fraudsters altering bank statements to secure loans
AS far as financial products go, loans are probably some of the riskiest to offer.
They also offer the highest reward for fraudsters who manage to fool the standard or alternative credit scoring process.Many online lenders ask borrowers to upload bank statements, tax forms, and other financial documents to assess creditworthiness.While the broad majority of borrowers who submit financials are legitimate applicants, some do submit documents that are altered or fabricated to enhance their ability to secure a loan.Some criminals apply for loans and lines of credit with the intent of maxing them out and not making any payments. This is done as some loan applicants default for legitimate reasons.Criminals who target loan companies usually create synthetic identities. These are identities made up of data from real people who either willingly lend their identities or have them stolen.The reason these types of identities are so effective at fooling lenders is that they are designed to target people with non-existent credit history, including the unbanked and underbanked.These criminals have been known to stoop as low as using children or deceased people’s identities in order to fool the credit scoring stage.Many applicants default for legitimate reasons, but some criminals apply for loans and lines of credit with the sole intent of maxing them out and skirting payments.Some criminals use their own identities to apply for loans, then go off the grid to avoid repaying them.However, stolen or synthetic identities, also known as third-party fraud, remain the preferred method. With third-party fraud, scammers use multiple identities to open different credit lines.Balancing between customer convenience and security is a delicate process, especially in a competitive, high-value market.For example, when banks and credit card companies provide online loan applications, they make it suitable for potential customers to get a loan. Still, they also make it convenient for identity thieves and hackers.There are several different types of loan fraud. One of the most common forms of loan fraud is application fraud, which involves falsely applying for a loan by providing inaccurate or incomplete information on an application form.This could include providing false employment history or exaggerating your income level to obtain a larger loan.The start of loan fraud starts with the consumer. The many ways criminals can obtain personal information depend on their vectors.Some criminals use phishing emails and malicious websites. Others use a variety of ways to install malware on a targeted user’s local device, and some local thieves steal unshrouded paperwork from garbage cans to collect private information.In most cases, an identity thief targets a large number of consumers to collect as much information as possible.Their goal is to sell the data, not use it themselves. With enough personal data, an attacker can make a seven-figure return on their investment.Using a combination of bots, virtual private networks, and proxies, the attacker submits loan applications using a victim’s information.The fraudster might be outside of the victim’s country, so they get an unsuspecting co-conspirator to use their local country address to have credit cards sent.The co-conspirator then uses the cards to buy products to send to the attacker.The attacker might use the credit cards to purchase products and send the stolen products to a local co-conspirator’s address so the co-conspirator can forward the stolen goods to the criminals.To take it a step further, some criminals use scripts to test credentials purchased on darknet markets automatically.There are two reasons an attacker uses bots: to verify stolen credentials and sell them to fraudsters or to authenticate a victim’s financial accounts and use them to open loans, transfer money, or purchase products using the victim’s credit cards.It is impossible to expect every consumer to avoid identity theft as human error is always an issue for any business. This leaves financial institutions with the responsibility to stop identity theft and fraud.Whether it is bots or human criminals, financial institutions or those offering loan application services can take steps to minimise risk.This type of fraud is a serious issue for financial institutions and other businesses and there are several solutions that can help fight it.One of the key solutions is the use of automated document tamper detection technology.Many of these tools use artificial intelligence and multiple layers of machine-augmented human review to detect and prevent document fraud. Digital data sources can also be used to enhance and simplify their anti-fraud underwriting procedures.Data aggregators such as Plaid, offer access to up to 24 months of transaction history once a borrower has provided bank login credentials.
By using data aggregation during the funding process, businesses can confirm that the applicant’s financial documents match the data obtained directly from the bank, ensuring the authenticity of the submitted information.
Combining efficient and precise document processing with digital verification, businesses can optimise for both customer satisfaction and minimal intrusion, while also incorporating multiple layers of fraud detection into their loan application (and other business) verification processes.This approach can help in faster and more reliable approvals for loans and other financial and business services.This is the predominant area where bank statements are altered to secure loans. Document fraud detection tools can help loan and institutions, detect and prevent fraud in loan applications by identifying fake bank statements and pay stubs, submitted by borrowers.
Author
