Catch me if you can - Identity fraud during COVID-19

Identity fraud is on the rise during COVID-19, according to Onfido’s Identity Fraud Report 2020. The report shows document identity fraud increased by 41 percent in 2020, concurrent with an increase in first-time fraudsters.

It’s been suggested that the recent spike in identity fraud is due to a combination of factors - crisis times and uncertainty, increased unemployment, growth in the use of online delivery and purchasing services, remote working, increased storage of personal information online, and the rapid development of technology to enable more efficient and effective fraudulent activity.

Interpol commented on the findings in Onfido’s report saying, “identity document fraud can take different forms, and both false and genuine documents are used to perpetrate a variety of frauds. The fraudulent use of identity and travel documents therefore present a threat to the security of countries and their citizens, the economy, and global commerce, and is often linked to organised crime, money laundering and terrorism.”

What is identity fraud?

According to the Office of the Australian Information Commissioner, the definition of identity fraud is the use of another individual’s personal information without consent, often to obtain a benefit. This benefit is usually an economic advantage or to conduct illegal activity.

Latest trends in identity fraud

1. More first-time fraudsters: Onfido found that the proportion of unsophisticated fraud attempts grew from 57 percent to 70 percent, while the number of sophisticated attacks remained the same as pre-COVID levels at under one percent. This indicates that individuals may be trying their first fraudulent activities due to unemployment or a furloughed status during the economic downturn.

2. No longer a weekday 9-to-5 operation: fraudulent attacks have previously been documented to occur mostly on weekdays, however during the pandemic the fraud rate has been relatively consistent over all seven days. This may be due to the lockdowns providing opportunities seven days a week, as well as the increased participation in fraudulent activity by first-time fraudsters.

3. Emerging trend of biometric fraud: a growing use of 2D and 3D masks, replay attacks and deep fakes are being used to circumvent photo and video verification products. Businesses therefore need to consider how they’ll protect themselves against increasingly complex threats like biometric fraud.

4. Suspicious behaviour is harder to detect: as many individuals’ purchasing habits have legitimately changed during the pandemic, it has become even harder to spot suspicious behaviour. Businesses across all industries therefore need to rethink and recalibrate how they can balance fraud risk with customer experience, particularly businesses in the financial services industry.

Steps you can take to minimise risk

1. Implement solutions that can be adjusted quickly to changing circumstances: as the complexity of fraud attacks increases, it’s important to have measures in place that can grow and adjust to that shift. Onfido recommends a hybrid approach of manual and machine learning checks.

2. Utilise a combination of identity verification measures: it’s no longer suitable to rely on just one mode of identity verification, e.g. asking for a mother’s maiden name, as answers can often be found on social media or the dark web. Onfido recommends adopting more robust identity verification measures such as a combination of document verification and biometrics.

3. Recalibrate your ‘friendly friction threshold’: anti-fraud technology will add some friction into your customer experience, however it’s vital for businesses to balance the value of customer experience against the risk of fraud, and adjust processes accordingly. Onfido gives an example of banks versus retail stores - customers are willing to endure security measures to secure their bank account but less so for retail stores, meaning retail stores will generally have a lower friendly friction threshold than banks.

4. Act proportionally against fraud across your customer lifecycle: there’s no need to ask a user for verification when the risk is low, rather, retain these changes to verify for more sensitive or critical times, e.g. when they’re about to use their credit card or ID card.

Identity fraud is on the rise and is becoming increasingly complex to prevent and react to. It’s now up to businesses to implement increased protections to minimise the risk of fraud to their organisation and their customers.

National Crime Check offers a range of identity checks and document verification services that can be adjusted and tailored to suit your business needs. We will develop a suitable package of screening and verification to keep the balance of your customer experience and risk management in check. Contact us today to discuss your needs.

Martin Lazarevic
General Manager