Imagine you open a new credit card account and receive a statement with several thousand dollars worth of fraudulent charges. That’s because you were a victim of new account origination fraud – someone posed as you during the onboarding process and then used your identity to incur debt or take advantage of promotional items like free credit lines or loans you would never have qualified for. This is a critical problem for banks, as it can cost them in both financial loss and customer goodwill.

Stop New Account Origination Fraud: Key Steps for Fraud Prevention

Criminals know this and are constantly adapting their methods to get around fraud detection. For instance, they are increasingly targeting new accounts with stolen or fake identities to commit crimes and money laundering. This type of criminal activity is called new account origination (NAO) or account opening fraud and it often goes undetected. Criminals use these fake new accounts to steal money, launder funds or gain access to services they wouldn’t otherwise be able to get with their real identity – for example, a 30-year-old Canadian man recently opened 600 fake bank accounts and racked up over $5 million in fraudulent charges before being caught.

The best way to stop new account origination fraud is to make it extremely difficult for criminals to launch an attack. Feedzai’s multi-layered, artificial intelligence-based solution combines multiple layers of risk checks including social media lookups, IP reputation scoring, device fingerprinting, mobile network validation and phone verification to increase the difficulty for bad actors to clear challenges and ultimately bankrupt their business model.