In the last year itself, the FTC (Federal Trade Commission) received over 2 million fraud reports, which led to losses of over $3.3 Billion. Fraudsters can run a scam to trick the onboarding process and by exploiting the identity verification program. Businesses, banks, and FIs need to employ the best risk management program to detect and eliminate fraud early on.
An essential part of any risk management program of any organization is a perfect onboarding program that verifies the identities of people from the first step. Verifying identities using strong online document verification solutions is something organizations need to have.
Preventing Fraud Risk with ID & Business Verification
Identity theft is currently one of the most common types of fraud and growing technologies may keep assisting the growth of ID theft. The sudden increase in ID theft cases is because of sudden data breaches in recent years. These data breaches have provided the fraudsters with enough access to data that they can use to assume the identities of someone else.
Using online document verification solutions like DIRO and employing organization-wide KYC compliance that can help prevent fraudsters from entering the inner operations of your system. The ID verification process usually helps in identifying the red flags in the early stages of customer-business relationships.
Verification methods that can verify customer documents instantly and distinguish between authentic and doctored documents can reduce the pace of fraud. Countless methods can be used and data can be cross-referenced to verify customer identity.
Types of Online Fraud
As a business, you need to understand the techniques used by fraudsters that will help you protect your business. Some of the most common types of online fraud you need to consider to build your anti-fraud management program are:
- Synthetic Identity Fraud
Synthetic Identity Fraud is one of the most common types of ID fraud, where real information is stolen from someone else and fake information is blended to create a synthetic identity. Usually, all the real information used to create a synthetic identity is stolen. Synthetic identity fraud makes up 80% of all identity fraud. Being able to spot fake identities is the best way to defend your business against fraud. You need to reduce fraud all the while making sure the customer experience stays intact.
SIF is designed to go around conventional methods of ID verification. The increased number of data breaches over time has made things worse for both organizations and customers.
- Account Origination and Takeover Fraud
Account origination fraud and account takeover fraud are other two types of identity theft that happen whenever a person gains access to an individual’s account. They can use this access to make fraudulent transactions or use their personal information to create fake accounts at different places.
ATO is much more complicated to identify as fraudsters are using legit credentials to access the accounts. Companies can lose millions of dollars by not prioritizing a solution for reducing fraud or identifying ATO in the initial steps.
- Card-not-present and Chargeback Fraud
Card-not-Present or CNP fraud is a general term for fraudulent transactions where a cardholder doesn’t present a card in person at the time of purchase. CNP usually occurs through mobile payments or online, which makes it tougher to prevent and detect fraud.
Chargebacks are a type of CNP fraud that happens when someone orders products or services and requests a chargeback from the bank instead of the merchant. To reduce this type of fraud, implementing an enterprise-wide strategic program is the best bet.
What is a Fraud Risk Management Program?
A fraud risk management program gives your business a foundation for identifying, analyzing, preventing, and mitigating fraudulent activities. Preventing fraud is a lot bigger than protecting revenues, it also minimizes the harm fraud does to a brand’s reputation.
One of the main reasons for fraud risk management offers a positive impact on decreasing the pace of fraud and losses incurred on fraud. Conducting risk analysis offers a greater understanding of the weaknesses of the businesses which can lead to an improved risk management program.
Digital Customer Onboarding with Ideal Technology
Online customer onboarding methods are one of the preferred target areas of fraudsters. Weak customer onboarding methods tend to cause a lot of harm for customers as their information can be used for a variety of fraudulent activities.
Organizations need to build fraud risk management programs that can support online customer onboarding methods. Technological solutions that provide online verification of Identity and documents are needed to mitigate fraud.
DIRO’s Online Document Verification Solution for Fraud Management
None of the strategies a business can build will help in reducing fraud if there’s no technology to support your business’s needs. Customer onboarding can be made secure and faster with DIRO’s online document verification API.
DIRO can offer instant document verification for customer ID verification which reduces fraud and improves fraud detection and prevention. DIRO’s technology can capture data right from the original web source. It prevents the use of flake and stolen documents, with 100% verification of original data.
