee turnover are more vulnerable to fraud. Why? Because the consistent shift in employees makes it tough to maintain rules and regulations. There are even cases where employees partake in fraudulent activities due to a lack of procedures.

5. Businesses With Outdated Technology

Retailers that use outdated point of sale (POS) systems or payment terminals are more vulnerable to skimming and other types of fraud.

Older technologies aren’t up to the latest protocols so they’re more susceptible to fraud.

How Banks Can Prevent Credit Card Fraud?

While customers don’t have to bear the burden of credit card fraud, financial institutions have to take the brunt of the fraud. To prevent this type of fraud, FIs need to comply with KYC regulations and AML regulations, continuously monitor the transactions, and utilize technologies.

Technologies such as DIRO online document verification solutions can help financial institutions stay on top of acts of fraud.

Categories

Fighting Online Fraud with Multi-Factor Authentication Solutions

multi factor authentication

In a world that’s moving towards complete digitization, how can a business distinguish between fake and real? As a business, the need of identifying a real person from a fake one is vital. Identity authentication solutions help in verifying customer identities. Using multi-factor authentication (MFA), and knowledge-based questions, businesses can reduce the risk of fraud and increase customer-business trust. 

One widely used MFA is using the mobile number for sending a unique 6-8 digit code to the customers. This is a common method of authentication because:

  • Mobile phones are widely available. Over 62% of the world’s population uses a mobile phone. 
  • Easily accessible. Most people carry their phones with them at all times.
  • More convenient than any other method of MFA.

Mobile Number for Verification

Using mobile numbers as a method of verification consists of:

  • A customer/potential customer provides their phone number to the business
  • A text is sent to the phone number, it contains a unique, time-sensitive code
  • The person is authenticated if they enter the right passcode

While the process is simple, it supports one element of customer authentication. Strong customer authentication (SCA) which verifies customers using something a customer has. By entering the unique code, a customer confirms that they have the phone with them. 

Combining this with another method of authentication, mobile number verification passes the bar set by EU requirements for SCA. Not a lot of businesses are obligated to comply with SCA, still, the use of mobile verification offers some benefits. Using multiple channels for customer authentication is extremely helpful for the financial sector as it provides a robust security model. 

Verification and Authentication

Using a mobile number for customer verification only indicates that a person has access to the number. It is easy to activate a mobile number using synthetic identity and can be easily created on internet-based phone and text services without any ID requirement. If a firm relies on mobile checks for verification, it’d have a higher chance of authenticating fraudsters. 

Verifying the legitimacy of a person includes confirming that they exist, which is fundamental to ensure that the authentication process is efficient and effective. Cross-referencing the information provides a solid base for authentication. Having precise identity data with an authenticated mobile number delivers increased assurance.

Identity Two Factor Authentication

There are online document verification methods that help in the process of identity multi-factor authentication. These services make sure that only real mobile numbers can be used for mobile numbers, thus filtering out bad actors who use VOIP services. 

By adding the additional authentication layer, bad actors face extra friction to establish, use or modify any account, while legitimate users can quickly continue with their activities.

Online Document Verification for Customer Verification

Some customers are hesitant to provide their mobile numbers before starting a customer relationship. This is where online document verification for verifying customer identities. Distinguishing between fake and real people is crucial for banks and financial institutions to reduce fraud.

DIRO’s online document verification service verifies online documents from all over the globe. DIRO supports banks, healthcare institutions, financial institutions, and more by providing a new and unique approach towards online document verification.

With DIRO, entities can verify customer documents instantly. DIRO 100% eliminates the use of fake and stolen documents by cross-referencing document data with original sources. 

With over 7000+ types of documents, DIRO is a global platform. Backed by forensic data and 100% proof of trust, DIRO verifies documents such as bank statements, driver’s license, utility bills, tax documents, insurance documents, student records, and more. Implementing organization-wide KYC & AML compliance is also easier with DIRO’s technology.

Categories

What is Synthetic Identity Fraud? How does it impact businesses?

what is synthetic identity fraud

Out of all the online frauds, synthetic identity fraud is one of the fastest-growing threats in the U.S. Traditional methods of detection and prevention of fraud are failing when it comes to synthetic ID fraud. Synthetic identity fraud is a type of fraud where fraudsters combine fake and real information such as real stolen social security numbers and fake names to create a whole new persona. Fraudsters then use this new identity to complete a number of fraudulent activities. This new identity can affect financial institutions, government agencies, or individuals by opening a new fake account. 

