A New Account Fraud Solution to Block Fraud at Stage 1

New Account Opening is a New Account Fraud Opportunity

It wasn’t that long ago that we had to visit a physical bank branch to open a new bank account. We had to book an appointment with a real-life bank employee, fill out a form, and present identification. 

This process seems like a distant memory today. Modern customers can onboard with banks digitally without setting foot in a branch.

Unfortunately, fraudsters appreciate the digital onboarding process, too. New account fraud makes up roughly 90% of all credit card fraud, while an estimated 95% of synthetic identity fraud goes undetected at onboarding.

If financial institutions onboard criminals, they risk being conduits to fraud, money laundering, and other illicit activities. Given these risks, banks need a strong defense against allowing fraudsters and financial criminals to pass the onboarding stage.

However, banks are not the only ones impacted by new account fraud. Fraudsters can seriously harm a person’s credit score and financial record by opening an account using identity theft. This damages the genuine person’s credit profile and prohibits them from accessing life-changing financial services. This risk underlines banks’ dual challenge in stopping new account fraud while protecting and minimizing fraud losses. 

Challenges of New Account Fraud

New account fraud appeals to bad actors because new customers are essentially unknown parties. Banks want to grow and are often eager to welcome new customers. Fraudsters leverage this eagerness to disguise their identities behind digital screens, deceiving banks and causing financial havoc.

Before financial institutions can stop new account fraud, they must understand the scope of the challenge. Here’s what makes new account fraud so appealing to fraudsters. 

Customer Data is Readily Available from Data Breaches

Years of data breaches have given fraudsters troves of personally identifiable information (PII) to create fake identities. This stolen data is easily available (and disturbingly affordable) on the dark web, fueling a lucrative market for fraudsters. Bad actors exploit this stolen personal information to open new accounts and avoid detection. Synthetic identities, carefully crafted from fragments of real information, complicate the authentication process, as they can accumulate a seemingly credible history over time.

Bots and Money Mules: Puppets for Fraud

Fraudsters employ sophisticated tactics, including bots and device emulators, to automate the account creation process across various channels. Bots can fill out forms by themselves, while fake devices hide who they really are by changing their data. Additionally, money mule accounts serve as conduits for moving illicit funds, further complicating fraud detection efforts.

Targeting Promotional Offers

Fraudsters create fraudulent accounts for various nefarious purposes, from exploiting promotional offers to obtaining credit cards with no intention of repayment. Moreover, new account fraud is a crucial mechanism for facilitating money laundering activities, allowing criminals to obscure the source of illicit funds and evade detection.

Introducing Feedzai’s New Account Fraud (NAF) Solution

Feedzai’s New Account Fraud solution operates discreetly in the background, leveraging advanced algorithms and comprehensive data analysis to flag suspicious activities and thwart fraudsters before they can open an account intended for a legitimate user. 

Our New Account Fraud solution considers several key risk factors to determine if fraudsters are trying to open accounts. These risk indicators include:

1. Detection of Non-Human Behavior

Fraudsters are innovative, writing scripts and building bots to create hundreds of fake accounts within minutes. In a typical account opening workflow, all applications go through default verification steps (e.g., telco or identity check). Depending on the number of new accounts opened daily, this can be very costly.

Feedzai identifies suspicious application activity indicative of bot or device emulator usage. This approach distinguishes genuine applicants from fraudulent entities. By proactively stopping applications created by bots, banks can reduce downstream third-party verification costs.

2. Fraudster Patterns 

Feedzai’s domain expertise equips banks to combat commonly used fraudster techniques. Out-of-the-box, Feedzai’s solution detects fraudulent applications with precision by analyzing known fraudster patterns. This includes location spoofing, rooted devices, and more. 

3. Behavioral Biometrics

Feedzai’s solution evaluates browsing patterns, form fluency, and other behavioral biometrics to discern genuine human behavior from automated activity. It spots fake applications by checking user interaction cues, such as typing patterns and mouse movements. Banks can quickly intervene proactively and prevent financial losses.

4. Device Intelligence and Network Data

Analyzing a user’s device and network is invaluable. Feedzai reviews multiple data points, including IP addresses, devices, and network connections, to assess fraud risk. Our solution helps banks identify money mule accounts, synthetic identities, and identity theft by measuring how often and quickly devices and networks are used to create accounts.

5. Blocklists

Feedzai clients can add known fraudulent devices and networks to blocklists when identifying a fake application. This blocks future applications attempted by known fraudsters, preventing fraud before it occurs. This proactive approach safeguards banks from financial losses and mitigates public reputation risks associated with fraudulent activities.

Why Choose Feedzai?

Feedzai’s new account fraud solution seamlessly integrates into a bank’s account opening decisioning process. It offers real-time risk assessment and enhances workflow efficiency. As digital onboarding becomes more common, NAF will play a critical role in keeping banks and customers safe. Here’s how:

Prevent Criminal Entry

Feedzai’s solution safeguards banks from financial and reputation damage by preemptively identifying fraudulent patterns. By leveraging advanced analytics and machine learning algorithms, Feedzai enables banks to detect and neutralize fraudulent activities precisely, ensuring a seamless banking experience for customers worldwide.

Enhance Conversion

Recognizing genuine behavior reduces authentication friction, enhancing the customer experience and increasing conversion rates. By leveraging behavioral analytics and machine learning algorithms, Feedzai enables banks to streamline the account opening process, reducing friction and improving customer satisfaction.

Improve Operational Efficiency

Early detection of fraud minimizes the need for unnecessary authentication steps, streamlining operations and reducing costs for financial institutions. Feedzai enables banks to optimize operational efficiency and enhance profitability by automating fraud detection processes and leveraging advanced analytics.

Keeping Banks in Control

Feedzai empowers banks with flexible deployment options, allowing them to integrate NAF intelligence seamlessly into their application risk decision processes. Whether performing a risk assessment at the outset or during the final stages of account creation, banks can effectively leverage Feedzai’s solution to mitigate fraud risk. Feedzai enables banks to tailor fraud detection strategies to their specific needs and preferences, giving them granular control over their risk assessment processes.

Feedzai’s solution represents a paradigm shift in preventing new account fraud. The solution combats bots, synthetic identities, stolen identities, and mule accounts during the critical account opening stage. As financial institutions navigate new account fraud complexities, Feedzai emerges as a trusted partner, providing innovative solutions to prevent the exploitation of financial services.

Customers are the key to any bank’s bottom line, so many banks want to make digital onboarding seamless. Feezdai’s New Account Fraud solution will be essential to assuring that new customers are trustworthy.