Identity thieves

A  robust customer identity verification mechanism will help to track down a fraudster quickly.


Even as technology has tremendously eased our navigation and conducting of transactions in the financial world, it has simultaneously brought financial crimes at our doorsteps. Customers of banks and financial institutions have become prone to technology-driven subver- sive activities of cyber criminals like blocking fraud, money laundering, identity theft etc.

This state of af- fairs reminds me of eloquent words ofone of the greatest novelists we have ever known, Charles Dickens: “It was the best of times; it was the worst of times.” At present, it is the best of times in the sense that the internet has zeroed distances and made it possible for all to more easily con- nect with other people from around the globe, to access information from sources previously out of reach and to obtain services that in the past were limited to brick and mortar. Hitherto, it is also the worst of times as cyber criminals are on prowl taking great advantage of electronic connectivity to perpetrate internet- based frauds and to more easily gather the information needed to carry out traditional crimes. All of which is driving up crime rates, in particular financial crimes. Hardly a day goes by without news of a data breach, wire fraud or the latest Ponzi scheme.

There are many channels through which a financial fraud may get triggered. However, studies have pointed out the increasing chances of fraud happening at the opening of a new account. There are study reports which have attributed a significant portion of the rise in identity theft fraud to “new accounts” fraud which showed longer periods of  misuse and detection and therefore more financial losses associated with it than any other type of fraud. So under the circumstances it’s the identity theft which lays the founda- tion of financial fraud of any magnitude. What is this identity theft and how does it happen? Identity theft is a clandestine activity by someone in which a fraudster acquires key information such as name, date of birth, social security number, mother’s maiden name, etc., of another per- son’s identity with the intent to commit fraud. The stealing of this kind of information can help a criminal impersonate another individual.

Once this information is obtained, it becomes easy for a criminal to make best use of technology to commit different kinds of frauds, including accessing bank accounts, obtaining loans, making purchases, etc. Identity theft can happen to any- one, rich and poor and regardless of whether or not he uses the Internet. At the moment identity theft is epi- demic in nature and is known as the fastest growing crime facing people. However, there are certain basic things which only you can take care to avoid being victimised. Now pass- words and personal identification numbers are keys of your accounts and financial transactions. In fact, these numbers have become your identity. Whosoever punches these numbers will get through a transac- tion. So safety of these numbers lies in your hands because you only know them. To avoid misuse of these numbers by any other person, make it a habit to change all passwords regularly.

You can have strong passwords of your ac- counts by using a mix of numbers and characters.  Primarily memorize your passwords. If at all you require re- cording them, then write them down only in a secured manner. Identity thefts mainly occur when unknown individuals or groups seek your personal information through email. Be wary of such emails. Be assured, your bank will never ask for your passwords or any other personal detail via email or telephone. So, never share your details to a person posing as a bank official on phone or through any other medium of communication. No bank asks for such information from their customers. While being online through inter- net or phone, sometimes your personal information is sought to com- plete the transaction. Never provide it unless you initiated contact or know with whom you are in touch. Be bold to ask how your personal information will be used and protected and whether the information you’re asked to provide is voluntary or mandatory to complete the transaction.

Monitor your bank and card statements every month. In case you suspect identity theft, immediately con- tact your bank and explore the option of reporting the incident to the police. Meanwhile, basic role of banks and financial institutions in curbing frauds through their system cannot be overlooked. They have to scan en- try of customers at the front door, that is, at the time of opening an account. In this context, let me again quote ex- pressive words of Charles Dickens: “It was the age of wisdom; it was the age of foolishness.”

The wise in this case are the banks that develop and implement a robust, risk-based customer identity verifica tion mechanism and review it regularly. The foolish are those who ignore the benefits of such wisdom by either relying on ad hoc measures to keep the ever adapting cyber criminals at bay or ignoring the problem altogether. The foolish simply risks injury to customer loyalty as well as reputation of the institution. There is no denying the fact that the criminals use multiple access points for committing a fraud, but a strong customer identification process at the front door of financial world will significantly check financial frauds. Precisely, a proper customer identity verification mechanism at a bank will not only help to check identity thefts but will also prove beneficial to track down a fraudster quickly as and when he triggers a fraud.

(The views are of the author & not the institution he works for. Feed- back at [email protected])