Synthetic identities are a growing threat in the US. This is because identity verification in the US leverages personally identifiable information (PII) like SSNs. According to a report by the FTC, synthetic identity fraud is the fastest-growing type of financial crime in the US.

One of the biggest reasons why synthetic identity fraud is growing is because it is hard to detect. Victims of these frauds are typically individuals who are less likely to access their credit information regularly, such as children or the elderly. Plus, fraudsters often nurture these identities over time, and then they apply for more and more credit and build up a positive online payment history.

Synthetic identities often go years without being detected. This is one of the reasons why identity fraud is so attractive to fraudsters. Synthetic ID fraud is a fraud committed by expert fraudsters.

What Exactly Is Synthetic Identity Theft? 

Synthetic identity theft involves stealing an individual’s Social Security number (SSN) and combining it with invented personal data—name, date of birth, address, email, and phone number—to form a new identity.

It’s Hard to Spot Conventional fraud detection struggles to identify synthetic identity theft. Children, seniors, and homeless individuals are commonly targeted due to limited credit usage and monitoring.

The Creation Process Fraudsters can create synthetic identities through several methods:

  • SSN Theft: Stolen SSNs are combined with fabricated information in identity compilation.
  • Manipulated Data: Genuine personal data is slightly altered to establish a new persona using identity manipulation.
  • Fabricated Identity: Bogus personal information is used to craft an entirely false identity via identity fabrication.

Difference Between Synthetic ID Fraud & Traditional Fraud Methods

Traditional fraud usually involves a fraudster impersonating someone else. They will use stolen identity documents or information to commit fraud. These types of fraudsters tend to max out the credit limit as soon as possible before the victim notices the fraud. Most financial institutions send alerts to the victims about suspicious activities and that’s why this type of identity fraud is detected easily. 

Synthetic ID fraud in comparison combines real stolen information and fake information to create a completely new identity. There are several ways this can be achieved:

  • IdeIdentity fabrication- creating a completely fictitious identity without any real personally identifiable information. 
  • Identity manipulation- fraudsters create a modified real PII for building a new identity. 
  • Identity compilation- a combination of fake and real PII, such as a false driver’s license to build a new identity.

By combining real and fake information, detecting synthetic ID fraud becomes much more difficult. Especially when the real information is stolen from those who are less likely to keep their eye on their credit files. In a lot of cases, synthetic identity fraud can go undetected for a long time.

Purpose of Synthetic Identities 

Synthetic identities are mainly employed for financial fraud. Identity thieves use these to acquire loans, credit cards, bank accounts, and more. They can even file taxes, access medical care, and apply for unemployment benefits with fake identities.

This process can be prolonged, spanning years to build a credible synthetic profile, complete with a substantial credit history and reliable credit scores.

Fraud Avenues Synthetic identities enable various fraudulent activities:

  • Organized Crime: Crime rings use synthetic identities to access or store illegally obtained funds.
  • Loan Scams: Fraudsters secure personal loans, default, and abscond with the money.
  • Evasion: Criminals evade prosecution by assuming synthetic identities.

Repercussions of Victimhood Detection prove challenging due to the legitimacy of synthetic identities. Lenders and banks struggle to identify these fraudulent accounts, targeting individuals with infrequent credit access.

Fraudulent SSN use results in fragmented credit files, mixing your legitimate data with synthetic identity details. Negative judgments stemming from this mix can harm your credit scores and untangling the records can be arduous.

How Synthetic Identity Fraudsters Commit Crime?

  1. They Create a New Fake Identity

The process usually starts on the dark web. A fraudster can easily purchase stolen PII that is obtained with data breaches or other methods. Or sometimes they’ll use a completely fake identity for fraud. 

  1. They Apply for Credit

Using the new synthetic identity, a fraudster applies for credit online. The financial institution the fraudsters apply to sends their query to the bureaus for checking. This initial application is often as the new synthetic identity doesn’t have a credit history. Although, the application is enough to start a new credit record. 

