World economic forum states that Cyberattack is mapped as one of the top threats to global stability. A cyberattack occurs every 39 seconds. Research states that the global economy can lose $445 billion a year due to cybercrimes. The stolen data is used to defraud the businesses for financial gain which ultimately turns into the financial and value loss of the business. According to a survey of Insurance Information Institue, out of 3 million stolen identities in America, more than 50% of those stolen identities were used for online financial credit card fraud with banks and online businesses.
Such an alarming increase in cybercrime magnitude and methods have made the businesses to invest in global identity proofing and document verification solutions. A survey reports that 63 percent of companies have implemented a biometric system or plan to onboard a customer.
Huge data breaches raising KYC concerns of businesses:
Huge data breaches have occurred raising a question on the cybersecurity of the so-called top-notch organizations dealing with confidential data of millions of people and businesses. For instance, the recent data breach of Equifax has caused losses of worth millions of dollars to the credit rating agency and also the other businesses. The huge data breach compromised 143 million records which contained the records of not only individuals but businesses also. According to a recent settlement with the regulatory authorities, Equifax is liable to pay a settlement of 245 million and also free credit rating to the victims of this data breach. Some other huge data breaches that affected the businesses in the past are the data breaches of Target, TJX and facebook. Those data breaches not only influenced the individuals but the businesses as well.
How a third-party data breach may become your liability?
Once an incident of data breach occurs it leaves an impact on several entities. The most common targets of the third-party data breaches are the businesses that do not have strong identity verification solutions integrated into their systems. The need for a strong identity verification solution cannot be overlooked by the businesses willing to prevail in the market for a longer period of time.
Risk of identity thieves:
After stealing the legitimate data of individuals from some third party server the fraudsters move towards the next step and buys goods and services from online businesses using the stolen identities. The business delivers the goods and services charging from the illegally accessed account. Once the victim realizes about the misuse of his identity proofing he gets a refund due to consumer protection laws and the business is the ultimate loss bearer. Other than illegal purchases there is an array of crimes initiated with a mere stolen identity, most common are, terrorist financing, money laundering, human trafficking, drug dealing, etc.
The phenomenon of stolen identities could affect businesses of all kinds in many ways and can influence many industries simultaneously, let it be a financial institution, online business, hospital or non-profit organization identity theft has caused huge losses.
Increase in fraudulent transactions
Once the individuals have access to the personal credentials of the individual he uses it often for financial fraud. Mostly the banks and financial institutions are defrauded through illegal transactions to an from the account of their legitimate client. According to a survey, online fraudsters managed to steal £1.2 billion from UK-based banks even in the presence of strict regulations regarding KYC (Know Your Customer) and AML (Anti Money Laundering). Also, the banks lost 123 million to internet banking fraud.
The fraudulent transaction fraud does not target the banks only. It targets all types of financial and fintech businesses. For example, a business facilitating online money transfer is defrauded by sending or receiving money using the stolen credentials. Other than that cryptocurrencies have been a very common victim of identity thieves and terrorists, the security loopholes make it easy for the criminals to hide their identity and money transfer trail.
Your business identity might be misused
The major data breach that hit Equifax in 2017 compromised the data of many individuals and businesses. The identity of a business, either big or small is a very valuable asset. Once that asset has been compromised it can start a range of losses for the business, including financial loss, loss of customer value, loss of competitive edge and the loss of competitive edge. Hence the misuse of a business’s identity could bring that business to its knees. The criminals could crack huge deals using the stolen credibility of a business. The identity thief might sell low-quality goods to the other business or client using the stolen business identity, ultimately this crime cycle will end with the loss of company value of the victim company.
The stolen business identity could be used for even more grave acts like money laundering or terrorist financing.
Getting a job with stolen identity:
The stolen credentials in a data breach are sold for as low as 10 to 15 dollars in the black web. Using these stolen identities the criminals get jobs at companies with the motive of hiding their true identity or to perform even bigger crimes like data breach while being an employee of the company. In case a business performs an efficient identity proofing on his employees before onboarding the new people, the risk of loss due to identity thieves is less than 1%.
How identity proofing helps in risk mitigation
Identity proofing helps the businesses to screen the true identities of the customers and employees before on-boarding them. The integration of AI-based global identity proofing systems adds layer after layer of security to the company profile. Hence the fake identities are highlighted before any damage could be done. Below is how timely investment in identity proofing solutions reduces the risk of loss due to third party data breaches:
- ID verification screens all types of IDs and other identity documents for originality, expiry dates, forged data, MRZ code, hologram, reflected colors and photoshop.
- Facial verification adds another security layer by checking the facial image in real-time for liveliness, 3D depth perception, and micro expression. Hence making it impossible for any fake person to as a person whose identity he has stolen.
- Two-factor identity proofing makes the identification process even easier flexible for clients and businesses.
All the above-mentioned solutions help the businesses in keeping the identity thieves at bay while making it difficult for the fraudsters to stolen identities to cause any loss to the business. The data breaches no matter how old, have the tendency to cause loss to all types of businesses. Businesses need to integrate an Identity Proofing solution into their systems so that the data breach of some third party like Equifax, google or facebook might not become your liability in the form of identity theft-related frauds.