Security & Fraud

Fake IDs And Fraud’s Other Face

Among the many plots and ploys, fraudsters fake IDs. They make off with ill-gotten gains, hurting firms and consumers alike — and in the online world, one in every 60 transactions is fraudulent. It’s harder than ever for merchants to know that someone is who they claim to be. Kevin Trilli, Onfido’s CPO, tells PYMNTS ahead of an upcoming webinar that combining tech and the human touch can stop the bad guys, facing them down (literally).

The headlines come fast and furious — the numbers are staggering. The drill is well-known now, with a litany of familiar names amid data breaches.

Equifax and the 143 million victims of a massive hack here in the States stands as a landmark. Card data stolen from millions of department store customers? A story told too often. And, of course, Facebook is now a household name in a less than savory field: data harvesting.

Here’s a data point that is possibly unfamiliar, though, and sobering to everyone: one in 60. That’s the number of transactions done online that are fraudulent. If it were the lottery, one might play those odds. Those odds look pretty good to a fraudster, too, when it comes to separating unwitting victims from their financial well-being — and damaging companies’ top lines and reputations in the process.

As it turns out, firms across the payments and eCommerce landscape are falling prey to some wily techniques.

In an upcoming PYMNTS webinar, Kevin Trilli, chief product officer at Onfido, weighs in on the “5 Ways Fraudsters Fake IDs” and shows the power of facing the fraudsters head on — and we do mean facing fraudsters, in the most literal sense. However, to do so requires a multi-layered approach.

The Problem We Face

In a discussion ahead of the webinar, scheduled for Wednesday with PYMNTS’ Karen Webster, Trilli noted that the one in 60 number is testimony to the fact that “everything is going online” as we conduct business. A majority of adults in the U.S. use the internet during their everyday lives and as many as 77 percent of the population wields a smartphone — and all told, Americans spend hundreds of billions of dollars online annually.

Certainly, eCommerce is top of mind for retailers as the all-important holiday season approaches, and as the frenzy of online shopping remains just a few weeks away. The holiday season is certainly top of mind for fraudsters, too.

With the lessening of face-to-face commerce, done live and in person, the onus is on merchants to authenticate customers at the front end — before the transaction is underway. Effective gatekeeping is the first, and sometimes best, line of defense in stopping malevolent actors.

For Onfido, which verifies individual identities as people wield photo-based ID documents, tackling fraud is a matter of making sure identity documents are genuine. That’s no easy task, as digital identity theft has embraced scams of all types involving counterfeit documents, and where technology — typically graphics editors  that now exists can make it relatively easy to edit and falsify everything from passports to drivers’ licenses.

Trilli noted there are templates available online that can aid criminals on their counterfeiting journeys, and that “you can have a fake ID or you can have a spoof — a fake image of yourself,” he said. “And, of course, it is digital.” The choices for fraudsters seem to be a smorgasbord, with forged, counterfeit and even blank documents circulating around the underworld.

With such methodologies afoot, the traditional models of ID verification fall by the wayside, he told Webster. The days of using a database to draw upon, and asking questions of individuals before they can proceed with a transaction — in other words, relying on static data — are over. “The problem is that the data has been compromised,” said Trilli.

The Trade-Offs

As the database method has low reliability, the movement toward document verification and biometrics has higher reliability, but requires relatively higher levels of interaction from the user — thus, friction. Trilli told Webster that the eternal balancing act involves a trade-off between security and the ease of the consumers’ journey, from onboarding to verification to completed transaction.

The perfect eCommerce ecosystem balancing scale and security is elusive right now, he said, where the security process is wholly in the background, unnoticed by the consumer as businesses strive to stop identity theft and service misuse. However, he said, as machine learning and artificial intelligence (AI) remain critical parts of a layered authentication process, know your customer (KYC) gets a boost with human interaction. Think of it as “checking up on the checking up” during the KYC endeavor.

To that end, this week’s webinar will teach the virtual attendees how to leverage that hybrid approach, detailing the steps that need to be taken in document verification. Want to know the best approaches to identity verification? Come hear about them here. Want to know the five ways that fraudsters most often fool companies into thinking they are legitimate customers? That’s up for discussion in the webinar, too.

Fraud is evolving, so document verification techniques must evolve, too, as Trilli will illustrate. After all, in commerce, “verification is the way you build a trusted community,” he said.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.