  1. Fraudsters Keep on Trying Till They’re Successful

The fraudsters keep on applying at various financial institutions until they’re approved by anyone. Most of the time, it’s a high-risk lender who approves. They continue to build this line of credit making timely repayments and building up a good credit reputation. With a good enough credit history, fraudsters can gain access to lower-risk lenders and higher credit limits. Building this reputation takes months or even years and on paper, fraudsters look like any other credit users. 

  1. They Accelerate a Positive Credit History

Some fraudsters accelerate their credit history process by piggybacking. Fraudsters are added as authorized users to an account with a good credit history. Authorized users are compensated for this process. The fraudsters will use several tactics to make the synthetic identities even more real. Thus making it harder to detect with traditional methods.

  1. They Take Advantage of Their Efforts

Eventually, the fraudsters will take advantage of the reputation they’ve built up over time. Once they secure a large line of credit, they will max out the credit line before vanishing forever. It’s also possible for the fraudsters to double their profits by claiming identity theft on their accounts and get the charges removed. Or they can even use fake cheques to pay off the balance before maxing out the credit limit. 

Protecting Against Synthetic Identity Theft 

Following these fraud prevention strategies are crucial to ensure a fraudster doesn’t steal your identity information.

  • Secure Your SSN: Safeguard your SSN. Store your Social Security card safely at home, and avoid disclosing it in public. Dispose of documents containing personal data securely.
  • Digital Security: Utilize comprehensive digital security software to guard against hacking and malware.
  • Phishing Awareness: Beware of phishing scams through emails, texts, and calls. Scrutinize sources, avoiding unexpected requests for personal data.
  • Monitor Credit: Regularly review credit reports and scores for discrepancies. Place fraud alerts or security freezes to guard against unauthorized credit activity.

Safeguarding your SSN and practicing digital security can help mitigate the risks of synthetic identity theft. Stay vigilant and take preventive measures to protect your financial well-being.

Impact of Synthetic ID Fraud on Businesses

Due to its hard-to-detect nature, there’s no way to tell how this type of fraud impacts businesses. In the US, lost credit-card accounts lost $820 million to synthetic identity fraud in 2018 and the losses are expected to cross $2 billion by the end of 2021. However, this data doesn’t account for the loss of personal time and aggravation for the victims.

Synthetic identity fraud is costing businesses billions of dollars. Plus the amount of time financial institutions spend chasing down people who don’t exist. Clearly, synthetic ID fraud is a growing threat, so businesses need a more efficient process to verify if the users are authentic or not. Traditional tools that are meant to reduce identity fraud can’t keep up with synthetic identity fraud. 

Businesses need to invest in the latest and more sophisticated methods like DIRO’s original document verification technology. It verifies documents instantly and verifies customer data from original sources to reduce the use of fake and stolen information.

FAQs

  1. What is synthetic identity theft fraud?

Synthetic identity theft fraud occurs when criminals create fictitious identities by combining real and fake information, often involving social security numbers, names, addresses, and other data. 

They then use these synthetic identities to open fraudulent accounts or apply for credit, aiming to build a credit history and obtain financial benefits.

  1. How does synthetic identity theft differ from traditional identity theft?

In traditional identity theft, a criminal uses another person’s legitimate identity information. In synthetic identity theft, the criminal creates a new identity that may not correspond to any real individual, making it harder to detect.

  1. How do fraudsters create synthetic identities?

Fraudsters often combine real and fake information to create a synthetic identity. They might use a real social security number with a fabricated name, address, and other details. Alternatively, they might use various fabricated elements to build a seemingly authentic identity.

  1. Why is synthetic identity theft difficult to detect?

Synthetic identities often involve a mix of real and fake information, making them appear genuine to many fraud detection systems. Additionally, since these identities don’t have a true individual associated with them, the fraud may go unnoticed until it’s well-established.

  1. What impact does synthetic identity theft have on individuals and organizations?

For individuals, it can lead to financial harm, damaged credit scores, and difficulty resolving the issue due to the complex nature of synthetic identities. Organizations can face financial losses, regulatory penalties, and reputational damage.

  1. How can organizations detect synthetic identity theft?

Detecting synthetic identity theft requires advanced fraud detection tools that can analyze patterns and inconsistencies in data. 

This might involve monitoring unusual application behaviors, identifying duplicate identities, and validating identity elements against authoritative sources.

