May 4, 2021
Having the right verification tools is crucial for any establishment, whether small or large businesses, agencies, or the state itself. Identity verification tools can safeguard the establishment and customers from identity fraud that results in heavy losses. Here’s a recent example: millions of dollars were lost due to the lack of a robust verification process in the German state of North Rhine-Westphalia. The state’s failure to implement a secure citizen verification procedure enabled fraudsters to steal an estimated amount of €31.5 million–€100 million.
Overall, growth in digital adoption has created a strong relationship between identity, fraud prevention, and customer experience. With the increase in the number of businesses undergoing digital transformation, consumer expectations have soared. Consumers are now looking for unique, convenient, and secure experiences.
Fundamentally, customers demand convenience through smooth, uninterrupted processes. Every time a company delivers such processes, the overall convenience quotient in the customer journey increases. Businesses, irrespective of their industries, have created working groups and strategies that focus on improving the overall convenience quotient for customers. One way to improve convenience is to reduce the number of clicks required by a customer to complete a transaction successfully. Fewer clicks have proved to be directly proportional to higher conversion, which is a result of a higher convenience quotient.
However, in doing so, businesses tend to lose sight of security and risk tools as they slow up the overall process and work in the background. Security and risk tools allow only verified customers on the platform and ensure information is not leaked into the wrong hands. If not done right, it can have a catastrophic impact on both customers and business.
The general method of identity verification fraud can be divided into two major parts. The first part is where fraudsters install malware on users’ devices to steal identity credentials and access key information such as relatives' names, addresses, and passcodes. The second part is entering directly through stolen credentials or resetting the password (bypassing identity verification service) to execute fraudulent transactions.
According to a Javelin Strategy and Research study, the combined fraud losses in 2020 amounted to $56 billion, out of which identity fraud scams accounted for $43 billion. This trend can also be seen in Germany, where computer crimes have increased over the past few years, resulting in verification fraud. The German police define computer crime as falsification of legally relevant data, alteration of data and data sabotage, data espionage and data interception, and handling stolen data. The number of computer crimes in Germany has been increasing year on year; in 2020, Germany had 130,611 cases of computer crimes, 7,605 offenses more than 2019, and a 20.6% increase from 2017.
The above numbers validate that German businesses need to secure their customers against fraudulent transactions by strengthening transaction-level security using robust verification methods. The fraud impacts victims by putting them at risk of having their accounts drained or having vital information taken hostage. Likewise, businesses that fail to install a robust identity verification process are subject to reputational damage due to lost funds or risk losing users to more secure competitors.
Although most businesses have implemented multi-factor authentication (MFA) using SMS- and voice-based one-time passcodes (OTPs), the level of complexities has increased. While businesses need extremely sophisticated technologies such as mobile intelligence to stay ahead of fraudsters and safeguard their businesses and customers from identity fraud, they must not slow down the experience for legit customers.
The German government has created a cybersecurity agency with an initial funding of $415 million to protect the country’s cybersecurity and provide incentives and funds for basic security functions certified by the state for the citizens. However, as no agency, company, or task force can put an end to all the malpractices by hackers in the world, identity theft continues to rise. Hence, the burden of safeguarding every customer’s important assets falls in the hand of the business. A strong verification process that allows only the right customers to enter is required to protect businesses and their customers’ assets.
One way businesses can deploy a robust verification process is by using a mobile phone, a device commonly used by consumers. A mobile phone number is often a reliable person identifier as most consumers have had their phone numbers for many years. When authenticating a consumer using their phone, it is vital to not only associate that phone number to the consumer but also to assess whether a bad actor may have taken over the phone number. Prove’s Phone-Centric Identity™ is a tool that businesses can deploy to ensure that only the right customers enter while the fake ones are denied access.
Phone-Centric Identity™ uses the mobile device as a “what you have” factor that companies can leverage to determine whether they are interacting with their customer or not. Phone-Centric Identity™ also uses behavioral and phone intelligence signals to measure a phone number’s fraud risk and identity confidence in real time. Apart from the obvious advantages of significantly reducing identity theft, advanced solutions in identity proofing and authentication deliver additional revenues and operational upsides such as better consumer experience, enhanced exception management, and lower cost of fraud management.
Want to learn more about Prove’s phone intelligence-powered solutions in Germany? Click here.
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