Security & Fraud

Global Trust Meets Instant Money

Global Trust Meets Instant Money

Who doesn’t love fast money? But here’s the thing: Velocity adds risk in a complex equation, which includes everything from account opening to transacting across various rails and platforms. Global identity verification with a focus on better remote onboarding may be the answer.

The July 2020 AML/KYC Tracker®, done in collaboration with Trulioo, looks at the proliferation of digital remote onboarding in the pandemic era, the opportunity it represents to cybercrooks, and how organizations that tech-up properly are having more success fending off attackers.

“With the rise in digital payment usage also came more fraud and online crime. As a first step to safeguarding against bad actors, companies must ensure they’re paying close attention to the onboarding process,” Zac Cohen, chief operating officer at Trulioo, told PYMNTS.

“By taking a holistic approach, using a variety of identity verification and authentication methods to deliver the right level of risk protection, businesses can prevent these bad actors from accessing their customers,” Cohen said.

The cost of avoiding the holistic path, along with a wealth of insights into the onboarding challenges posed by the pandemic and its tempestuous economic weather, are detailed in PYMNTS’ latest AML/KYC Tracker®.

Know It – or Blow It

As the new AML/KYC Tracker® points out, the differences between instant in-app P2P payments and wire transfers or ACH payments issued from a bank are pretty major.

“Consumers are more likely to fall victim to fraudulent schemes when they assume there are stricter security measures protecting their P2P app transactions than there are in truth. Major P2P apps like PayPal and Zelle do not have policies protecting users against losses from sending authorized payments to recipients who turn out to be scammers,” per the Tracker.

“Bad actors often exploit customers who are unaware that they will not be able to reclaim their funds. Criminals might connect with consumers over online marketplaces with offers to sell items in exchange for payment made upfront via P2P apps,” the report states. “These criminals accept the money, but then never deliver the promised goods. Fraudsters know that consumers have little ability to regain funds lost this way, because P2P app transactions lack the charge-back protections that credit cards have.”

This scam is especially familiar to those who frequent auction and bidding sites like eBay. It typically involves sending funds via instant apps to unknown third parties. Nearly one-third of respondents to a 2019 study reported falling prey to this particular “instant” swindle.

Balancing Friction With Fraud

“Raising awareness among users about potential threats is important, yet P2P apps must

also prevent criminals from accessing their services, and that can be challenging,” according to the July AML/KYC Tracker®. “P2P apps may succeed in stopping fraudsters from opening accounts, but bad actors can still find ways to seize control of accounts belonging to honest customers. Fraudsters that have gained control over a legitimate account can then easily steal victims’ money, and P2P payment platforms must therefore stand on guard.”

Email scams, text scams, mobile scams … sadly, it’s a bit of a scammer’s paradise out there at the moment as the business world lurches to the digital – often not elegantly, but for sound reasons. The tightrope walk for companies is finding that perfect mix of onboarding friction and trust.

“It’s worth noting that customers expect safe, seamless and quick onboarding when they’re signing up for a new mobile app,” Trulioo’s Zac Cohen told PYMNTS.

“However, achieving a balance can be tricky – if companies make onboarding too complicated, they’ll lose customers; on the other hand, if they don’t have the right due diligence in place, they risk falling victim to bad actors,” he noted. “This is why having technology partners that can provide real-time identity verification in a safe and trusted way is crucial in today’s digital environment.”



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.