Preventing identity and synthetic fraud in consumer lending

Identity fraud in consumer lending is damaging due to several reasons. All of the reasons are concerns for the risk management of the company - ranging from PR (public relations) risk to fraud & credit risk.

Not preventing properly identity fraud has also a damaging impact on the community where you may be operating your lending business, as it creates distress for people, whose identities were used to take up loans from you.

But if you were to not lent to them, they would not have been put in that position in the first place.

What are the ways to prevent identity fraud

• Know your customer: Make sure you have proper KYC procedures in place. This will help you verify the identity of your customer and make sure that the information they have provided is accurate.
• Use biometric verifications: If possible, perform face recognition and comparison between the applicant and provided identity document. When doing verification at a distance using an app, perform liveliness detection and verification.
• Use data verification tools: There are various data verification tools available that can help you verify the information provided by your customer. These tools can help you verify identity, address, phone number, email address, etc.
  1. Verify addresses:
     Cross-check applicant addresses against postal service databases, utility bills, or government records to confirm accuracy.
• Use social media: Social media can be a great way to verify the identity of your customer. You can check if the customer has an active presence on social media and if the information they have provided matches what is available on their social media profile.
• Use fraud detection tools: There are various fraud detection tools available that can help you identify fraudsters. These tools use data analytics to identify patterns that are associated with the fraud.
• Keep track of changes: Keep track of changes in the information provided by your customer. If there are sudden changes, it could be an indication of fraud.
• Monitor activity: Monitor the activity of your customer to see if there are any suspicious activities.
• Be alert: Be alert for any red flags that may indicate fraud. Set up early-warning system.
• Report suspicious activity: If you suspect fraud, report it to the authorities.

By taking these measures, you can help prevent and detect identity fraud in consumer lending.