The act of wrongful access and use of some person’s personal information to commit fraud or getting financial benefits from it is called Identity Fraud. It involves all types of crimes in which the user’s data is exposed to criminals with their consent. Identity fraud is a critical problem around the globe. The consequences of identity fraud are money loss, account takeover, and blackmailing. It also raises serious concerns for personal security. Identity fraud attempts are more sophisticated now as 56% of Europeans gave experience between 2016 and 2018. According to a report, 10 percent of Americans fall prey to identity fraud every year. These stats show how frequent identity fraud is.
Types of Identity Fraud
Let’s have an insight into types of identity theft and how to combat them:
1. Account Takeover Fraud
Account takeover happens when someone else accesses the online account of the user without his permission. By doing so, a hacker can do anything with the account as the actual user. For instance, if the bank account is taken over, it can be used for funds transfer, withdrawal of cash, and accessing other accounts. Insurance Information Institute states that there were 680,000 victims of account takeover in 2018.
Likewise, social media accounts are also vulnerable to account takeovers. Criminals use social media chats for blackmailing users. Although 2-Factor Authentication heavily prevents it, hackers have also found ways to bypass it.
2. Synthetic Identity Theft
User data is mixed together, and fake information creates made-up identities that look the same as genuine identities.
Then bank accounts are opened against that data. The motive is to apply for loans from the bank. If a fraudster successfully receives a loan by presenting a fabricated or synthetic identity – the company would be unable to get the loan back. Banks or loan corporations can suffer substantial financial losses because of this.
3. Child Identity Theft
When a minor’s personally identifiable information is leaked or hacked by fraudsters, most child identity thefts are committed by family members. Then this information is used to request loans, account openings, applying for special government services. According to a report of Javelin Strategy, there were 1 million victims of child identity theft in the US, costing the loss of 2.6 billion US Dollars.
4. Medical Identity Theft
It happens when someone steals the person’s personal and medical information and then uses it to receive medical services, medicines, and prescriptions in the victim’s name. It can also be a friendly fraud, where the victim gives his information knowingly. There is another case where a person himself alters his medical information to get reimbursements or other benefits.
There are also some cases where the medical records of the patients are sold on the dark web. According to a report by Experian, medical records selling prices range from $1 to $1000 on the dark web.
5. Financial Identity Theft
The type of identity theft where the financial information is taken over to use for illegal purposes. One of the most famous cases of financial identity theft is credit card fraud. In this, the credit card is used for payments without the permission of the owner.
The other form is where opening bank accounts in some other person’s name. There is also jeopardy of money laundering through these accounts. Money launderers use these accounts to place, transfer and circulate their illicit funds in the financial system.
The ultimate solution to block all types of identity fraud is identity theft protection services. The most convenient way to onboard only legitimate customers is by identity verification of customers. Businesses should implement this solution where they do business with verified customers only. All the customers are verified by presenting their government-issued id documents. Like when a customer wants to open a bank account, he has to upload the picture of the id card along with his selfie. The identity (face and personal information) is verified through id document verification. The other way of identity verification is biometric authentication, in which their unique biological traits recognize individuals. It depends on the business scale and type and what service it chooses for the customer verification.