Fraud assessments are special tests designed to discover your business’s current fraud risks. Vulnerabilities of all types must be carefully analyzed and, ultimately, addressed for a complete fraud assessment to work as intended. That’s why it’s important for both internal and external risks to be considered.
Professionals in this sphere not only help in identifying existing risks to your organization but also assist in crafting an effective roadmap for responding to such risks, however, if you aim to tackle a fraud assessment on your own, the following checklist is a great start:
1. Synthetic Identity Fraud
Synthetic fraud occurs when criminals combine real information with fake information to create a unique identity that isn’t associated with any one real person. Believe it or not, synthetic fraud is actually the fastest-growing crime in the United States. Real elements of people’s ID are stolen from various sources and oftentimes more than one person.
How Does this Happen?
Unfortunately, identity attributes – parts of an identity like a phone number or a social security number – are easy to obtain. Many verification methods are proving to be ineffective as well. Many verification systems as well as the naked eye, are focused on whether an ID looks real… not whether it is real. Given how good fakes are, looking to see it is real .
How to Combat Synthetic Fraud
Finding better ways to verify users really are who they say they are is a great starting place. Thoroughly checking identification documents, like a driver’s license, during the initial set up of an account can help ensure an ID is valid.
Vendors need to start relying less on how an ID looks and more on its validity, and that comes from getting the right technologies in place. They can even take it a step further by using biometric and facial recognition to determine if a user matches the ID they are presenting.
2. Chargeback Fraud
Chargeback fraud happens when a credit card purchase is made, the product is received, then a refund request is made claiming that the product was not received. If the transaction gets approved, the bank cancels the transaction, and the individual behind the fraud is fully reimbursed.
This means that the merchant is financially responsible. Unfortunately, their verification measures will be put under a microscope if it ends up in an investigation. In extreme cases, some merchants might end up black-listed. Payment processing companies can play a part in this type of fraud and not even be aware.
How Does this Happen?
There are many different scenarios in which criminals can get away with chargeback fraud. One common way is the customer can simply say the product they received is damaged or different than what they originally ordered. They may even claim to be a victim of fraud, report that their card was stolen, or that they never authorized a specific transaction. This can result in operational costs going out the window, as processing, shipping and other fees play a huge factor.
How to Prevent Chargebacks
Never be afraid to dispute a chargeback if something seems out of the ordinary. Identifying a fraudster before they are able to commit a crime is one of the only ways to prevent chargebacks from happening. This starts by validating a user through effective verification methods so you can catch fraudsters in real time, as opposed to after the crime has already happened.
3. Account Takeover
When an individual has stolen enough personal information to log into someone else’s account it is called account takeover. With a little bit of acting (or creative writing – phishing) to obtain the information they need, these individuals can do some serious damage by making unauthorized purchases or draining an account of its funds.
How Does this Happen?
The fraudster will need a username and password. Sadly, this information is easy to purchase on the dark web. If it can’t be purchased, fraudsters will use a dictionary attack or phishing to fool the customer to give up their information. Security tokens are also easy to obtain, such as a social security number, or even as simple as the name of a teacher which can be easily obtained by a cybercriminal by doing some internet research. This leaves many people vulnerable to account takeover. This can leave companies to pick up the pieces, resulting in heavy legal fines and sometimes penalties.
How to Prevent Account Takeover
When fraud happens on your platform, it can cause major distrust in future companies and customers to use your services. Pay attention to accounts that have multiple failed login attempts. This could mean a user is trying to manipulate their way into an account. Having an extra layer of protection and security not only leaves you with a great reputation, but it also protects you. This means having a good way to verify that an ID presented is indeed real, and matches the owner.
The Proactive Approach
Validating an ID is so much more than seeing if ID looks real, because, unfortunately, fraudsters have become professionals at fabricating fakes that pass an eye test. And as a payment company, it’s crucial that you protect your company, vendors and customers. Take the right first step and implement a system that verifies ID’s with high accuracy.
Intellicheck provides a complete solution you can count on for 99.9% accurate ID verification vs. the industry average of less than 60% accuracy. So don’t put your customers and business at risk?
Fraud is a huge risk for payment applications and companies. Partnering with Intellicheck is a crucial step to begin eliminating the risk altogether. As a company who partners with over half the top banks in the US and is trusted by 4,500 bank branches, we make it simple for you to know with certainty that an ID matches a user presenting it.