New customer fraud is one of the most dangerous types of fraudulent activity because criminals can exploit it at scale. Fraudsters often use compromised personal information stolen from data breaches or malware to create bogus identities, gaining access to accounts and credit cards they never intend to pay back.
This type of identity theft is a nightmare for companies. Not only do these fictitious people incur financial losses that can be near impossible to recoup, but they also create bad reputational damage and cause friction with legitimate customers. In addition, organizations are spending time and money onboarding and keeping fictitious users, which reduces resources available to genuine customers.
Smart Solutions: How to Protect Your Business Against New Account Fraud
As businesses transition more of their operations to the digital space, they often roll out a red carpet for new customers by making the onboarding process as easy and streamlined as possible. However, this streamlined experience can be a trap for criminals. When fraudsters can easily sign up for an account with a fake identity, they can perpetrate a number of different crimes, such as account takeovers or creating dummy accounts to abuse free trials or coupons.
The most effective way to prevent new account fraud is to use technology that checks the accuracy of a user’s personal details, such as their name, home and billing address, phone number, email address, or even biometrics. This technology can help detect a wide range of behaviors that indicate fraud, such as an attempt to provide a home phone number for a mobile device or a social security number that is off by one digit.