An Overview of Fraud Prevention

Identity Verification is easy in person. Ask for a photo ID and then check the person against their photo ID –  but over the phone and online, it becomes more difficult. Fraud Prevention is designed to help minimise the risk of fraud happening. We are constantly hearing of the rise in number of data breaches involving well-known companies, making it a topic which needs to be part of daily conversation – in a bid to gain better understanding to help against the rise of fraud.

At the point of establishing business relationships with customers, companies should carry out ‘Customer Diligence’. For example;  when opening a bank account, in order to verify your identity the first step is to verify that you exist – this is checked against the recorded applicant name, address and contact details – usually done by a Credit Bureau like Equifax or Experian, to ensure a match in the customer data. The Credit Bureau Company would then use ‘Authentication Questions’ known as Out of Wallet Questions’ –  similar to the security questions that a customer would select when banking online, except these are not chosen by the customer but are services provided by Credit Bureaus. Sometimes, with security questions of this type, customers can find it difficult to recall the information needed, resulting in ‘failed security’but these questions are needed to help ensure that the company are truly speaking with the customer –  this is information that a fraudster may not have access to.

If the applicant fails the Identity Verification, the company can decide whether to ‘fail’ the applicant or request manual review’. A Manual Review can take different forms in Identity Information Requests, such as, a ‘follow-up call’ requesting additional information or a request for the applicant to send or email photographic ID, or a request for the applicant to physically come into a local branch to provide sufficient ID.

Fraud Prevention Techniques can be used for the introduction of Policies, Procedures and Controls. Activities such as ‘Staff Training’ around Fraud Awareness can be crucial in the bid to avoid fraud from occurring. But, bear in mind that Fraud Prevention Techniques may not stop all fraud! Companies should ensure that systems are properly in place, showing any occurrences of fraud. This also helps to improve internal systems and controls.  To surmise – smart collaboration, on-going improvements and training will help keep fraud in check.

All organisations are subject to fraud risk, large fraud can cause massive losses, legal costs and loss of confidence in a company, as well as the impact it can have on the company’s reputation if publisied – therefore, the need for Risk Management around fraud prevention is huge.

We can help companies by advising on suitable fraud prevention techniques to avoid potential key fraud risk events, these preventions should be established where feasible to mitigate the potential impacts on the organisation.

We are constantly sharing and updating our Personal Identifiable Information online and offline with organisations who provide goods or services to us, we understand how valuable PII is to the flow of a companies processing. We realise that the illegal trading of personal information has become a gold mine for criminals – and are working with organisations to prevent any illegal trading.

Valuable information is used to identify an individual’s identity by using their name, date of birth, national insurance number, mother’s maiden name, driving licence, passport number, home address, gender, educational details, and legal and employment records. From the perspective of an organisation when managing customer and employee PII there needs to be a clear set of guidelines. Having the right compliance, protection, management and the right storage of data is vital.

Research has shown that the best scenario is one where Management, Employees and Auditors work along-side each other to help prevent fraud.  We can help Organisations by providing Fraud Awareness Training which will help Employees gain a better understanding of fraud whilst emphasising the roles that all employees have in prevention and detection of fraud, along with conducting Data Protection Audits to help assist organisations in understanding and meeting their data protection obligations.

Useful links – ISO 27001 and BS 10012

Dawn Pearce
Dawn Pearce
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