Categories

5 Must-Know Anti-Fraud Strategies To Reduce the Risk of Fraud

anti fraud strategies

Online fraud poses enormous risks, many financial institutions don’t have the procedures and effective systems in place to tackle fraud. No anti-fraud procedure is 100% foolproof. Regardless of that, there are some anti-fraud strategies including 5 key steps that can help in fighting multiple cases of fraud.

Fraud is Growing in Quality and Quantity

Customers all across the financial industries are now using services that operate completely in the online environment. When the entire world went into lockdown because of the pandemic, financial institutions had to rely on digital methods. Even as the world returns to normal after the pandemic, customers wouldn’t want to go back to traditional, slow, and inefficient methods. That’s why it is imperative to learn how to prevent fraud in the business.

But one of the major flaws in digital processes is that increased presence means an increase in fraud. According to a report by the FTC, the rate of identity fraud increased by 45% in the last year. Increased online transactions, payments, and personal banking provide new opportunities for fraudsters. The rate of fraud isn’t just growing, online fraud is evolving beyond normal measures. To control this, creative and unique anti-fraud best practices have to be followed.

Businesses have to fight a series of different financial attacks. Some of the most common types of online fraud are synthetic identity fraud, from replay attacks to advanced biometric fraud. To get around the common fraud, businesses set up fraud-fighting procedures, and fraudsters keep on trying new methods of fraud.

To mitigate/eliminate the threat, businesses need to keep relying on the best fraud prevention tips. But are the businesses doing enough to eliminate fraud?

Impact of Fraud on the Global Economy

According to reports, the global losses from online payment fraud alone were around $32.89 billion in 2020. This number tripled since 2011. Among other findings, surveys by financial fraud suggested that they are losing up to 7% of their annual profit because of fraud. Unfortunately, only a small percentage of these losses are uncovered. Normal fraud detection and prevention methods are proving to be ineffective. 

There are large numbers of surveys that aim toward understanding the true cost of fraud to businesses & society, but it’s almost impossible to get a rational idea of how many losses fraud causes. Plus, these surveys don’t consider the associated costs of fraud. That includes the hours banking staff spend rectifying the issues and reputational damage and personal costs that fraud has on victims. One thing that financial institutions are clear about is that fraud remains a huge and financially daunting problem. Businesses need to employ the best anti-fraud strategies.

Proactive Approach for Reducing Online Fraud

To reduce the costs of fraud, and to combat new and evolving types of fraud, businesses need to invest time, money, and resources into fraud risk management. Having a successful process and strategy in place provides a comprehensive approach to identifying, assessing, mitigating, and monitoring fraud.

According to the Association of Certified Fraud Examiners (ACFE), the best approach to managing risk is proactive instead of a reaction-based approach. Organizations that have to tackle financial fraud, need to take a proactive approach to fraud. It helps in figuring out how fraudsters are going to attack and measuring the fraud level their businesses have to face. 

This can happen using robust fraud detection and elimination solutions and analyzing evolving fraud trends to stay ahead of the fraud types a particular business faces.

5 Foundation Steps for Effective Anti-Fraud Strategies

In today’s online banking environment, organizations need more than a strong team of fraud fighters. So what do businesses need to do about effective anti-fraud strategies? Businesses have to follow 5 foundation steps:

  • Educating People About Security and Governance

Fraud risk managers should make it a part of their strategy to educate people about fraud prevention. Fraud managers should aim to scatter their strategy throughout the business chain. A successful model also needs a compatible framework. Senior managers should hire the best team to fight all kinds of financial fraud. The team should have good enough experience in fraud awareness and detection. A customer-centric mindset is important when choosing a fraud detection team, it is crucial for implementing the right type of strategies. 

  • Finding the Balance

Businesses should have fraud teams focus on customer experience and growth-focused parts of the business to achieve a balance between how much risk they have to tackle and how many customers they onboard. Businesses could eliminate 100% of fraud if they don’t board any of the customers. However, the best fraud strategy suggests that the teams need to find a balance, and the team works with the broader business to find the ideal balance. 

  • Assessing the Fraud

Businesses need to figure out what frauds are your businesses encountering, and how these frauds have evolved? They also need to figure out, if some kind of fraud happens, how much financial loss it will cost your business. The basis for the prevention and detection of fraud for your business starts with assessing the risks. To understand the risks a business faces, you need a firm understanding of how the landscape works. 

