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Telecoms turn to identity verification as fraud concerns soar

According to the identity verification survey* conducted by Regula in 2023, 9 out of 10 organizations in the telecommunications industry consider identity verification (IDV) a crucial tool in combating the increasing threat of identity fraud. Additionally, businesses are leveraging IDV solutions to enhance the user experience. In this article, we will delve into how telecom businesses navigate the diverse range of IDV methods at their disposal and decide where to allocate their resources. Furthermore, we will explore the tangible business outcomes that can be anticipated as a result.

One of the highlights of the survey is the pressing need to prevent identity fraud. The integration of telecommunication services with various financial sectors, such as banking and trading, along with universal usage of a phone number for two-factor authentication, has made them prime targets for criminals aiming to exploit the identities of legitimate customers and gain illicit access to their funds.

Criminals employ a wide range of fraudulent schemes to achieve their goals. In 2021, the FBI issued a warning about a significant increase in scams involving SIM-swapping, where criminals deceive or manipulate mobile network providers to transfer a victim’s phone number to a SIM card under their control. Afterwards, they can bypass security measures, gain unauthorized access to personal accounts, and conduct various fraudulent activities, potentially leading to financial losses and identity theft. The bureau reported receiving 1,611 complaints related to SIM-swapping, resulting in losses exceeding $68 million. And the situation isn’t getting any better, with more and more breach incidents happening to telecom providers involving the data of millions of their customers.

Based on Regula’s survey, conducted at the beginning of 2023, an alarming 47 percent of organizations within the telecom industry have reported encountering synthetic identity fraud, commonly referred to as “Frankenstein identity.” This particular scam involves the combination of both real and fake identification information to create entirely new and artificial identities. Furthermore, 45 percent of these organizations have had to contend with the use of fake or modified physical documents, highlighting the urgent necessity for robust digital document verification solutions.

On average, these telecom organizations experience approximately 18 incidents of identity fraud within a span of 12 months. Shockingly, 9 percent of the surveyed organizations faced a staggering number of over 500 incidents in a single year. The financial ramifications of such fraudulent activities are significant, with the average cost associated with these cases reaching approximately $260,000. Furthermore, a concerning 26 percent of businesses reported losses exceeding half a million dollars.

However, it is important to note that the costs for organizations are not only the ill-gotten funds that end up in the hands of fraudsters. Instead, the three most significant costs of identity fraud to organizations are often perceived to be business disruption, legal expenses, and the loss of existing or potential clients.

Full article: Telecoms turn to identity verification as fraud concerns soar

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