In Europe, one in five citizens has been a victim of identity fraud, with a new victim every two seconds. The financial and emotional repercussions are immense. For financial institutions, prevention and detection have become crucial priorities to protect customers and businesses against this scourge.
What is identity theft?
Identity theft: Definition
Identity theft is the theft of an individual's personal information with the aim of committing fraud.
The usurper uses this information and pretends to be the victim. This enables them to open accounts, benefit from undue advantages, avoid certain fines, and so on. The benefits obtained are numerous.
For the victim, getting rid of identity theft is a complex task. It's up to the victim to prove, in each and every case, that he or she is indeed a victim.
The rise of identity theft in the digital age
Identity theft has grown exponentially since the digitization of services. Technologies have enabled cybercriminals to steal sensitive data and exploit its vulnerabilities. With the development of AI and deepfakes, identity theft has become even easier.
Don't confuse identity theft with identity fraud
These two concepts are often used interchangeably. Yet they are quite different. Identity fraud involves the use of a false, fictitious identity. Identity theft, on the other hand, requires the use of a stolen identity. The stolen identity is real and belongs to another person, the victim of the fraud.
Several types of identity theft
Identity theft takes many forms, each with its own challenges and consequences. Let's explore these.
Financial fraud
This is the most common type. It involves unauthorized access to the victim's financial accounts and credit cards. The thief uses this information to make fraudulent purchases, open new lines of credit, obtain loans or transfer money.
Using the victim's social security number, the usurper can claim social and tax benefits. This usually leads to claims for reimbursement from government authorities.
Employee benefits
The social benefits sought by the usurper may be social assistance or employment under another identity. These undue benefits are usually claimed back by the administration after a certain period of time.
Tax benefits
By filing a fraudulent tax return, the usurper hopes to obtain the associated tax refund. The victim often discovers the problem too late. When they try to file their own tax return, or when they are asked to repay the amount obtained by the usurper.
Medical identity theft
This form of identity theft involves usinghealth insurance information to receive care or medication. Victims can end up with high medical bills and compromised medical records.
Criminal impersonation
In this case, someone uses the victim's identity to avoid arrests, fines or criminal record checks. This can lead to unfair prosecution and legal complications for the victim.
Vulnerable methods and sectors
Identity theft methods
The information needed for identity theft can be recovered in a number of ways, using both traditional and digital techniques. Understanding these methods is essential to better protect individuals and businesses against these threats.
Traditional techniques
By traditional techniques, we mean those that are not digital. These are used less and less, as they require physical movement. This increases the risk of detection.
Portfolio theft
This method involves stealing a wallet containing essential documents. For example: identity card, credit cards, health card, etc. The thieves then use this information to access financial accounts or open new accounts in the victim's name.
Card copy
Fraudsters use cloning devices to copy credit or debit card information. This can happen when making a payment in a store or withdrawing cash from a tampered ATM. Once the information has been copied, fraudsters can make fraudulent purchases.
Mail theft
Criminals intercept mail containing sensitive information. Sensitive information includes bank statements, credit cards and tax documents.
Digital techniques
Digital techniques are becoming increasingly widespread and better concealed. Here are just a few of the methods regularly used.
Phishing
Through fraudulent e-mails or messages, victims are encouraged to provide their secret information. For example: a password, credit card number or social security number. Fraudsters then use this information to access the victim's accounts.
Malware
Malware is installed on the victim's device. These programs will record the keyboard and steal sensitive information.
Unsecured networks
The use of unsecured public Wi-Fi networks can enable thieves to intercept transmitted data. In this way, bank connection information can be recovered, enabling criminals to carry out fraudulent transactions.
Data breach
This refers to the theft of company or institutional databases. This information typically includes customer names, addresses, social security numbers and credit card details.
Sectors vulnerable to identity theft
Identity theft affects many sectors. Some are particularly vulnerable, due to the nature of the data they handle and its value to criminal networks. Here's an overview of the sectors most at risk.
Financial sector: the most vulnerable
The financial sector is one of the most lucrative targets for identity thieves. Financial institutions hold sensitive personal information and considerable financial resources.
A criminal can use the stolen information to open new bank accounts, obtain loans or make fraudulent purchases. As a result, losses for banks and their customers can be substantial.
What about the insurance sector?
The insurance industry, too, is heavily affected by identity theft. Insurance companies collect detailed data on their customers, including personal and medical information.
A boon for fraudsters, who can use it to create false claims. But also to obtain fraudulent reimbursements or access medical benefits under a false identity.
The online gaming sector: a new target
With the rapid growth of the video game industry and e-sports, this sector has become a target in its own right. At the same time, the rise of micro-transactions and in-game purchases has contributed to this development.