  • Preventing & Detecting Fraud

How can businesses prevent financial frauds like account takeover and other fraud types? Is there a way businesses protect against fake or stolen identities and data breaches? How can businesses do this and not stop onboarding real customers? Using online document verification solutions and online ID verification solutions can help businesses figure out the real identities from fake ones.

  • Using Technology and Analytics

Customers want better digital banking and other online financial services. Humans don’t have the capability of keeping up with evolving fraud. To tackle the risks that are associated with online financial services, banks need to use better technological solutions like DIRO’s online document verification solution. The technology improves the customer onboarding experience and eliminates 100% of fraud.

Online Document Verification for Reducing Fraud

While there’s no limit to online anti-fraud best practices, not all financial institutions can implement the strategies in a way that matters. Most of the online/offline fraud revolves around documents, bad actors usually forge documents to gain access to the internal systems of an institution. 

Verifying these documents and ensuring that the documents are real is the foundation of mitigating all kinds of fraud. DIRO’s online document technology can verify online documents during customer/business/merchant onboarding instantly. DIRO helps in enhancing the implementation of AML and KYC compliance and 100% eliminating the use of fake and stolen documents.

Categories

Ali Dia: Premier League’s Most Well Known Fraudster

Ali Dia Fraudster

The OG football fans know all about Ali Dia, and why wouldn’t they? Ali Dia became famous among the premier league fans globally with just one match. Not for the good reasons though, he played for a good 53 minutes and it was clear that Ali Dia wasn’t built for football. Let’s go deeper into the story of Ali Dia, the most well-known fraudster in football.

Ali Dia had a cousin named “George Weah” and George Weah had won the FIFA World Player of the Year in 1995. So the fact that George Weah called up a bunch of coaches suggesting they pick Ali as a striker in their team had some credibility. 

George decided to make some calls, he reached out to some of the top managers of the time like West Ham, Rotherham, and Gillingham to pitch Ali as their striker. However, none of them chose Ali for their teams. In the end, George reached out to the manager of Southampton, Graeme Souness, and told him that Ali Dia can play as a striker, he also told him that he’d played with Ali Dia. Finally, Graeme said yes and Ali Dia was signed on as a striker under a 1-month contract.

What Fraud Did Ali Dia Commit?

Well, the truth is that Graeme Souness had never met Ali Dia, or even heard of him before. To make things worse, no one had actually seen him play. He got selected in Southampton solely because he was George Weah’s cousin.

The other players who practiced alongside Ali Dia weren’t so convinced of his performance, to put it bluntly, he wasn’t up to the mark in comparison to other players. Still, Ali Dia made the team, finally, the day came when the world got to see him play. On 23rd November 1996, he was sitting on the bench as a substitute where Southampton played against Leeds. 32 minutes into the match, Matt Le Tissier had to come off the field with an injury. Ali Dia finally got a shot to play. 

Well, it’s safe to say that the performance wasn’t as impressive as one would expect. 

In the words of Le Tissier “It was very, very embarrassing to watch. We were like: What’s this geezer doing? He’s hopeless”. Needless to say that he was taken off the pitch by Graeme. He came for a physio on Sunday and after that, Ali Dia was nowhere to be found.

Some research was conducted and it was uncovered that Ali Dia wasn’t the cousin of George Weah. Turns out George Weah never even called any of the managers, it was someone pretending to be George Weah. And as it was clear now, Ali Dia wasn’t good at football at all. Ali Dia had successfully lied about his identity.

Preventing Identity Fraud

It was lucky for Southampton that Ali didn’t cause any huge loss for them. This is why it is vital to identify the identities of people you’re getting in a business partnership with. Today it is most important to Know Your Customer.

Obviously, not everyone has to deal with football stars, but fraud is a fraud regardless of its scale. If you constantly sign up new consumers on your website or for your business, it is vital to have good, perfect fraud prevention methods.

DIRO’s online document verification technology can help in verifying customer Identity documents in an instant. It also prevents the use of stolen or forged documents for identity theft. Another common use of DIRO’s online document verification technology is streamlined compliance with KYC/AML compliance. The solution provides instant document verification, which means fast and secure document verification. The use of proper technologies can prevent another Ali Dia.

