Preventing fraud, the alternative way
By Gus Tomlinson, Chief Product Officer, EMEA at GBG
Our digital identities allow us to buy and interact like never before, but we can’t participate fully online without verifying our identity and it is mobile phones that are very much at the heart of this.
Today, consumers perform most of their transactions through their mobile but with this close relationship and ease of use comes a significant fraud risk. Amongst smartphone users, as many as 5.7 million people in the UK alone have fallen victim to identity fraud in the last 12 months with 44 percent of these having their bank account accessed and money taken. Seven percent had their mobile phone number stolen and cloned.
Fraud is certainly not a victimless crime and has serious ramifications for both consumers and businesses alike who themselves have experienced an increase in both known or suspected attempted fraudulent activity in the past 12 months.
In order to help combat identity fraud, the use of alternative data such as biometrics and mobile data has become more mainstream – strengthening the identity verification process. If we look at traditional identity verification to aid fraud prevention, it is typically based on static information such as an individual’s name, address and date of birth. It might look at an IP address from a consumer’s laptop, for example, but all of these are static, and none are particularly unique.
In contrast, biometrics are unique to the individual and are difficult to steal. Fraudsters may attempt to impersonate them, including getting photos of people off the dark web and doing a deepfake, but what fraudsters can’t fake are the behavioral patterns such as the way someone holds their phone, or the way they interact when using it.
Mobile phones themselves are also super personal and enable biometrics in the first place through the capturing of images of an individual’s face (their physical biometrics), and in providing the means to access and understand behavioral biometrics.
Mobiles are an extension of our identities and tend to be with us at all times. Knowing that a person is the owner of a particular mobile number is a robust way of validating an identity and preventing synthetic identity fraud. They provide a powerful data source matching an individual to their mobile device and providing a link to name, address, and mobile number, biometrics and identity markers such as:
- Ownership – do the attributes match those of the owner of the mobile phone number?
- Possession – is the consumer currently in possession of the phone in question?
- Reputation – is there any suspicious activity ongoing?
Used in combination these powerful alternative data sources, biometrics and mobile data can be layered with traditional identity verification information making it much easier and safer to verify that an individual is who they are – so that businesses can onboard the right customers not fraudsters in disguise.
This layering of alternative data is especially important as fraud becomes more sophisticated, during instances when a fraudster clones a consumer’s phone number and attempts theft or when authenticating and verifying consumers where there is smaller credit history and limited data available such as previous address information – making it harder to authenticate and verify them using traditional data sources only. The less information a business has on an individual the easier it is for fraudsters to commit fraud. That is why, the layering of traditional sources of verification with alternative data, is so important and critical to successful fraud prevention especially at the customer onboarding stage.
Regulations are also catching up allowing increasing use of alternative data and two factor authentication. With increased use of wearables and smart home technology, additional alternative data sources are also becoming more readily available and will continue to strengthen the data behind identity verification technology – improving and stepping up its fraud prevention capabilities. What we need to drive is consumer awareness and trust in the use of this data to make the digital ecosystem safer.
Despite these advances, a third of businesses (31 percent) don’t use technology to verify the identity of consumers and not enough businesses are taking advantage of the use and layering of alternative data. Some unregulated businesses also accept a much higher level of fraud risk especially when they are in start-up mode and focused on onboarding new customers – but they are only storing up problems for the future not only in terms of high levels of fraud but also in reputational risk.
Identity verification can be a complicated business but with rapid data and technology improvements, and increasing alternative data sources, it is becoming easier to implement and benefit from. There is a huge opportunity for businesses not to be left behind and to be on the front foot to build trust and ensure that they take advantage of mobile, biometrics and other forms of alternative data that is available right now to onboard customers quickly and securely. Ultimately, stopping fraud at the front door is much easier to do than trying to get rid of it once it’s in your business. The time is now to take the alternative route.
About the author
Gus Tomlinson is Chief Product Officer, EMEA at GBG and an expert in identity technology with experience in global data, regulations and market trends. She has a deep understanding not only of GBG’s product portfolio, but also the global markets that its customers operate in across the globe.
DISCLAIMER: Biometric Update’s Industry Insights are submitted content. The views expressed in this post are that of the author, and don’t necessarily reflect the views of Biometric Update.