Fraud Reduction By Using Digital Onboarding
Digital onboarding is the process in which acquiring a new customer to a new company, or subscribing a new user to a new service remotely, typically by using a mobile device of the user.
The vital purpose of digital onboarding is to verify the identity of the person who is on boarded for a company to ensure that the person is actually who they claim to be.
It includes setting up workstations, introducing the team processes and members, and providing necessary resources.
Fraud Risks in Manual Onboarding Processing
Preliminary, the manual onboarding process is initiated without a recruiting system. This lets one onboard rehire and new hires who didn’t come in through the standard recruiting process.
There were many fraudulent activities during the manual onboarding processing, i.e. stealing the synthetic Identity of the people while opening accounts, while writing the data of the clients a lot of chances of errors and fraud in manipulating their data.
There were a lot of problems that were faced while manually onboarding processing. HR (Human Resources) departments had to send a lot of offers to different candidates with varied profiles and titles.
They had to make the changes manually and framed an offer for each candidate, which required a lot of time while doing.
Fraud Reduction and Management in Digital Onboarding
But in this contemporary era, digital Onboarding has made it easier to reduce fraud risks and stopped a large number of evil opportunities that were previously available to bad players.
By the end of the year 2020, the Federal Trade Commission (FTC) received an estimated fraud report which is over 2 Million which resulted in losses of over $3.3 billion.
Bad players or fraudsters can do a scam from the onboarding process onward by obtaining and exploiting the candidates using verification, including home addresses and passwords.
A vital part of any fraud risk management program is an onboarding process that verifies that people are the same in saying who they are. It can stop fraudulent people from entering your systems in the first place.
Fraud Reduction with ID and Business Verification
Identity theft is currently amongst the most common fraudulent activities and is expanding day by day. The increase in identity theft is due to the theft of significant data breaches, in recent years, which gave fraudulent people access to a huge amount of Personally Identifiable Information (PII).
Using the Know Your Customer (KYC) verification method during the onboarding process helps to prevent fraudulent people from entering your system data.
The ID verification process enables us to check identity information like out-of-date or mismatched.
Mobile Network Operator (MNO) phone data like geo-location and billing information can also be cross-referenced with identity data points. By using these and digitalizing the manual onboarding, Fraudulent activities can be decreased.
Understanding the different techniques that are used by Fraudulent and bad players is one of the good ways that allow you to protect your business.
Synthetic identity fraud (SIF) is a common type of identity theft where original and unreal information is combined to create another identity for doing different malicious activities.
Typically, real information about the clients is stolen. SIF currently includes about 80% of all Identity frauds so spotting fake identities is a strong defense you can give your business without hurting the customer onboarding experience.
SIF is formed to bypass traditional authentication methods. The increase of large-scale data leaks of customers has given fraudsters plenty of their data to exploit.
Standardization of a Fraud Risk Management Program
By establishing a fraud risk management program you can standardize your organization’s commitment to management of fraud risks.
A comprehensive good strategy can boost your controls and communication for employees and customers regarding exposure and control of fraud through digital onboarding.
1. Access your company fraud risk
The first step is to make a comprehensive assessment of fraud risk. The requirements that are associated with your particular regulatory compliance and industry standards must be considered. The other notable thing is to investigate the ways used by the fraudulents against the type of your business.
After this, you can do the selection, development, and deployment of fraud risk control steps that are suited to your company’s risk profile specifically.
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2. Adopt a coordinated Approach
An effective fraud reporting process includes a coordinated approach to do an investigation and corrective action. As you continuously monitor your observation, and the fraud risk management process, your team will report the results and make continuous improvements in this way.
3. Grasp fraud reduction tools
Some efficient fraud reduction tools such as Address Verification Service (AVS) and Card Verification Value (CVV) can help to combat fraud from credit and debit cards.
The FTC reports that most frauds come from credit cards, debit cards, and payment apps or service payment methods. So, by using these simple fraud reduction tools one can prevent a good amount of fraud risks.
4. Fraud Databases and Blacklists
The Fraud risks can be reduced by Integrating the onboarding system with fraud databases and blacklists to cross-reference the new applicants and fraudulents. This can help in identifying and rejecting known fraudulent individuals or entities.
5. Real-time Monitoring and Alerts
Continuous monitoring and analyzing user interactions during the onboarding process l, one can control the Fraud risks by using Digital Onboarding. Implementation of alert systems to flag suspicious activities or to deviate from expected behavior in real-time.
By leveraging and adopting digital technologies and automated processes, organizations and many other companies can develop and boost the accuracy and efficiency of their onboarding procedures. In this way, these can lead to a reduction in fraudulent activities in onboarding processes.
