(BPT) - How many things do you get done online in a day? From banking, gaming, shopping, dating, fitness, social media and more, the digital landscape broadens your world in many useful and interesting ways. The downside is signing up for all those accounts can also put you at risk of new account fraud.
New account fraud occurs when criminals exploit a victim's personal information, such as a phone number, address and email, in order to gain access to a digital platform. Once fraudsters have access to accounts, they commit costly fraud that leaves a trail of angry customers and damaged brand reputations along the way.
Unfortunately, this online trend is growing. Synthetic ID fraud, one example of new account fraud that can occur during the customer onboarding process, is up 33% from a few years ago with financial institutions estimating $20 billion in losses during 2020 alone.
The good news is reputable companies are taking steps to protect their customers and members by implementing various security steps and authentication methods. Recent studies report that 80% of people select a company that has a strong digital identity verification. What was once thought of as an inconvenience is now an expectation-an important signal to customers that the brand is protecting them.
Shutting down new account fraud online requires a personalized, dedicated solution that adapts to the evolving world of fraud. If you have digital accounts, you have probably encountered Telesign whether you realize it or not. A leader in account verification and digital security, Telesign technology helps companies securely onboard customers, prevent fraud, secure communications, and enable the digital economy by allowing companies and customers to engage with confidence.
The more you know about new account fraud, the more you can protect yourself from it. Here are some of the most prevalent examples of new account fraud being perpetrated online by fraudsters today, along with the latest best practices you can use to help keep your digital accounts safe:
New account fraud is often carried out by fake users, who complete the onboarding process under the guise of false information in order to commit fraud and wreak havoc on digital platforms. A fake user is able to pass through the verification and authentication processes during onboarding and set up shop in the ecosystem, where they spam and victimize legitimate users, impersonate brands and commit fraud.
Synthetic ID fraud
Synthetic identity fraud happens during account creation. In synthetic ID fraud, criminals combine both real and fake personal information to create a fake person, which they then use to apply for credit and make purchases in bad faith. One of the biggest problems resulting from synthetic ID is the identity created in these schemes doesn't belong to a single, real person, and thus any fraudulent activity is untraceable and extremely costly to the victims.
International Revenue Share Fraud is a communications fraud that gives criminals a chance to benefit from revenue share from premium numbers. In IRSF, which occurs in the onboarding stage, fraudsters use scripted attacks and other illegal business practices to make unauthorized calls and messages to premium rate numbers (PRN). Unlike other types of new account fraud, IRSF doesn't target individuals; it targets businesses.
Promo abuse happens when a fraudster circumvents a company's rules or restrictions regarding promotions, using multiple accounts to take advantage of sign-up offers, such as coupons or free trials. On the surface, promotion abuse sounds innocuous, but in the long run, abuse of signup bonuses, referral rewards and free trials can add up. In fact, promo abuse is now one of the costliest forms of fraud retailers face, which impacts their finances and costs for everyone.
Protecting your accounts
Always follow the latest account security best practices, such as enabling multi-factor authentication (MFA) or two-factor authentication (2FA) and using your real mobile phone number, when working with an ecommerce or digital organization.
Two-factor authentication significantly decreases the risk of fraudsters accessing your online accounts. Authentication factors can include a one-time password sent to a mobile device, subscriber status and more. Additionally, if given the option for multi-factor authentication, always opt yes to ensure higher security every time you sign into your account.
As part of your account creation, you will likely be asked for your phone number. Your phone number is important for businesses monitoring security, so be sure to provide your real number. Using phone number attributes, businesses can monitor traffic for suspicious patterns and then input the new-account request into a global telecom fraud database. This stops creation of unauthorized accounts and blocks creation of multiple accounts by verifying each phone number and its owner.
To learn more about digital fraud and steps to protect yourself and your customers, visit Telesign today.