Identity fraud and identity theft

Identity theft and identity fraud has become unavoidably more widespread and can be expected to increase in the future. Some of the most affected industries are financial services, including crypto asset providers, fintech, remote gaming operators along with online media platforms, professional services, healthcare and transportation

To understand the difference, Identity theft is when a perpetrator obtains access to personal, sensitive, and confidential information illicitly for the use of impersonation of an individual or company that are used as verification measures to ensure that the person or entity is who they state to be. Such act is commonly carried out through phishing, scams, or malware that amounts to other cybercrimes.

Identity fraud is commonly followed after the act of identity theft. This involves the element of manipulation and deceit for which the perpetrator who has access to stolen data fraudulently engages and uses such data obtained illicitly to impersonate the victim being both individuals or companies alike. One of the most common uses is that of financial services, such as obtaining goods, services, products or any benefit that constitutes to a financial gain.

Anti-fraud measures are pertinent to be implemented within any organisation to avoid dealing with financial losses, reputational damage, and costly re-percussions when falling victim to such crime. Further, understanding potential blind spots and implementing targeted strategies can significantly reduce the risk of fraud.

In this article, Philip Bugeja the Chief Executive Officer of ArriTech who has over 10 years’ experience in the field of financial crime, has been consulted for this article. He shares key recommendations for safeguarding identities, benefiting both enterprises and individuals within identity verification and IT security.

● Data Encryption: Safeguard customer data by encrypting it securely before storage or transmission, encompassing credit card, bank account, and social security information.

● Firewall and VPN: Employ robust firewall and VPN solutions to thwart potential hacker intrusions, complemented by regular software updates to address emerging security vulnerabilities.

● Access Control: Restrict data access to authorised personnel exclusively, ensuring access is granted solely to employees handling personal data, and dispose of obsolete business records securely.

● Adopt New Technology: Embrace cutting-edge technologies such as antivirus software, encrypted backups, and DDoS appliances to fortify your security infrastructure.

● Vendor Assessment: Vet the security measures of third-party vendors rigorously to ensure entrusted sensitive data is safeguarded effectively.

● Breach Protocol: Devise a systematic procedure for addressing data breaches promptly and effectively, assigning responsibility to an appointed information security officer.

● Record-Keeping Deadlines: Define deadlines for retaining client information, ensuring compliance with regulatory requirements, and facilitating the timely disposal of unnecessary sensitive data.

● Minimal Data Retention: Minimise the storage of sensitive data such as SSNs, driver’s licenses, or birth dates online, whenever feasible, to mitigate risks associated with data breaches.

● Identity Verification: Implement robust identity verification measures, including requesting identification when customers make payments by card and cross-referencing ID information with payment details to prevent fraud.

● Continuous Authentication: Revalidate user identities upon any alteration in payment data or user profiles, safeguarding against unauthorised account takeovers effectively.

● Multi-Factor Authentication: Enhance security by implementing multi-factor authentication, combining diverse verification methods to fortify access controls.

● Liveness Detection: Incorporate liveness detection technology to verify the physical presence of applicants during the authentication process, mitigating risks associated with identity theft.

● Fraud Detection Measures: Deploy fraud alerts and monitoring mechanisms to promptly detect and respond to suspicious activities, complemented by manual inspection of anomalous transactions when necessary.

On the importance of robust fraud prevention processes, Philip Bugeja, continues: “Awareness and understanding of identity theft and subsequently identity fraud for which such incidents can have catastrophic consequences relating to financial and reputational losses for a business is critical. Proactive prevention is the key to success, and each company should understand their security needs and adopt defensive measures accordingly.”

Furthermore Bugeja added, “It is pertinent to ensure data is not stolen. Operators with tools and technology can take preventative measures to mitigate against risk.”

The following are his recommended measures that an individual can proactively take to prevent identity theft:

● Safeguard your Social Security number in those jurisdictions for which links are through social security

● Be alert to phishing and spoofing.

● Use strong passwords and enable two-factor authentication where it is possible.

● Enable alerts and notifications in financial apps.

● Shred debit, credit, and bank statements.

● Protect your mobile devices.

● Monitor financial and medical statements.

● Monitoring of emails and risk of impersonation

While companies can do their utmost to prevent fraud and identity theft, some responsibility lies with the private individual to be diligent and vigilant with their personal and financial information.