According to recent reports, fraud-related losses for businesses in the US was roughly $11 billion in 2020. This number is expected to grow in size thanks to the ongoing Covid-19 pandemic.
Credit application fraud is key fraud trend. Banks and financial institutions of all types are estimated to be burdened with application fraud loss that account for as much as 10% of all of their bad debts. On average, these kinds of debts cost $1,000 each.
How Credit Application Fraud Works
A store credit card is a way to keep a customer longer. The theory goes that by making it easier for the user to use the store card (less info to enter, faster transaction), and providing them with rewards for each purchase (e.g. points, free shipping), they are more likely to come back. However, ensuring that you have a good customer who is applying is the trick.
Most cars are purchased in the United States with a loan or a lease. Most banks and financial institutions offer credit cards as ways to increase customer transactions and use of their money.
Fraudsters can use fake identities, synthetic identities, or someone else’s identity to open a credit account. In-person that can be as simple as creating a fake ID with their picture on it. The results, of course, are losses that vary based on the industry.
Some businesses will look at a driver’s license in addition to asking the applicant to fill in an application. They may require a credit check and they might require a security token like the applicant’s social security number.
The problem is that all this information is static, and can be bought on the deep dark web. What is missing is the ability to verify the ID is real, and that it belongs to the person presenting it. Without this, it doesn’t really matter that the other information is valid.
The Most Effective Solution
ID validation software can help a business whether a customer is who they claim to be. However, not all ID verification services are made the same.
Many ID validation tools take a conventional, human-replicating approach to the task. Such tools can usually complete a quick optical scan of a given identity document and compare it to a template or check for field validity. However, these lack the sophistication to actually tell if the document being presented is real in the first place. That’s why it’s important to partner with a trustworthy company that enables you to gauge document authenticity in addition to verifying the physical person presenting the information.
Credit application fraud can quickly result in the loss of tens of thousands, so it’s important to make sure you have the first step right, which is identity verification.
Intellicheck can verify an ID with 99.9% accuracy versus the industry average of 60% or less. Intellicheck’s high accuracy means that you can start a relationship knowing that you can trust the person you are working with.
We offer a variety of solutions that can tightly integrate with your systems and experience. We work with 5 out of the top financial institutions and credit card issuers as well as thousands of other businesses. We’ve seen it all and can help you mitigate fraud before it happens.