Businesses are extremely concerned because of the increase in cybercrime during the COVID-19 pandemic. In 2021, the average cost of a data breach among businesses that were surveyed was $4.24 million per incident, the highest level in almost 20 years, according to a report by IBM and the Ponemon Institute. These facts highlight the necessity for financial service providers to have a proactive approach to safeguarding data.
Knowing the distinction between identity fraud and criminal identity theft is particularly important for protecting consumers from these crimes. The terms are often used interchangeably, but despite their similarities, they are two distinct crimes with varying impacts on your consumers and business.
What is Identity Theft?
In short, it is when someone steals another person’s personally identifiable information, such as their social security number, and uses it to open new accounts in their name, causing serious harm to their finances and image. Bank accounts, credit cards, and sizable loans may be opened in the victim’s name as a result of identity theft. Once the criminal has maxed out, they switch to another one, leaving the real person associated with that identity to cope with the damage. These are prime examples of why identity theft protection is so important.
Some of the most typical techniques used by criminals to steal personal information with the purpose of committing theft are listed below.
Attacks Against Databases
Cybercriminals frequently target businesses that deal with sensitive and private data, such as financial institutions. Criminals may be able to get around a company’s security measures and steal both personal and financial credentials if sophisticated enough techniques are used, or if the security protocols are inadequate or contain gaps.
Some criminals will connect a scanner that copies bank card information to ATMs. Additionally, these devices have a covert camera that can read pin codes, making it simple for them to obtain your information.
Credentials Purchased on the Dark Web
A cybercriminal can check the dark web to discover if someone is selling specific personal information if they need access to it in order to hijack accounts and conduct illicit transfers.
Sending fraudulent emails is a technique used to get access to personal information. Typically, identity thieves will pose as a person’s bank or credit provider and request information such as passwords and account numbers. Because your bank account security questions and the security questions used to safeguard your social media accounts are frequently the same, even social media account phishing can result in financial identity theft.
Public Network Interference
Since public Wi-Fi typically has weak security, scammers can use it to listen in on other connected devices. A hacker might be able to intercept and steal the entered credentials if someone conducts a banking transaction.
Once a link is clicked, malicious software will be installed via scripts or programs that criminals have created. The malicious software is capable of keylogging your passwords or engaging in more intrusive monitoring of your computer usage.
Wallet, Document, and Mail Theft
Physically stealing your personal documents gives a criminal access to your information in the most direct way possible. In addition to stealing mail from someone’s mailbox, some could even rummage through dumpsters and trash cans to find someone’s information.
What is Identity Fraud?
Identity theft can be defined as the act of stealing a person’s identity or other personal information. In contrast, using that information to commit fraud is known as identity fraud. Cybercriminals will take advantage of an account you already have or use the data to open a new bank account, carry out debit card or credit card fraud, make fake IDs like passports, and apply for or withdraw money using false information.
Fraudsters have the ability to not only steal identities but also create fake identities to use in fraudulent transactions. Synthetic identity theft occurs when a synthetic identity is made up of forged documents and is not connected to a real person. A possible valid social security number combined with fraudulent personally identifiable information can be used by an identity thief to construct synthetic identities.
Some typical instances of identity fraud are provided below:
The personal data of a person is used by criminals to generate a fake ID. In addition to reputational harm, a victim of identity theft may be held accountable for crimes they did not commit. Synthetic identities can be created using social security numbers that have been stolen.
This happens when a customer intentionally defrauds a financial institution, such as when they take out a credit line or loan without intending to pay it back.
Fraud on Credit Cards and Lines of Credit
To start a new credit line or use all available credit on an existing one, a fraudster uses stolen personal information. Sometimes fraudsters use a “Frankenstein” identity to pull a long con. To do this, a phony credit card account must be opened, and payments made over a long period of time to raise the credit score. They max out the account and never pay it back after obtaining a higher spending cap and unsecured loans from a financial institution.
Fraudulent Use of Government Benefits
Criminals may use a person’s personal information to apply for benefits from the government. Since the start of the pandemic, this has happened more frequently, costing taxpayers billions of dollars in theft.
Home Title Fraud
When a fraudster takes control of a person’s property title, this happens. In addition to having access to financial and personal information, they assume ownership. Scammers can obtain sizable loans in the victim’s name by using the equity in their property as security.
Takeover of an Account
This occurs when an unauthorized person obtains full control of a person’s financial accounts. By altering the login information, they exclude the original user before stealing money and disclosing recorded data. Additionally, scammers might apply for phony ATM cards and take money repeatedly over time.
The Demand for Identity Proofing
Organizations should be very concerned about theft and fraud protection. It is easy for fraudsters to commit crimes and exploit the gaps and flaws in the system because digital procedures are constructed on weak infrastructure and there aren’t any up-to-date regulations addressing identity fraud.
An attack can jeopardize a business’s ability to maintain its finances and reputation, as well as the security of its customers. These results underline the significance of identity proofing. The implementation of linked, layered, and continuous multi-factor authentication along with biometric IDV security systems will make sure that only verified people can carry out transactions, gain access to systems, and manage sensitive information. Utilizing a range of strategies to stop fraud is essential because there are so many ways to conduct it.
Ready to get started with FTx Identity? Get in touch with us today to schedule a consultation and experience a demo to learn more about how we can serve as an identity guard.