Account Origination Fraud Prevention

account origination fraud prevention

New Account Fraud

Often called account origination fraud prevention or “Account opening fraud,” New Account Fraud is a type of identity theft where criminals use stolen identities and banking information to open new bank accounts. It’s a growing threat for consumers and financial institutions.

It costs the industry, businesses and consumers billions of dollars every year.

According to American Banker/Neustar research, one in three financial organizations report being negatively impacted by account origination fraud today, and the number of attempted attacks is increasing. Executives say the most effective approach to addressing account origination fraud is a combination of education/ awareness, multi- and cross-channel verification and biometrics.

Behavioral Cues to Watch For

When conducting background checks on potential new customers, it’s critical to watch for any red flags that are based on known fraudulent behavior patterns. These can include, but are not limited to, a recently issued identification or social security number, opening the account with a small cash deposit, or having an address outside of the bank’s geographic footprint.

Account Origination Fraud Prevention: Best Practices for Preventing Fraudulent Account Creation on Your Platform

Another important factor to consider is the user’s device, including a smartphone. Using a specialized anti-fraud system, banks can easily identify any new accounts created on a smartphone that was previously associated to or used in a previous fraud scheme.

In addition, FIs should train their staff to look for certain behaviors that indicate fraud. These could include a customer who is overly friendly, attempting to establish a quick rapport with the banker or wearing clothing that does not match their age, occupation or income level.

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