3 Types of Identity Fraud to Watch Out For

3 Types of Identity Fraud to Watch Out For

The stealing of identities and identity data continues to be a primary and successful target for fraudsters. According to the Federal Trade Commission (FTC)1, there were 5.74 million fraud reports in 2021 in the United States, up from 4.87 million in 2020—identity theft accounted for 25% of all reports.

Whether it’s stealing consumers’ personally identifiable information (PII) from companies through hacking and data breaches or targeting individuals through phishing and social engineering, criminals are continuously adapting their methods of attack. Having safeguards in place to ensure secure digital identities and protect against different types of identity fraud will be essential, particularly for businesses that want to establish trust with their customers.

Different Types of Identity Fraud

According to a GBG survey2, approximately one in ten European consumers have been victims of fraud and 42% of businesses surveyed experienced some form of fraudulent activity in the past twelve months. The pervasive threat of countless types of identity-related fraud is a reminder that businesses need to have the proper identity proofing technologies in place to protect PII, detect fraudulent identities and prevent fraud.

Identity Theft vs. Fraud

Though they are similar and are often used to mean the same thing, identity theft and fraud do differ in meaning.

  • Identity Theft: the stealing of a person’s PII, typically to impersonate that person or to use their information to open a new account or line of credit, or in many cases, fraudsters use the stolen information to create a synthetic identity.
  • Identity Fraud: the stealing of a person’s PII through various means and exploiting that person’s existing accounts (bank accounts, etc.) through account takeovers.

Some (of many!) different types of identity-related fraud include:

01. Tax Identity Fraud: though tax season is officially over, the danger of tax identity fraud is a problem year round. Whether it’s tax refund fraud, fraudulent unemployment claims, credit card debt or a bank account takeover, tax identity fraud can have far-reaching consequences that damage a user’s finances, credit history and identity. Not to mention likely facing issues when attempting to file taxes in the future. Individuals need to do what they can to protect their own data, but tax professionals and FIs also need to ensure they have effective data protection measures in place to protect sensitive data and identify fraudsters attempting to appear legitimate.

02. Address Fraud: all industries and governmental institutions can be targeted by fraud, especially if there are ineffective identity proofing technologies in place. According to a recent USPS fraud report, lax identity validation for its online change of address service resulted in the United States Postal Service experiencing a significant jump in cases of identity fraud, going from 8,857 cases in 2020 to 23,606 in 2021.

A relatively easy vehicle for identity theft, fraudsters will exploit the postal service’s change of address process to reroute people’s mail to a different address to steal data—social security numbers, credit card information, loan statements, Medicare documents, etc.—from people’s personal documents and then access existing and/or open accounts with that exploited PII.

03. Synthetic Identity Fraud: synthetic identity fraud is when fraudsters combine (real) stolen PII, such as a social security number, with fictitious information to generate a seemingly legitimate digital identity. This sophisticated form of fraud can be very convincing and difficult to detect, especially for companies dependent on outdated identity proofing technologies. According to GBG’s survey, 23% of businesses identify synthetic identity fraud as the most prevalent fraud threat in their respective industries. Synthetic fraud continues to be one of the fastest growing frauds, a threat to both individuals and businesses.

Protecting Digital Identities

In today’s digital-first world, protecting digital identities and PII from fraudsters has become increasingly important, for both consumers and businesses alike. As tempting as it may be to think of being the exception to the rule, the likelihood—in today’s environment no less—is slim. More than ever, people need to be cautious with where, how and with whom they share their information when online.

Fraud prevention is also a huge factor for businesses in all industries. Firstly, by having the proper protective measures in place to ensure that their customers’ PII is secure, and secondly, by investing in the right identity verification and Know Your Customer (KYC) technology to ensure effective fraud prevention and trustworthy digital identities. A complete identity proofing solution will streamline the verification process by adding extra checks for suspicious customers and showing good customers the fast lane. Thus, empowering businesses to prevent fraud without compromising their customers’ experience or privacy.

Learn more about the state of digital identities and the importance of preventing identity fraud in GBG’s The State of Digital Identity 2022 report.

 

Sources:
Consumer Sentinel Network Data Book 2021: February 2022, FTC
The State of Digital Identity 2022GBG  

Acuant is now a GBG cmpany Acuant is now a GBG company

Questions?

Let's Talk Support