Criminals can steal game account information to resell virtual goods, divert rewards or access personal account information.
Cryptocurrencies: a growing vulnerability
Cryptocurrencies are also seeing emerging risks ofidentity theft. Cryptocurrency transactions are often difficult to track and totally anonymous. That's what makes them so attractive.
Criminals can use stolen identities to create cryptocurrency wallets. They will also transfer funds or access accounts and steal digital assets.
Unfortunately, regulation is insufficient and technical complexity is too high to secure this sector.
How to avoid identity theft?
How can individuals protect themselves against identity theft?
Because prevention is better than cure, here are a few practices that will save you a lot of trouble.
Best practices
Don't share your personal information
Limit the amount of personal information shared online. Avoid divulging sensitive details such as social security numbers, bank details and passwords.
Keep an eye on your bank accounts
Check your bank and credit card statements frequently. This will help you spot any suspicious or unauthorized transactions. Early detection can help minimize the damage.
Shredding sensitive documents
Shred all documents containing personal information before throwing them away. This includes bank statements, invoices and any other official documents.
Use of security software
Install antivirus software
Protect your devices against malware and viruses. Make sure your antivirus software is up to date, and run regular scans.
Use a firewall
Activate your network firewall to prevent unauthorized intrusions and protect your personal data against cyber-attacks.
Vigilance against scams and spam
Beware of suspicious e-mails and messages
Never click on links or attachments from unknown or unverified sources. Phishing scams are common and aim to steal your personal information.
Check the authenticity of websites
Before entering personal information on a website, make sure it's secure. Check for the presence of "https" in the URL and verify the legitimacy of the company to which it belongs.
The importance of strong passwords
Create strong, unique passwords
Use combinations of upper- and lower-case letters, numbers and symbols for your passwords. Avoid using the same password for several accounts.
Use a password manager
Password managers can generate and store strong passwords. They make your task easier and more complex for cyber-criminals.
Secure your wi-fi networks
Use complex passwords for your Wifi network. Avoid using public, unsecured networks to access your personal and sensitive information.
How can companies secure their information systems?
The implementation of the latest regulations in terms of customer knowledge and the use of tools at the cutting edge of AI contribute to securing companies.
KYC (Know Your Customer)
KYC is a process that requires companies in the financial sector to verify the identity of their customers. This includes collecting and verifying official identity documents. But it also involves analyzing transaction histories and continuously monitoring accounts to detect any suspicious activity.
Focus on identity verification
To digitally verify their customers' identity, financial institutions use identity verification tools. These technologies make it possible to :
- Check the authenticity of identity documents and detect signs of tampering
- Check membership by matching a selfie of the holder
- Ensure that the customer is not on a list of criminals or exposed persons
Would you like to implement such a tool? Datakeen can help you with remote identity verification.
AML (Anti-Money Laundering)
AML tools are designed to prevent money laundering and illicit financial activities. They enable us to monitor abnormal transactions and behavior. As soon as suspicious behavior is detected, it is reported to the appropriate authorities.
Detect identity theft attempts
Stay alert to detect usurpation
Early detection of identity theft is crucial to minimize financial and personal damage. Here are a few warning signs.
Warning signs for individuals
For individuals, there are several warning signs of potential identity theft:
- Unusual financial activity: The discovery of unauthorized transactions on bank statements or credit cards.
- Unexpected correspondence: You've received letters or invoices for accounts or services you haven't signed up for.
- Credit alerts: You have been notified of new accounts or credit applications that you have not opened yourself.
- Rejected applications: Your applications for credit or social benefits have been rejected for no apparent reason.
Detecting identity theft as a company
For companies, warning signs include:
- Transaction anomalies: Unusual or suspicious transactions or requests.
- Inconsistent customer information: Contradictory or inconsistent data provided by customers.
- Increase in customer complaints: An increase in complaints related to fraudulent activities.
What to do in the event of identity theft?
Are you a victim of identity theft? Act quickly to minimize the damage, and start taking action today. Here are the essential steps to take.
Monitor and document
As soon as you suspect identity theft, start by documenting all suspicious events and transactions. Note the dates, amounts and types of transactions involved. This documentation will be useful to financial institutions and the authorities.
Set up a fraud alert
Contact your bank to ask for a fraud alert to be placed on your file. This will alert potential creditors to take additional steps to verify identity before taking any action.
File a complaint
File a complaint with your local police department. Provide them with all the documentation you have collected. Obtain a copy of the police report, or at least the reference number of the report, as this may be necessary for further action.
Inform the other parties involved
If the identity theft has involved other aspects of your life (e.g. benefits, medical records), contact them. This may include Social Security, insurance companies, or other government organizations.