Identity Fraud Report

Identity fraud and identity theft are two terms that are often used interchangeably, but there are some subtle differences between the two. Identity theft refers to the act of stealing someone’s personally identifiable information (PII). For example, via a data breach. This PII is then often sold on the dark web — fraudsters are able to purchase an individual’s information (including their name, date of birth, email address, Social Security number and more) for as little as $4 according to findings from Atlas VPN.

Identity fraud is when a fraudster goes on to use this stolen information for personal or financial gain, or to commit a crime. For example, creating synthetic identities to open bank accounts or obtain credit, performing phishing attacks, or using the information to take over an individual’s account and make illegal transactions.

Any act in which a fraudster uses an individual’s stolen personal information for financial gain, or to commit a crime, qualifies as identity fraud. Such activities include using stolen or fake PII to open a bank account, open a credit application, or apply for official documents. Often, the long-term intention is to launder money or purchase illicit goods.

Fraudsters might also attempt to defraud individuals (using techniques such as phishing, or account takeover) to get them to hand over money.

Some of the most common types of identity theft include:

1. Synthetic identity theft, one of the fastest-growing types of financial crime in the US. Fraudsters use a combination of real and fake personal information to create a new identity, and go on to apply for loans, credit cards, or commit other crimes — usually for financial gain.
2. Data breaches are still on the rise and can compromise anything from a customer’s address, to their date of birth, passport number or driving license number, or even images of a customer’s ID. Information gathered from data breaches empowers fraudsters to go on and commit other types of fraud — including phishing attacks, account takeover fraud, synthetic identity fraud and financial fraud.
3. Financial identity theft where fraudsters use a person’s data for financial gain. For example, they might steal someone’s credit card details to make purchases, hack into a personal account and steal funds, or use personal information to open new accounts or apply for credit.

Some of the first warnings signs of identity fraud include:

• Unexplained withdrawals or purchases made via your bank account
• New credit cards that you didn’t apply for
• Errors on your credit reports
• Sudden changes to your credit score, or an unexpected refusal for new credit 
• Collection notices for unpaid accounts or unexplained debts

One step businesses can take to prevent identity fraud is to conduct identity verification at onboarding. This can be achieved in a number of ways — by verifying customer data against a variety of trusted data sources, checking identity documents, and verifying biometrics.

At Onfido, we recommend adopting a layered approach to fraud detection, including:

• Data validation: Verifying customer identities against a range of trusted data sources such as SSN, credit databases, sanctions and PEPs lists, and proof of address.
• Document verification: Check that identity documents are genuine.
• Biometric verification: Ensure that the biometric matches what is on a submitted ID.
• Fraud detection signals: Leverage passive fraud signals such as device, network and behavioral data.

1. Reduce fraud losses
   Protect your revenue by stopping more fraud at the door. Safeguard your systems and customer privacy, and maintain your brand integrity, all while growing your bottom line.
2. Prevent fraud without adding friction
   Identify fraudsters before they access services with passive signals that offer zero friction for genuine customers and build tailored onboarding flows based on individual customer risk profiles.
   
3. Manage your risk
   Accurate reporting helps you avoid penalties and fines by ensuring risk controls and audit trails.