As digital identity fraud grows increasingly sophisticated, identity verification providers must have a multi-pronged approach of data and technology, in addition to continuous refinement of machine learning models to catch new fraud patterns.
When it comes to data sources, a delicate balance of quantity versus quality is critical to maximize good applicants with the highest precision and accuracy at onboarding. Organizations that rely on legacy providers that leverage traditional data sources with static rules-based logic are more vulnerable to exploitation from bad actors, which can negatively impact the experience of good customers.
Recently, our investigations team noticed an uptick in fraudulent applications from correctional facility addresses. By spotting these fraudulent applications in real time, we improved our ability to flag these high-risk locations by 27%. This improvement will help ensure our customers remain compliant with regulatory standards.
When it comes to putting this enhanced address data to use, correctional facilities are not the only example.
Staying Up to Date with Deceased Data
In addition to flagging high-risk locations, Socure also recently expanded its database of deceased identities by more than 140 million records by sourcing additional trustworthy data sources beyond public records, such as funeral homes or confirmed authoritative obituaries, that can indicate a death before it is reflected in public records. Because it can take weeks or months for public records to reflect a death, bad actors often use this gap to take over accounts racking up debt that they never intend to repay.
With deceased identity information in particular, false positives can occur when a living person is mistakenly marked deceased. For example, someone may share a name and address with a recently deceased relative, or errors could arise from clerical mistakes and outdated public record systems.
To reduce false positives and improve precision, we have applied specialized machine learning algorithms to look for anomalies across data sources associated with a given identity. Using this data, we can detect patterns that differentiate a living younger relative from an older deceased one at the same address.
Another common source of false deceased positives stems from synthetic identity fraud. Criminals take over a real but deceased identity, or create a synthetic identity using a mix of real and fake information. By marking the synthetic identity as deceased, fraudsters can more easily take over accounts or accumulate debt that they will never repay. Our improved accuracy helps distinguish truly deceased identities from fraudulent ones. Socure employs advanced classification techniques that provide robust signals, allowing us to accurately distinguish a true identity from a fabricated one, as well as correctly detecting deceased individuals.
This enhanced precision aids underserved groups as well. For example, a new immigrant could be mistakenly flagged as deceased if moving into an apartment recently occupied by someone who is now deceased. For emerging Gen Z identities with limited credit history, false deceased markers could prevent them from accessing needed financial services.
Socure’s data coverage and our technology means we can successfully resolve these hard-to-verify identities.
Accurate Address Normalization is Critical Across a Range of Industries
Another part of Socure’s data coverage is address normalization, which ensures that addresses on customer applications meet USPS standards, preventing any typos or incorrect formatting for a higher likelihood of deliverability. This offers the best chance of approving legitimate applications, and ensuring accurate, auditable customer data. If institutions don’t correctly match the consumer, they may introduce unnecessary friction.
One key detail? This process is only as effective as the data behind it to successfully normalize the address.
That’s why Socure sources additional authoritative address data sources, such as property records, that enable us to match more than 15 million residential addresses not found in the USPS database, and have access to property ownership changes up to three months earlier than legacy providers.
Address normalization is critical for industries such as gaming that must adhere to strict regulatory rules. Normalizing customer-entered addresses against official postal standards ensures gaming companies can approve more good applicants and keep out the fraudsters, all while staying compliant.
For regulated institutions such as transfer agents and broker-dealers that must record accurate customer addresses to fulfill AD17-AD regulatory requirements, proper address formatting enables the successful delivery of mailed products such as credit cards.
Without this strong normalization engine and constant pursuit of every authoritative data source available, Socure couldn’t fulfill these standards that our customers require.
A Balance Between Quality Data and the Right Technology
Honing accuracy is just as crucial as expanding coverage for effective identity verification. Data alone doesn’t solve for fraud, instead it’s the quality of data and the right technology to identify risk. While more data sources allow providers to catch more fraud attempts, additional logic ensures accurate decisions without unintended consequences.
By minimizing false negatives, Socure can provide equitable opportunity for all eligible individuals. As fraud evolves, we will continue balancing scale and precision to validate 100% of good identities.
Looking for more resources? Check out our eBook: Legacy IDV Vendors are Exposing You to Risk – Protect Your Business with Socure
Arpitha Gadag is the Senior Product Manager for Socure’s KYC suite of solutions. Her team focuses on driving inclusive and equitable access to a diverse array of products, while ensuring an accurate identity verification experience. Arpitha has been in the identity space for 5+ years.
Uncovering Hidden Threats: Why Auditing Your Portfolio for...
With regulators considering shifting liability for certain consumer scam losses on...
How Legacy Identity Verification Vendors Expose Your Enterprise...
The strength of an identity verification solution is not determined solely...