Third-party fraud is the type of crime that can steal headlines – adding insult to injury for business leaders who suddenly realize the true cost of being a target.
Unfortunately, the impact of headlines can prove long-lasting as public trust in the company will have been compromised. Characterized by swift criminal action and immediate financial impact, third-party fraud occurs to victims as if out of the blue and often with steep economic impact.
Standard fraud protection may not be enough.
Because of the potential severity of third-party fraud, businesses may regularly update standard operating procedures. However, given the lengths and creativity fraudsters are willing to employ, standard measures for protection often isn’t enough.
Third-party fraud is usually referred to as identity fraud, where someone submits credit applications with a fake or fabricated identity. Here, fraudsters use stolen information to manipulate an existing account. Also known as account takeover fraud, this crime jumped 16 percent from 2015 to 2016, an increase of two million new fraud victims in just one year, according to a 2017 report by Javelin Strategy & Research.
Fraud rings have many modes of attack.
Criminal cells engaging in third-party fraud have a track record of versatility. Relying significantly on ill-gotten or false personally identifiable information (PII) and bank routing numbers with suspicious activity, fraud rings may have a few or dozens of individuals involved throughout the country.
Like a predator will sneak up closely to its prey before attacking, so too might a fraud ring invest plenty of time and thought setting up a third-party fraud heist. Lenders often do not know that it happened until it’s too late.
Here are some perennial third-party fraud tricks of the trade.
Account takeover fraud isn’t always catastrophic to lenders, but this method has the potential to be so when vast amounts of digital data is hacked. Fraudsters use another person’s account information (such as a credit card number), to withdraw funds from an account or order products and services. Often, thieves find account numbers in the trash, steal them from the mail or hack into accounts online.
Clarity’s veteran team of certified fraud examiners spearheads round-the-clock vigilance to discern and connect various patterns of behavior for industry-leading fraud prevention. That’s in addition to our data analysts and developers who are continuously evolving new ways to stay ahead of a fraud ring’s next moves.
Our fraud team works to make fraud prevention easy so lenders can safely consider a greater volume of responsible loans.