How One Customer’s Experience with Application Fraud Highlights the Need for Advanced Detection and Validation

In today’s fast-paced digital world, the convenience of online lending and instant credit approvals has become the norm. However, this convenience comes with significant risks, as fraudsters continuously develop sophisticated methods to exploit vulnerabilities in financial systems.  

What is Application Fraud? 

Application fraud involves the use of stolen or fabricated personal information to apply for financial products, such as credit cards, loans, or bank accounts. Fraudsters might use legitimate names and addresses while providing false bank account numbers and phone details. This deceitful tactic can lead to severe financial losses for lenders and significant damage to the credit scores and reputations of the victims. 

Recently, an online marketing and lead acquisition company experienced an application fraud incident where a fraud bot targeted their website, using legitimate consumer information paired with invalid phone numbers and bank account details. ValidiFI’s predictive bank account and payment intelligence was able to detect suspicious behavior and flag it before it impacted the customer.  

The Role of Fraud Detection 

Fraud detection is essential in identifying and preventing fraudulent activities before they cause harm. In our customer’s case, the fraudster submitted thousands of applications in a few hours, using various combinations of legitimate consumer data paired with a total of four invalid bank account numbers.  

By assessing the connections between consumer application data and bank account data together, ValidiFI’s bank account validation solutions can help lenders and financial service providers avert significant losses. 

Enhancing Bank Account Validation 

Validating bank account information helps ensure that the provided details are legitimate and belong to the applicant. Here’s why robust bank account validation is crucial for combatting application fraud and other incidents: 

• Preventing Fraudulent Applications: By cross-checking financial institution data, bank account details, and consumer application data against a third-party database, live ValidiFI’s, financial institutions and lenders can quickly identify and reject applications with invalid or suspicious information. 
• Verifying Identity: By checking various pieces of contact information like phone numbers, email addresses, mailing addresses and whether that information has been seen with a bank account previously, lenders and financial institutions can ensure they are extending credit to legitimate customers. 
• Improving Accuracy: Accurate bank account validation to check if a bank account is currently valid, active, and how long it has been established can reduce errors and ensure financial transactions are processed smoothly, benefiting both the institution and the customer. 

The Power of Predictive Bank Account and Payment Intelligence 

As fraudsters continue to evolve their tactics, the importance of fraud detection and robust bank account validation cannot be overstated. The recent experience of our customer encountering application fraud serves as a reminder of the vulnerabilities that exist. Financial institutions and lenders must stay ahead of the curve by implementing advanced technologies and stringent verification processes.  

ValidIFI is here to be your partner by offering: 

• Advanced Verification Techniques: Utilize multi-factor authentication and cross-reference information to verify the authenticity of applicant information. Other providers often filter based on the velocity of change in email addresses alone. However, ValidiFI conducts a more comprehensive assessment by evaluating the velocity of contact information such as email addresses, phone numbers, bank account data, and past payment performance data collectively. This robust approach ensures a more accurate and reliable analysis of customer behavior and risk. 
• Real-Time Verification: Real-time verification to flag suspicious activities instantly, allowing for a more proactive action to prevent potential fraud. 
• Customized Calculated Friction: ValidiFI provides both non-credentialed and credentialed solutions, ensuring a seamless customer experience for routine transactions. For added security or verification, you can introduce friction by requiring consumers to log in to their bank accounts using options like vAuth or vConnect. 

To learn more about our vAccount, vAccount + and our other bank account validation and fraud solutions, contact us.