Identity theft has become a major concern in recent years, as businesses and their customers have increasingly become targets of this crime. Identity theft can lead to significant financial losses, ruined reputations, and serious legal consequences. Fortunately, business owners and executives can take steps to reduce their risk of identity theft.
By taking proactive steps to reduce the risk of identity theft and having a plan of action in place, businesses can protect themselves, their customers, and their reputations. In this article, we will discuss the causes, prevention, and what to do if identity theft does occur.
What is identity theft?
Identity theft is a type of fraud in which a fraudster has the legitimate user’s personal details stolen, such as their name, date of birth, address, or credit card information. This stolen information is then used to commit identity fraud by accessing the victim’s accounts and making purchases or opening new accounts in their name. Identity theft can happen to anyone, but businesses are especially vulnerable as they often have more significant financial resources and access to customer data.
Identity theft can also involve creating a false identity in another person’s name. This can include obtaining driver’s licenses, passports, and other documents using stolen information. Identity theft is a serious crime and can have devastating effects on the victim.
Victims can suffer from financial losses, damaged credit, and even criminal charges due to the fraudulent activities of the thief. It is important for businesses to be aware of the signs of identity theft and take steps to protect their customers and personal information.
How does identity theft work? – 5 steps
Step 1: Gaining access to personal information – Identity thieves may gain access to personal information by stealing wallets, mail, or other documents containing personal information. They may also use tricks to gain access to personal information, such as phishing, which is when they send emails pretending to be a legitimate company asking for personal information.
Step 2: Using stolen information – After the identity thief has access to someone’s personal information, they can use it to open new credit cards, bank accounts, and other forms of accounts. They may also use the stolen information to make purchases, take out loans, or even commit other criminal activities like fraud or robbery.
Step 3: Concealing identity theft – Identity thieves may use other people’s information to conceal their identity. This could involve using stolen driver’s license numbers, or other forms of identification. The thief may also use false names and addresses to conceal their identity.
Step 4: Cashing out – After the identity thief has gained access to someone’s personal information and used it to open accounts, they can then cash out or take out loans. This is often done by transferring money from the stolen account to another account or by taking out a loan in someone else’s name.
Step 5: Closing accounts – Once the identity thief has cashed out or taken out a loan, they may close the accounts to avoid being detected. They may also use stolen information to create new accounts and repeat the process.
Types of identity theft
Credit Card Fraud
One of the most common forms of identity theft is credit card fraud. It involves the unauthorised use of someone else’s credit card to purchase goods or services. This can be done by stealing the physical card or obtaining the card information through online means. Victims of this type of theft can suffer financial losses and damage to their credit scores.
Tax Identity Theft
Occurs when someone fraudulently uses another person’s personal details to file a tax return and claim a refund. The thief can also use someone’s name to gain employment and avoid paying taxes. Victims of this type of identity theft can suffer financial losses and may have difficulty filing their taxes in the future.
Physical Identity Theft
Occurs when someone steals another person’s physical documents, such as their driver’s license or passport. This allows the thief to access services, open accounts, and access other forms of identification in the victim’s name. Victims can suffer financial losses and damage to their credit scores. Driver’s
License Identity Theft
This involves the unauthorised use of someone else’s driver’s license. This is done by stealing the physical document or obtaining information from it. The thief can use the stolen license to get access to services and open bank accounts in the victim’s name. Victims can suffer financial losses, damage to their credit score, and even legal trouble if the thief commits a crime in their name.
Bank Identity Theft
This is when someone uses another person’s bank account information to access funds, open new accounts, make purchases or commit other types of bank fraud. The thief can use the stolen information to withdraw funds or make purchases in the victim’s name. Victims of this type of identity theft can suffer financial losses and damage to their credit scores.
Medical Identity Theft
Occurs when someone uses another person’s medical information to gain access to medical services or obtain prescription drugs. The thief can use the stolen information to obtain medical services or prescription drugs in the victim’s name. Victims of this type of identity theft can suffer financial losses and damage to their medical records.
Synthetic Identity Theft
This is when someone combines real and fake information to create a new identity to commit synthetic identity fraud. This is often done to get access to credit and other services in the victim’s name. Victims can suffer financial losses and damage to their credit scores.
Phishing Identity Theft
This is when someone sends emails or other messages pretending to be from a legitimate company, asking for personal information such as passwords or credit card numbers. The thief can then use the stolen information to access accounts or make purchases in the victim’s name. Victims of this type of identity theft can suffer financial losses and damage to their credit scores.
Account Takeover (ATO) Identity Theft
ATO fraud occurs when someone takes control of an existing account. This is done by changing the password or using stolen information to gain access to the account. The thief can then use the account to make purchases or access other services in the victim’s name. Victims can suffer financial losses and damage to their credit scores.
Common causes of identity theft
Stealing mail or other physical documents containing personal information – This can include anything from tax documents, bank statements, bills and even credit card offers.
