Identity theft, as defined by Wikipedia as “a form of stealing someone’s identity in which someone pretends to be someone else by assuming that person’s identity, typically in order to access resources or obtain credit and other benefits in that person’s name”, is not only a major issue for the consumer, or identity theft victim, but also for organizations of all shapes and sizes. Fraudulent interactions rooted in identity theft have a negative effect on a business’s bottom line and can impact costs and revenue throughout organization’s entire process.
Sources such as the U.S. Department of Justice and Javelin Strategy and Research annually report statistics on identity theft and the numbers are staggering.
- The average number of U.S. identity fraud victims annually equate to 11,571,900.
- The average financial loss per identity theft incident is $4,930.
- Total financial loss attributed to identity theft in 2010 equated to $13.2 billion.
- Total financial loss attributed to identity theft in 2013 equates to $21 billion.
In today’s digital age, the possibility of your customers becoming victim to identity theft is a very real and serious threat. Thieves looking to steal identities are becoming increasingly more adept in their ways and the results can wreak widespread havoc both personally and for the corporations targeted.
There are many ways that thieves can obtain personally identifiable information on your customers that can be used to trigger a fraudulent transaction:
- Physical theft: Smartphones, laptops, tablets and wallets will typically hold everything needed for a thief to easily take over an identity.
- Mailbox raiding and dumpster diving: Mail and trash can prove to be quite lucrative to an identity thief who “stumbles” upon information from banks, credit card institutions, and even utility bills. The information provided in these types of documents can hold all that is needed for your customer’s identity to be stolen.
- Phishing: Identity thieves can use very well thought out and carefully crafted fraudulent emails to try and trick the unsuspecting victim into releasing valuable information.
- Vishing: Much like phishing attempts, vishing is the attempt at getting an individual to release personal information through the telephone by pretending to be someone at an institution needing to verify their personal information.
- Spyware/Malware: Spyware and Malware are two types of malicious computer software that can be downloaded on to a computer with the intent of gathering sensitive information from the unknowing user.
- Skimming: Skimming is the act of an identity thief using a small electronic device that can be attached to anything that may be used to swipe an ATM or credit card. When an individual swipes their card at a gas pump or even an ATM machine, the skimming device can read all the relevant data needed to easily steal the card owner’s information.
While the above list highlights some of the better known and more prevalently used methods that identity thieves take to gain access to information, this is in no way an all-inclusive list. Additionally, the list of fraudulent tactics will become more and more diverse as thieves come up with new ways to extract their sought-after information.
Although your customers need to remain vigilant and protect their personal information, there are also steps organizations can take to safeguard their business. Here are just a few steps you can take as an organization to help stop fraudulent transactions and protect your customers from identity theft:
- Utilize comprehensive identity verification and fraud prevention solutions to ensure your customers are who they say they are. This can be accomplished during account opening, for high-risk transactions, in a call center environment or wherever your organization may need to reduce loss and mitigate risk.
- Employ dynamic decisioning to make judgments based on the composition of the identity. By taking a look at more than just a “match/match” or “pass/fail” result, you can effectively analyze the composition of an identity and deter fraudulent transactions.
- Obtain a higher level of verification when needed. For example, when suspicious identity attributes are present, utilize dynamic Knowledge-Based-Authentication (KBA), i.e. Out-Of-Wallet questions to execute a series of multiple choice queries that only your actual customer would be able to answer.
- Use your own internal data to verify a customer. You have a ton of valuable information on your customers. Previously, there was no easy way to systematically use this information in your authentication process. However, now there are solutions out there like IDology’s ExpectID Customer Based Authentication that allow you to generate your own KBA questions using proprietary data behind your firewall.
- Automate and improve your manual review process. It is no longer sufficient to obtain a fax (that could have been easily tampered) of a customer’s driver’s license or passport. By utilizing a solution that allows a customer to scan a photo ID and confirm validity, along with performing additional checks not only reduces fraud, but also improves customer experience and acquisition. Check out our new IDScan solution for more details.
- Partner with an innovative identity verification and fraud prevention solution that can quickly and easily evolve as the tactics fraudsters utilize change. See how IDology can help your business by scheduling a personalize demo today!
Identity theft is a growing danger. With so many threats out there to your customer’s identity, being knowledgeable, proactive and remaining vigilant are your best tools in reducing fraud and protecting your business.