Imagine opening a new account fraud prevention to purchase something online, only to find that someone else has logged into your account and made fraudulent charges in your name. It’s a headache, it’s expensive and it leaves a bad mark on your credit score and brand reputation. It’s a case of new account fraud, and it can be one of the most challenging types of fraud to prevent.

Fraudsters can commit new account fraud by opening deposit and credit card accounts using stolen or synthetic identities. They can then use those accounts to steal money, launder funds, or access services they couldn’t get with their real ID. The cost of this type of fraud can be staggering for financial institutions, and it’s increasing as the fraudsters become more sophisticated.

The Future of New Account Fraud Prevention: Innovations and Best Practices

Fortunately, there are a number of indicators that can alert banks and merchants to potential new account fraud. For example, a social security number that doesn’t match up with the identity on file with the three major credit bureaus is a red flag. Also, applications with photo IDs that are not valid or issued more than a year ago can raise suspicions. Lastly, applications with non-residential addresses such as P.O. boxes or mail drop locations are often indicative of fraud.

To combat new account fraud, the best approach is to monitor new accounts closely and in real-time. This includes checking for secondary documents that corroborate the applicant’s story such as articles of incorporation for business accounts. This, in conjunction with advanced identity verification technology such as iProov’s biometric verification solution, can help prevent new account fraud and ensure that those opening the accounts are who they say they are.