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A sense of security comes in many forms during a crisis. It can also be upended in many ways.

In what feels like the blink of an eye, the world as we knew it is no longer. Every day, more and more people fall ill as the current pandemic ravages the globe. Too many of them die. Families and friends are unable to gather in support and comfort. Businesses are forced to close and layoff or furlough many employees. Entire industries are left wondering if, when or how they will ever recover from their losses.

In addition to these stark realities, the Novel Coronavirus has rocked us to our core, forcing us to come face-to-face with a vulnerability we never wanted to believe, let alone see in our lifetime. Despite its invisible nature, one cannot help but see the force that is COVID-19.

We tend to think about a threat as something we can detect and prepare for, so as to be ever ready and capable of warding it off. This is innately linked to our human desire to feel safe, protected and secure. And so, from the individual level up to the highest echelons of public health organizations and governments, efforts are being made to do just that.

The Novel Coronavirus poses an invisible threat to the physical health of every person on the planet. While the medical community and government leaders around the globe work furiously to get ahead of the deadly curve, yet another invisible threat emerges: pandemic-induced identity theft and fraud.

Identity theft and fraud in the wake of COVID-19 is real and active now, demanding immediate action from financial institutions and their partners, lawmakers and consumers alike. Barring swift and resounding steps to prevent fraud in its tracks, fraudsters only stand to exacerbate the long-term impact of this pandemic.

Disruption as a primary fraud risk factor

Just like an unlocked car door all but encourages and enables the opportunistic auto thief, any large-scale disruption at the institutional, national or international level signals an invitation to identity thieves. This happens in in multiple ways, including:

  • Creating the need to revalidate credentials or update settings en masse, making it all but impossible to for current technologies and fraud detection processes to keep up.

  • Distracting individuals and institutions, allowing fraudulent activity to go undetected.

  • Overloading or flooding systems, forcing a reversion to manual processes unable to identify or prevent fraud.

  • Requiring financial institutions to rapidly move systems to remote operations, resulting in inherent disruption.

Institutional disruptions like mergers and acquisitions require leadership attention to system and personnel conversions, potentially reducing oversight in areas where fraud may be introduced. Transitions of power temporarily disturb or distract governments. The epic proportion of the Coronavirus disruption is unlike anything ever experienced in modern history, thus making it fertile ground for fraudsters.

Stay-at-home orders force spike in online shopping

As more people are ordered or encouraged to stay home, the ability or desire to go out for even the most basic supplies has waned quickly. We are lucky at least to live in a time that provides us an alternative means of getting virtually anything we want, when we want it. From groceries to medications to entertainment items and more, we just point and click—then wait for it to arrive.

Online purchases, however, put essential banking information in a realm that fraudsters love. The weekly volume of online shopping across the globe in mid-March spiked 23% higher than normal according to TransUnion. Fraud activity grew even more. 1

In addition, online transactions will continue to grow as closures of physical bank force more people to utilize online banking or mobile banking services than previously. This includes people who may never have used these services before and who may less ability to recognize fraudulent activity or prompts.

Phishing scams fuel account takeover fraud

Emails, text messages or phone calls may be the entry point for account takeover (ATO) fraud. In the midst of COVID-19, messages and calls offer assistance related to the pandemic, preying on people’s immediate fears and concerns to spur the intended action and response.

When sent via email or text, a message may direct a person to a website where they are prompted to input select account information that is subsequently received into the wrong hands. Clicks on email or text links may also initiate the silent downloading of malware onto a consumer’s computer or phone. This malware then tracks the user’s activity and captures essential credentials or Personally Identifiable Information at logon or during an online or mobile transaction.

In other scams, a consumer receives a phone call supposedly from their bank, credit card company or other trusted institution. As with emails and texts, the consumer is asked for sensitive information to verify their account. This reinforces the bank staff deployment problems.

Armed with the information provided by the consumer themselves, hackers then access and takeover the accounts. In 2019, an Experian report identified that businesses experienced higher losses due to ATO than in the prior year.2

Stimulus checks open door to multichannel identity fraud

In the coming weeks, many households across the country will receive physical delivery of stimulus checks from the federal government. Stealing these checks is step one in a complex scheme involving mail fraud and new account fraud.

Thieves create synthetic identities using the name on the stolen checks. They then open fraudulent accounts and deposit checks into them, only to turn around and withdraw the money and move on to the next checks and accounts. In some cases, fraudsters use the synthetic identities to open new unsecured loan accounts as well, gaining access to even more funds all thanks to one stolen piece of U.S. mail. The fact that what was intended to provide some relief from the pandemic can actually give rise to even more loss is a somber irony indeed.

The time to act is now

COVID-19 has already claimed too many lives worldwide, with more deaths expected. Countless others will experience significant health issues as they battle the disease. Adding insult to injury will be the financial losses experienced by consumers and businesses alike due to the individuals who take advantage of a world population in its greatest time of need.

It would be arrogant for any individual or organization to say that they can prevent all of the fraud likely to be associated with COVID-19. However, by making the brave choice to act now and do something different than what’s currently being done, fraudsters will not be as successful as they are hoping.

We at Q5id believe that now is the time to prioritize advanced identity verification solutions to find an approach that properly protects everyone—because financial stability and wellness is an integral component to the overall well-being of an organization and every individual.

1 Experian, 2020 Global Identity and Fraud Report, 2020.

2 PaymentsSource, Fraudsters exploit coronavirus fears as spending habits shift, March 30, 2020.


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