How To Identify Genuine Customers And Prevent Identity Fraud

Fraudulent use of an individual’s identity, or ‘ID theft,’ involves obtaining their information and using it for criminal purposes. It’s common for victims to never find out exactly how their information was obtained and dealing with the repercussions can be time-consuming and expensive. For businesses, big or small, it is extremely important to know who their customers are and prevent fraud.

Fraud can impact businesses in several ways, from financial losses to reputational damage. For instance, creditors in the finance sector need to be vetting new customers with stringent customer data validation procedures. Not only do such measures help businesses protect themselves from fraudulent data, but also preserve the trust of existing customers.

But how do you implement data verification checks into your business model? And more importantly, in a way that doesn’t impact the customer experience. Our blog explains how businesses can better protect themselves against customer identity fraud, with methods of how to verify genuine customer identity.

Ways businesses can prevent customer identity fraud

In today’s highly connected and digital world, it is a possibility that your customers can fall victim to identity fraud. Your company, customers, and data can be severely affected by fraudsters. This is why it is paramount to be aware of identity theft and ensure that your customer data is high quality and accurate.

There are several ways that you can stay mindful of identity theft and keep your data clean, as well as methods to identify fraudulent or spam information in your database. Here are some simple steps to help you prevent customer identity theft and verify customer data.

1. Identify Verification (IDV)

The purpose of identity verification is to prove that the individual behind a process is who they claim to be. The reasoning for this is to prevent anyone from carrying out a process on behalf of another without authorization, creating false identities, or committing fraud.

Checking identities consistently reduces the likelihood that one organisation or service will do less effective identity checks than another. As a result, identity fraud may be targeted at fewer organizations and services.

Both physical and digital evidence can be used to identify an individual. These can be in the form of a passport or information stored in a database for example. Checking the evidence is vital and you must be sure it’s genuine. This will prove if it has been forged or counterfeit.

By successfully checking users’ identities, you can be confident that you’ll give the right people the right things.

2. Check on financial and credit reports regularly

In contrast to credit card fraud against individuals, business credit fraud can affect multiple people – and even the company’s reputation.

Fraudsters do not need physical business credit cards to commit fraud, so unauthorised activity may be occurring without your knowledge. Business credit card statements showing fraudulent transactions may indicate you have fallen victim to fraud.

Check your statements regularly for unfamiliar charges so that you can catch them as soon as possible. To make the task more manageable, consider taking advantage of online banking tools to conduct weekly reviews. Update passwords regularly and remain vigilant when accepting orders. Ensure that issues are reported to the credit card company as soon as possible.

3. Use identity verification software

Identity verification software helps companies verify the identity of their users in real life. Due to the ease of creating fake identities online, it’s crucial to confirm that a person is who they say they are. Software that verifies identity is a great way to make sure what you see on the website matches what you expect in person.

Sign-in processes, questions, and answers, or video IDs are typical methods of identity verification software. By using this kind of software, you will minimise the risk of falling victim to fraud for your business and maximise the trust of customers.

Find a provider of identity verification and fraud prevention solutions that can evolve quickly and easily as the tactics used by fraudsters change. See how we can help you and your business with our Smart Link by contacting us!

4. Online document verification

The most common method of customer verification is online document verification. Using third-party solutions that help verify online documents, you’ll be able to identify customers with ease. This kind of technology provides 100% proof of authenticity, although it can create additional inconvenience for customers. It is also important for businesses to ensure GDPR compliance here since this involves processing highly personal data.

5. Knowledge-based-authentication (KBA)

Utilise effective decision-making based on identity composition. A more comprehensive analysis of the composition of identity and deterring fraudulent transactions can be achieved by looking at more than just a “match/match” or “pass/fail” result. If necessary, obtain a higher level of verification.

Create dynamic Knowledge-Based-Authentication (KBA) questions when suspicious identity attributes are present by executing multiple-choice questions that only your actual customer can answer.

6. Know Your Customer (KYC)

As part of Know Your Customer (KYC) regulations, banks verify the legitimacy of prospective customers before opening an account, as well as throughout the lifetime of the account.