Skimming or scanning debit and credit cards to capture card information – This often occurs when a thief attaches a small device to a card reader in order to capture the card’s data.
Impersonating someone to gain access to their accounts – This includes using someone else’s name, address, or other information to open accounts, gain access to existing accounts or commit other types of fraud.
Phishing or other online scams – Phishing scams involve sending emails, texts, or calls pretending to be from a legitimate business. The scammer then uses this information to gain access to accounts, steal personal information, or commit other types of fraud.
Hacking into online accounts – This can be done in a variety of ways, including using malware, keyloggers, and other malicious software to gain access to a person’s online accounts.
Using unsecured public Wi-Fi networks – Unsecured public Wi-Fi networks can be easily accessed by criminals, allowing them to intercept personal information sent over the network.
Malware – Malware is malicious software designed to steal personal information or gain access to accounts.
Data breaches – Data breaches occur when hackers gain access to large databases of personal information, such as those held by banks, retailers, or other organisations.
Buying personal information from the dark web – Criminals often buy stolen personal information on the dark web in order to commit identity theft.
Creating fake identities using stolen information – Criminals can use stolen information to create fake identities, which can then be used to open accounts or commit other types of fraud.
5 steps to take to avoid becoming a victim of identity theft
- Use strong passwords: Use a combination of letters, numbers and symbols to create strong passwords that are difficult to guess. Avoid using common words, such as your name or address, and never share your passwords with anyone.
- Be wary of online scams: Be aware of phishing emails, online scams, and other malicious activities and watch out for the warning signs. Do not click on suspicious links or open attachments that could contain malware.
- Report suspicious activity immediately: If you suspect your identity has been stolen, contact your bank or credit card company immediately to report the activity.
- Review your credit report regularly: Check your credit report and credit card statements for any suspicious activity or unauthorised accounts. You can get a free copy of your credit report annually from each of the three major credit reporting bureaus.
- Use a secure Wi-Fi network: When using public Wi-Fi networks, make sure that the connection is secure and encrypted. Avoid accessing sensitive information on public Wi-Fi networks, such as banking accounts.
How can businesses prevent identity theft?
Implement strong identity verification
Strong and efficient identity verification processes which have features of liveness detection and biometric authentication give an additional layer of security that helps protect customer accounts against fraudulent activity.
Anti-fraud software monitors customer behaviour and detects suspicious activity, especially for financial institutions such as banks, anti-fraud software is designed to detect suspicious activity on a customer’s account. It uses algorithms to detect patterns in customer behaviour that may indicate fraud. This can help identify unusual transactions and requests that may be indicative of identity theft or other fraudulent activities.
Requiring customers to use strong passwords and change them frequently is one of the best ways to protect customer accounts from fraud is by requiring customers to use strong passwords. Passwords should be at least 8 characters long, contain a mix of upper and lowercase letters, numbers, and symbols, and should be changed frequently.
Fraud detection software
The use of fraud detection software to identify irregularities iss designed to identify patterns of behaviour that may indicate a fraudulent transaction or request. The software can detect unusual activity such as large purchases, sudden changes in location, or multiple attempts to access an account.
Strong authentication systems
Strong authentication systems to confirm customer identity uses multiple methods to verify a customer’s identity, such as biometric authentication, facial recognition, knowledge-based authentication (KBA) or a one-time passcode sent to their mobile device. This helps to ensure that the customer is who they claim to be and helps protect against identity theft.
Encryption and firewalls
Secure customer data by using encryption and firewall are processes of converting data into a secure format that cannot be read by unauthorised users. Firewalls provide an additional layer of security by restricting access to a network or system. Together, these measures help to protect customer data from being accessed by hackers or other malicious actors.
Educate your customers
Educating customers about the risk of identity theft and how to protect themselves in order to reduce the risk of identity theft is very important, customers should be educated on the dangers of sharing personal information online and how to protect themselves. This includes monitoring accounts for suspicious activity and using two-factor authentication.
Monitor and investigate suspicious transactions
Monitor and investigate any suspicious transactions or requests, as quickly as possible. This includes monitoring customer accounts for unusual activity, contacting customers to confirm any suspicious transactions or requests, and following up with authorities if necessary.
Preventing identity theft with Udentify
Preventing identity theft has become increasingly important, especially given the rise of online fraud. Udentify offers a comprehensive suite of features to help protect individuals and businesses from identity theft.
Udentify’s verification and authentication features include two-factor authentication (2FA), multi-factor authentication (MFA), liveness detection, biometric authentication, and facial recognition. By utilising these features, Udentify can help protect individuals and businesses from identity theft. It provides a powerful layer of security that can help ensure that only authorised people have access to sensitive information.
Furthermore, Udentify allows businesses to customise authentication methods to meet their specific needs, offering customised solutions that can help protect against identity theft and identity protection of their customers.