In Indonesia, 40% of fraud cases in online loan applications involve identity fraud, where false identities are created using AI.
A FICO survey on identity fraud cases in Malaysia revealed that 76% of Malaysians had received text messages, emails, or phone calls they suspected were part of a scam. Meanwhile, 25% of respondents considered identity theft to be the biggest financial crime threat.
This highlights the growing concern around identity fraud. But what exactly is identity fraud, and why is it a serious threat to businesses? Let's explore!
Identity fraud, also known as identity theft, occurs when someone uses another person’s personal information without consent, typically to gain financial benefits. Common examples include using stolen identities to open bank accounts, apply for credit cards, obtain passports, or even engage in illegal activities.
A person’s identity can be stolen if criminals gain access to their personal data, whether through physical documents or digital leaks. The alarming part? Cybercriminals can assemble a complete identity profile from just a few leaked details, even from social media posts.
Personal information such as date of birth, photos, and family details shared on social media often serve as loopholes that fraudsters exploit.
There are various types of identity fraud, including phishing scams through emails and fake websites. Some do not even require advanced technology; manipulating human psychology is also a common tactic. This is what makes identity fraud extremely dangerous.
According to CTOS Malaysia, in severe cases, stolen identities are used to fund or facilitate major crimes, such as terrorism, illegal immigration, and phishing scams. If criminals steal complete personal data, they can even claim tax refunds, create fake identities when arrested, or exploit health insurance benefits.
Watch out for these red flags that may indicate your data has been stolen:
Normally, you are aware of every activity in your bank account. But what if you find withdrawals or purchases you never made? Be careful, this could be identity fraud! Suspicious transactions often indicate that someone is misusing your personal information.
In Indonesia, banks suffered IDR 2.5 trillion in losses in 2023 due to fraudulent activities.
If you receive calls or letters demanding payment for loans you never took, someone may have misused your data. In fact, 67% of consumers report unauthorized transactions on their accounts.
If you are informed that your personal data was exposed in a security breach, it is highly possible that criminals may misuse your information.
Receiving bills for medical services you never used could mean that someone has used your identity to access healthcare services.
If you receive a request to approve changes to an account you did not request, be suspicious! Fraudsters may be trying to manipulate your account settings. Do not approve any unauthorized changes.
If your credit application is rejected for no reason, or if you notice inaccurate credit records, someone may have used your identity for fraudulent activities.
If you suspect that your identity has been stolen, act immediately to minimize financial losses and other potential risks. Here’s what you should do:
Take quick action by reporting it to the appropriate authorities: Report to law enforcement or contact your bank or financial institution
To ensure that fraudsters can’t access your accounts, log out from all devices immediately. This will remove unauthorized users from your accounts.
It’s best to regularly update your passwords before identity fraud happens. However, if you suspect suspicious activities, immediately change your password to a stronger one. Use a combination of uppercase and lowercase letters, numbers, and symbols. Avoid using the same password for multiple accounts.
Check your account history for unfamiliar changes, such as:
According to the California Department of Justice, here’s how you can prevent identity fraud:
Never rely solely on usernames and passwords. Use multi-factor authentication (MFA) such as OTP, biometrics, and device verification to ensure that only legitimate users can access the system.
VIDA offers two solutions: Face Token and Phone Token.
✔ Face Token: Uses facial biometrics for authentication. The user’s facial data is converted into a unique token, ensuring that only the registered individual can access the system. This prevents identity theft and account takeovers, even from deepfake attacks.
✔ Phone Token: Uses the user’s device as an authentication factor. The system links the user’s identity to their registered device, ensuring that only verified devices can log in. This prevents unauthorized access even if the user’s credentials are stolen.
Utilize AI-powered and biometric identity verification solutions to validate customers and employees. This includes document verification to detect forgery, deepfake fraud, and identity theft before abuse occurs.
Regularly educate users about phishing and social engineering scams. Advise them not to trust unsolicited SMS, emails, or WhatsApp messages claiming to be from a company, especially financial institutions.
Implement AI-powered fraud detection systems to identify unusual patterns, such as repeated login attempts from different locations or sudden changes in user data.
VIDA provides a comprehensive fraud detection system that includes:
Identity fraud is not just a financial crime, it’s a direct threat to your security and reputation. The risks are real, but so are the solutions. Want to protect your identity and business from fraud?
Learn more about VIDA’s security solutions today!