KYC procedures are essential to the banking, financial, and insurance industries in particular because it prevents criminals and other bad actors from easily concealing illegitimate funds. In addition to protecting banks from financial and reputational harm, KYC processes ensure compliance with government regulations.

7. Anti-Money Laundering (AML)

Anti-Money Laundering (AML) regulations refer to a broad set of security measures that banks implement to reduce the risk of illegal funds being disguised as legitimate income by criminals. The financial and reputational standing of banks depends on this regulation, as it makes it tougher for such crimes to take place.

In order to detect suspicious transactions and assess money laundering risks, financial institutions need sophisticated customer due diligence plans and stay knowledgeable about Anti-Money Laundering regulations.
Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations are constantly evolving, so adhering to them isn’t always easy.

This is particularly true when technology demands rise and departmental funds remain stagnant. By getting the right help, you can perform due diligence and affordably quantify risk.

8. Validate your customer data with Smart Link

Get your customer data validated and prevent identity fraud with Smart Link, our powerful tool designed to help verify identity and contactability across households or individuals. Smart Link cross-references customer data using the most comprehensive consumer data universe in the UK. This tool includes all the channel variables we hold on an individual level.

Link – Multiple databases or contact channels can be reliably linked together through links
Verify – Utilise multiple sources of information to identify the same individual or household
Validate – Be confident that an individual is who they claim to be by getting their identity fully verified and knowing your customer.

Ways customers can prevent identity fraud

As well as monitoring the signs of fraudulent data, it’s useful for businesses to prevent identity theft at the source, by advising customers on the best ways to protect their identity. This is especially useful for financial businesses.

Passwords and account numbers are often used to access our online accounts, and we provide these details every day. Because of this, customers risk having their personal information stolen or misused. Thankfully, there are great ways to help customers reduce the chance of identity theft that are easy to implement, and at no cost.

A fail-safe method to prevent identity fraud is unlikely, and monitoring services are usually only notified when something has gone wrong. You can, however, make identity theft much more difficult with some simple tips for customers.

1. Lock mobile devices

There is a real risk associated with mobile devices. According to a study by cybersecurity firm Kaspersky Labs, our mobile devices are only regularly locked by 48% of us. Make sure you use a password and/or fingerprint identification when using electronic devices. Encourage customers to use an online banking app rather than use mobile browsers for banking.

2. Get shredding

You shouldn’t throw away any credit card, bank, or investment statements that someone might find in the bin. Be sure to shred your junk mail and any other letters that are considered disposable with your personal details on them.

3. Be wary of phishing scams

Emails and text messages with suspicious-looking links should not be clicked. Phishing is a cyber-attack where identity thieves trick you into providing personal details such as your bank account or credit card details. They can appear like they’re coming from the storefront of a bank, credit card company, mortgage lender, or other financial institutions.

Some emails may include an attachment that you will be asked to open. Doing so could install malware that will be harmful to your device. Be wary of its legitimacy and don’t click on anything you are unfamiliar with.

4. Over-the-phone scams

In addition, fraudsters may often pose as bank employees or credit card company employees over the phone. It is a fact that no legitimate organisation will call you and ask for personal information from you.

If you suspect anything then ask for the credentials from the caller and get in contact with the company they are associated with to confirm it’s all legitimate.

5. Protect your documents and limit exposure

It is possible for physical documents to pose a security risk if they are not properly maintained. Personal information such as your name, address, and even bank account information can be found on these documents, making them useful to identity thieves.

Make sure not to leave your mail in the letterbox as they are a frequent target for identity fraud. Hold on to paper receipts or shred them if they are unwanted as they can prove valuable to thieves. It is wise to sign yourself up for digital statements rather than letters. This will limit your paper trail and you will have less exposure too.

6. Be vigilant, and stay safe

It’s critical not to take the security of your personal data for granted, since identity thieves often strike at the most inconvenient times. In addition to protecting your information and identity, you’ll make yourself more difficult for thieves to target.

Keep your information safe by monitoring your credit, protecting your devices, avoiding phishing and other scams, and ensuring that your documents are not accessed by anyone.

Get in touch to find out more about Smart Link, our market data validation service.