4 ways how fake identities can be a threat to your business


E-commerce has increased tremendously over the past few years. Small startups and micro-merchants have been increasing the competition within the market along with bringing in new opportunities. Such remarkable success of the online businesses does not infer that the businesses can oversee the threat of cybercriminals prevailing in the industry.

According to a PWC survey, 42% of global organizations said that they have faced some type of fraud and economic crime in the last year. Another study highlighted that UK-based banks have inured a loss of 393.4 million pounds due to e-commerce fraud with illegally obtained credit cards. The research stated that the banking industry is tackling this problem by investing in robust identity verification tools. Looking at the current situation of the banking industry 42% of the global organizations have increased their spending in fraud prevention tools like identity verification services provided by some well known global organizations.

According to a report, 40% of global consumers have been the victim of identity theft. 16.7 million identities were stolen in the USA only leading to a loss of $17 billion. Hence the reason 44 percent of the global businesses have been planning to invest in crime prevention tools like online identity proofing, document verification, and face verification for customer identity verification before onboarding a customer.

The fake identities could take different facets when defrauding the businesses. It could defraud as a customer using the stolen credentials of a credit card, or it could be the identity of a deceased person or a business with a good market reputation and credibility. 

Fake identity and stolen credentials for cybercrime:

The criminals steal the credentials of a person regarding his identity and his account details. Once the confidential data is in the hands of the criminal it is used to commit an array of crimes like illegal funds transfer, extensive purchases and spending through the stolen credit card, tax refunds or the use of fake identity to get insurance proceeds. Using online identity verification solutions gives an advantage to the businesses, the fake identity is easily identified through ID card screening and the criminal is kept at bay. Hence the online identity verification terminates the crime at the very first stage.

Often the fake ID cards are used by the underage people to get liquor or to access an online gaming site. The businesses unknowingly commit a non-compliant act and face penalties, hence the reason more and more online age-restricted goods and services merchants are integrating an online identity and age verification solutions into their systems.

Use of ghost identity for fraud:

A report from 2012 stated that 2.5 million identities of dead people are exploited by the fraudsters every year. These ghost identities are used to defraud businesses, tax organizations, and government organizations. These stolen identities are often used by the family members of the deceased to get tax refunds, free government benefits, open credit card lines or to get sim cards on the names of the deceased. A mere sim card issued in the name of a deceased person can be used for disastrous crimes such as maintaining a terrorist connection. The authorities have nothing in hand when they investigate the crime because no law can punish a deceased person and the ultimate loss comes to the victim organization. Hence the organizations are in dire need of running online identity verification.

Fake merchant fraud and how to prevent it with ID proofing:

The global integration of the e-commerce market places has increased the rate of fake merchants and fake clients on the web. The businesses are initiating and maintaining B2B relations with online businesses from every corner of the world. Such business opportunities are generating revenue for the businesses and are also exposing the businesses to the fake merchant frauds. The fake merchants can cause revenue loss, credibility loss and loss of company value in the market. The businesses that have B2B relations with the terrorists and money launderers posing as merchants come under the strict scrutiny of the regulatory authorities. Hence the business gets a lot of bad fame although it is the ultimate victim of the crime. Hence it is vital that the businesses should perform in-depth identity proofing of their merchants and stakeholders.

Health identity can cause losses of worth millions of dollars for the hospitals:

The health identity of an individual is used to get free health services, drugs, and other health benefits in a fraudulent manner. A woman in Florida found that her identity was stolen when she went for heart surgery and found her medical credentials were manipulated. When investigated it was found that the woman’s medical identity was compromised. The hospital and its doctors could have faced a huge loss in case they have not cross-checked the woman’s medical credentials.

To conclude, a stolen identity can be used to commit a variety of crimes and such crimes are targeted towards every type and size of businesses. Online businesses are often considered the most common victims but the huge data breaches in the past and the evolution of global markets have exposed every type of business and merchant to such crimes. The best tested and proven solution to such crimes is the use of real-time identity verification tools. It will help the businesses to prevent loss and will also improve their customer onboarding experience, as the real-time face and biometric verification are very popular among the consumers.

Raj Hirvate
Hi, I'm Raj Hirvate and I am a Tech Blogger from India. I like to post about technology and product reviews to the readers of my blog. Apart from blogging i'm a big Anime fan I Love Watching Naruto, One piece and Death Note.

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