One of the best ways to fight fraud is to take a proactive approach. Yet some business professionals believe that fraud detection software is the only type of software tool available (or necessary) to fight fraud. Certainly, detection through monitoring can play an important role in your anti-fraud program, but it puts you in a reactive mode. Instead, you should take efforts to better know the people and companies with whom you choose to do business. In other words, do what you can to help prevent fraud from occurring in the first place. Better anti-fraud programs will combine ongoing due diligence with monitoring, and the place to start is with identity verification tools.
There are a variety of reasons that you should know your customers. First, it is just a good business practice. You can help prevent being associated with deceptive individuals, and that can save you money. Such a relationship can lead to direct losses from the particular business deal, but it can also tarnish your company's name, sending your good customers scurrying to the competition. Second, knowing your customers allows you to focus on those products or services that best meet your customers’ needs. By doing those activities well, you can build (or enhance) a competitive advantage. In addition, some companies face regulatory requirements to identify their customers. For example, certain financial institutions are subject to regulations calling for Customer Identification Programs (CIP), and certain financial institutions are subject to the new Identity Theft “Red Flags" Rules. Many banks collect documents such as a birth certificate, passport, driver's license, or some other government-issued ID to help establish a customer's identity. The risk is that personnel may not be able to spot counterfeit documents or fraudulently obtained physical documents. Ensuring your employees are well trained is critical, but what happens when an unfamiliar identification document is presented to your employee? Clearly, the risk of fraud is higher, and some fraud begins with an employee unknowingly accepting counterfeit documentation.
One of the most popular ways to augment identity verification processes is to compare data provided by the potential customer against public records to see if there are any discrepancies. This “non-documentary method" could be very time consuming if not for software solutions that can help you streamline the process. In fact, using identity verification software, this task can frequently be completed within seconds.
Identity Verification Software
Identity verification software is designed to help you quickly and effectively verify the identity of your prospective retail and commercial account holders. This is your proactive step to preventing fraud: recognize the deceptive individuals before the fraud occurs! ID verification software can also help you investigate possible fraud scenarios by helping you confirm whether your customer is the true owner of a Social Security number (SSN) and by detecting potential synthetic IDs. In addition to the potential for identity verification solutions to confirm a true identity, it also may be configurable to perform a custom hotlist check for individuals that might seek to disguise their identity by using an alias or different address.
Being proactive and performing appropriate due diligence can help reduce your risk of being a victim of those that look to perpetrate identity fraud.
Michelle Thiel is an advocate for the information industry with an interest in identity verification software , identity verification solutions and enhanced due diligence programs.