While the evolution of technology has been beneficial to financial institutions and their customers alike, it has also made it easier for the fraudsters to get around unsophisticated security measures.
A fraud committed online is usually known as virtual fraud. The only way to reduce the virtual fraud risks is by understanding what it is and what preventive measures you can take.
What is Virtual Fraud Risk?
Virtual fraud, also known as ‘online fraud,’ is basically an umbrella term that encompasses both financial frauds and identity theft committed via the Internet.
Online frauds occur in various forms ranging from virus attacks on your computer to retrieve information to enticing email schemes that automatically download malware to your system. Some of the specific examples of virtual fraud include:
Person-not-present – this is a common embodiment of virtual fraud, especially when buying products and services. Since the person is not physically present, it is harder for businesses to verify their identity. A fraudster may impersonate someone else by stealing their information and creating a synthetic identity that could harm their credit.
Money Laundering – the online world lacks fool-proof financial activity monitoring protocols, making the digital realm comparatively vulnerable to fraudulent money movement. This allows cybercriminals, including money launderers and terrorists, to exploit this loophole.
Identity Theft – there are various methods such as phishing emails through which fraudsters trick unsuspecting victims to provide their personal and sensitive information willingly. Once the tricksters have these details, they either use a victim’s ID or synthesize a new ID using several victims’ information to commit virtual frauds.
Virtual Fraud Risk Factors
Knowing some of the associated risk factors can help businesses deploy adequate fraud prevention measures and safeguard their interest. Here are three major virtual fraud risk factors that you should be aware of.
The Trouble with Mobile Banking
Mobile banking was specifically created for the convenience of consumers. Technological innovation has facilitated banking customers in many ways. But it has also fueled the risk of hacking; now, the hackers have more ways to access anyone’s account information at the drop of a hat.
The dilemma most banks face is deciding whether or not adding more stringent security protocols will dramatically impact the customers’ experience and convenience. Some of the potential solutions to enhance the security of banking consumers include:
Offering OTP verification via texts and emails etc.
Be Wary of Malware
Often, fraudsters will send a spam email to masses, known as phishing emails. The goal will be to convince the recipients to click on a link that will, in turn, download and install malware directly on the users’ machine.
The purpose of this malware is to track the keystrokes, including banking login details. This allows hackers to easily access your online bank account including all your financial information and money. If you receive an email from an unknown source asking you to log in by clicking on a link or downloading an attachment – be suspicious as this is most likely a phishing attempt. Do not click on anything or reply to these emails and delete them immediately.
Another way to keep your email ids and online bank account secure is to keep changing your passwords with regular intervals.
Online Credit Card Applications
Fraudsters may apply for a credit card using an online application using a stolen or a fake identity - known as synthetic identity fraud. In this type of fraud, criminals combine real person’s information with some other fake details to create a new identity that actually does not exist.
The fraudsters will conjure up a synthetic ID and get themselves a new credit card and use it with no intent to repay. Therefore, if you are a banking institution or a business dealing with credit card payments, you need a strong ID scanner for online application and payment verifications.
Virtual Fraud Prevention Tactics
You may wonder if there are any prevention tactics that you can use to protect your business from any virtual fraud risks. Here are five of the most viable solutions to safeguard your organization against virtual fraud.
Multi-factor authentication, more commonly known as two-way authentication is an effective way to reduce online fraud risk. It requires your consumer to enter two forms of authentications to access their information or accounts, i.e., a password and a passcode sent to them via an email or a text message.
Even if the fraudster gets hold of the customer’s login id and password, they will not be able to get in. How? Because after they login, your system will generate a pin and send it to the customer’s mobile phone or email account, and without it, the hacker will not be able to proceed.
Plus, it will notify the consumer about an illegal attempt to access their account.
This refers to monitoring all financial transactions of your customers. This also includes assessing past as well as current consumers’ information and their history of interaction and financial payments to get a clear picture of their financial activity. You can monitor their deposits, withdrawals, and transfers.
Look out for any unusual activity such as transfer or withdrawal of large amounts. You can raise a flag and treat it as a potential virtual fraudulent activity unless the customer verifies the payment.
Device recognition is another secure way to prevent or reduce virtual fraud risk. You can encourage your customers to register their mobile devices and computers they are going to use to login. This way, the system will only allow the login attempts coming from authenticated/registered devices.
Mobile Facial Recognition
Most smartphones come with mobile facial recognition technology, and only the owner of the phone can unlock by facing the camera on their mobile phone. By integrating mobile facial recognition software into your login process, you will be taking your customers’ account security to the next level.
Even if the hackers get hold of a customer’s login credentials, they will not be able to get in because of their inability to bypass the facial recognition protocol. Try integrating a trusted system such as Ipsidy’s ID Proof solution for maximum security and accuracy.
Online ID Authentication
Using a high-quality ID authentication solution is the most effective and easiest way to catch fraudsters in real-time. Intellicheck is the market leader in providing state-of-the-art online ID authentication solutions. Their solutions are fully customizable and prevent and reduce virtual fraud risk factors.For even more assurance, facial recognition can be added to the process to ensure that not only is the ID real, it is also in the right hands.
Catch Fraud Early
If you are a banking or any other financial institution, Intellicheck has a wide range of great solutions for both in-person and online transactions to prevent virtual fraud risks and attempts. Intellicheck’s solutions are user friendly and can be easily integrated into your existing POS. They will save you both time and effort while reducing the risk of missed fraudsters slipping through the virtual barriers.