Categories

What Is Identity Theft? How to Prevent ID Theft Online?

Identity theft is when someone steals your personal information and uses it for financial fraud. There are multiple types of identity theft and each type can affect you differently. Almost all types of identity theft lead to financial loss. The cases of identity theft are growing every year with the rise of new technology, and people need to learn how to prevent ID theft online. 

There’s no perfect way to protect yourself against ID theft completely. But if you’re diligent in learning how to prevent identity theft, you can save your confidential information from fraudsters. It is always good to learn how to protect your data and act quickly if someone manages to steal your information.

How does Identity Theft happen?

Identity theft is a widely applied term that is used any time someone steals someone else’s personal information. Personal information can be almost anything like the Social Security Number, driver’s license, etc. which can be used to purchase products, create new accounts, and more without authorization. 

As technology and the use of social media are growing, the theft of personal information is always at risk. If you’re not paying attention to your credit file, you may not notice that someone is making a transaction with your details until it is too late. What are identity theft examples you ask? Here are the most common ones:

1. Data Breaches

A data breach happens when fraudsters gain access to an organization’s data. Most data breaches try to gain confidential customer information like full names, Social Security Numbers, and credit card numbers. 

In 2018, there were more than 1,200 data breaches in the USA, and more than 400 million records were exposed. As all of us have more than a dozen accounts with countless services, it is almost impossible to keep you safe from a data breach, however, there are methods companies can employ to mitigate the risks of data breaches. 

2. Unsecure Browsing

Most of us can browse the internet securely, but there are situations where people access third-party websites. Not all websites are secure and sharing personal information on an unsecured website is basically handing out your information to fraudsters. If you use an antivirus, some tweaks in settings can easily help you detect unsafe websites.

3. Credit Card Theft

One of the most common forms of identity theft is credit card identity theft. Let’s say someone somehow got access to your credit card information, they can use it to make unauthorized purchases. Other ways fraudsters can access your credit card information are through data breaches, physical theft, and credit card skimmers in online retail stores.

4. Mail Theft

Mail theft has been around long before the rise of social media and online shopping networks. Identity thieves have been going through people’s identities to sensitive data. Mails contain all kinds of sensitive information like bank and credit card statements or other personal documents. If someone somehow accesses your email account, they can have access to loads of information. 

5. Phishing and Spam Fraud

Some scammers use email and text messages or other electronic communication methods to steal personal information. The common denominator in these kinds of fraud is trying to trick a customer into believing that they are in contact with an organization. 

To put this in context, let’s say you receive an email that claims it’s your bank and it may include a link that directs you to a website similar to your bank’s website. Most of the time these websites will ask you for information like a username and password or credit card information. It is suggested that you call your bank and confirm if there’s an issue with your account. Entering sensitive information on any website can lead to huge losses. 

6. WiFi Hacking

Connecting your computer or smartphone to public WiFi for doing any kind of financial activity isn’t the right decision. Public connections are usually full of hackers looking to steal sensitive information.

If you need to use a public network, use a VPN service, or try to avoid inputting sensitive information like account details, credit card information, etc.. 

7. Mobile Phone Theft

Mobile phone theft can happen to anyone because our smartphones have access to all kinds of information. A lot of people don’t set a fingerprint or any kind of password protection for their apps. If someone steals your smartphone, they can access all kinds of information in your emails, text messages, and financial apps on your phone.

Stealing phones is one of the most common types of identity theft. It is advised to keep your phone locked with a password or a fingerprint. 

8. Card Skimming

Card skimming is one of the least known types of identity theft. Some thieves use a skimming device that can be placed over a card reader on an ATM or a fuel pump. This card reader can be easy to hide. Whenever a customer swipes a debit or credit card on the compromised machine, it either stores the information or transmits it to someone else. After that, anyone can use this stolen information to make unauthorized purchases.

How to Check For Identity Theft?

No one can avoid the possibility of identity theft, but some actions can be taken to learn how to prevent identity theft. To keep an eye out for identity theft possibilities, customers should keep checking their credit reports. In these credit reports, you should always look out for transactions that seem out of place or transactions you don’t remember making. These small anomalies can be a red flag, Here’s how to prevent ID theft online by checking some suspicious signs:

  • You aren’t getting important emails such as bills or checks.
  • You’re getting bills for things you didn’t purchase or services you didn’t use. 
  • You’re denied credit even after having an excellent credit rating.
  • You receive notification of unauthorized bank transactions or withdrawals.
  • Your electronic tax filing is denied. 
  • You receive bills or emails explaining the benefits of health insurance you didn’t apply for.
  • Your account was recently accessed and you didn’t do it. 

