Guarding Against an Identity Crisis
ID fraud has matched financial evolution step for step. “Friendly theft” - misusing an acquaintance’s credit card for petty gain is passé. Tricksters have moved on to bigger things, thanks to the emergence of more innovative and less regulated modes of online payment. Thus, phishing has reincarnated as “mobile phishing” and “cracking” is hacking’s newest avatar.
Social networking platforms, aspiring to become full-fledged payment engines of the future, are particularly vulnerable. A tie-up between ClickAndBuy and Facebook has enabled friends to send and receive money, but there’s no way for them to ascertain that the money is reaching the right person and not someone doing a clever impersonation using publicly available profile information.
Similarly, stored value accounts attached to prepaid mobile phones have made money transfer a cinch for not just the unbanked, but those with nefarious designs as well. Given the lack of KYC regulation, prepaid accounts can be had with a fake identity and email, making these accounts nearly impossible to trace.
No doubt there is a need for consistent and effective regulation; however, banks and their customers must also share the responsibility of guarding against ID theft. Identity verification by way of biometric, multifactor or adaptive authentication can help a great deal. So can measures to control and authorise access to customer information within the bank itself. It is also banks’ duty to spread awareness among their customers about safe and prudent financial practices. On their part, customers must be more diligent in the way they use, store or dispose of sensitive information that is susceptible to misuse. Subscription to credit reports or transaction alerts can also provide a valuable safety net. And should something go wrong, they must call the right authorities without delay.
Also read: Whitepaper: The proliferation of identity theft – Is the financial industry safe?
