New account screening is one of the most common types of fraud attacks. Fraudsters use stolen data to create fake accounts, which can be used for a wide variety of malicious activities. The damage to consumers can be devastating, with identity fraud scams costing $43bn in 2020.
It’s also very profitable for fraudsters, because the cost of obtaining stolen information is relatively cheap compared to the cost of creating and operating fake accounts. Additionally, the tools needed to perform new account fraud are often very easy to find online. There are now a number of marketplaces that offer bot services that can be used to create fake profiles quickly and at scale – far more than what would be possible for a single bad actor.
New account fraud can be carried out in a range of ways, depending on the business and its security controls. Some businesses, for example, might simply require email or phone verification, while others may implement database verification, selfie verification, or even document verification.
Beyond the Basics: Elevating User Trust with Effective Account Opening Validation Strategies
Fraudsters can also try to create new accounts by inventing information or using synthetic information. For example, they might imagine a person’s name and address to pass the verification process. Alternatively, they might use a service that allows them to generate fake documents to prove their identity.
Typically, fraudsters will attempt to open multiple fake accounts to take advantage of referral bonuses or to test their fraudulent credentials. These accounts can be found and reported by security systems that utilize machine-learning models to spot suspicious behavior. This will alert the security team to investigate, and potentially block the suspicious accounts or put them on a list of banned users.