How to Prevent Identity Theft?

Firstly people can’t figure out that their information is being stolen by someone else, if they do figure it out, they don’t know what to do. If the credit card or debit card was stolen, you need to contact the card issuer and your bank to put a hold on the card. 

The next step is to go through your credit card report from different credit bureaus to find out any unusual activity. Some banks and credit card providers offer services of credit card fraud alert, you can set that up on your card to prevent identity theft. 

You should also notify the local law enforcement agency to notify them of the crime. In most cases of credit card theft and identity theft, authorities can’t do much but they can write down reports and be on the lookout for suspicious activities. 

Before you report the crime to local authorities, it is suggested that you also reach out to the FTC (Federal Trade Commission) to file a report. The agency will guide you on what steps you need to take and the paperwork to fill out. Being a victim of an identity theft crime can be a horrifying experience, if necessary steps aren’t taken then you can be stuck for months dealing with authorities, trying to get your identity back. 

Categories

Hollywood Actor Arrested By Feds In $227M Ponzi Scheme Including Netflix and HBO: Report by Deadline

Scammed Out

A real-life story that can be a plot of a crime thriller where Netflix and HBO helped the FBI to bring to justice a scammer who scammed investors out of hundreds of millions of dollars. 

Zachary Horwitz, who used the screen name “Zach Avery” was taken into custody by the FBI a few days ago, on charges of allegedly scamming people for more than $227 million. The people who were scammed thought they were going to cash in with licensing rights to films by WarnerMedia-owned cabler and the streamer in Latin America. 

An affidavit from FBI Special Agent John Verrastoro declared “In reality, neither HORWITZ nor 1inMM Capital ever engaged in email correspondence with Netflix or HBO, nor did HORWITZ or 1inMM Capital ever have any business relationship with Netflix or HBO at all”. 

As fake as the promises may be, Zachary Horwitz was successfully running the scam for several years, with limited questions asked by greedy investors as they were getting enough money. Although in 2019, his production company didn’t follow up on its initial notes, which stated “time-causing audits” and “corporate restructuring” at Netflix and HBO, which obviously wasn’t true. 

Both Netflix’s Director of Content Litigation “Melinda LeMoine” and WarnerMedia’s Senior Litigation Administrator “Patrick Younan” were a part of shutting down Zachary Horwitz’s fake company. Both of them denied a collaboration between 1inMM and Netflix and HBO. They also confirmed that any email regarding the topic was forged. 

To support his claims, Horwitz repeatedly sent emails in which he forwarded made up email conversations with the employees at Netflix and HBO. To find out the whole situation gets sorted out quickly, both Melinda LeMoine and Patrick Younan made important steps. Both the executives have signed a declaration to the FBI, which stated that neither they nor their organization had any relationship with Horwitz or 1inMM.

Horwitz promised financial investors a 35% return on their investments by claiming that his production company had licensing agreements with Netflix and HBO. 

As it was cleared by Netflix and WarnerMedia Executives, these relationships never existed and he scammed investors out of $227m in the last 3 years. Using this money, Horwitz allegedly built his sprawling home, which contained a cinema, a gym, and a wine cellar. According to court documents, he also used more than $137,000 on private jets and paid $700,000 to a celebrity interior designer. 
The case is currently under proceedings, and Zachary Horwitz may face up to 20 years of imprisonment if deemed guilty. 

How DIRO Can Help Organizations Reduce Fraud & Scams?

With user permission, DIRO helps companies get instant access to consumer information held by any third-party website with global coverage. Further, DIRO can authenticate documents such as bank statements, utility statements, proof of employment, proof of income, tax returns, company registrations, and proof of assets directly from its original web source.

In this specific case of the Netflix and HBO scam, investors need to know the difference between authentic and fabricated bank statements. DIRO document verification technology allows you to check and verify bank statements with automated user consent using a secure virtual browser. 

If an organization can verify documents right from the beginning of a relationship, it can reduce the risk of being scammed by at least 20%.