Application screening fraud prevention is a growing threat that can cost companies billions in lost revenue and reputation. Criminals use a variety of methods to trick different systems, including creating fake identities with stolen or false information and using advanced tools for speed and scale. For example, they may exaggerate their income for mortgages or car loans, fake damage to items in insurance claims, or use children’s or deceased identities to get credit cards (car fronting).

Fortunately, with an understanding of how to spot red flags and a layered approach to fraud prevention, businesses can minimize risk and safeguard customers from financial losses. This can include identity verification, assessing risk with data analytics and tech like biometrics or machine learning, and staff training to recognize fraud indicators.

Application Screening Fraud Prevention: Identify Suspicious Activity

One of the most common types of application fraud is First-Party Application Fraud, where a criminal applies for a product or service using their own information to deceive the company into granting them the item. This is especially difficult to detect because it’s done by the person themselves, but there are a number of steps that can be taken to mitigate the risk.

A good start is a robust screening process that includes checks for an incomplete or illegible application, inconsistencies in work experience, and a lack of relevant references. Using technology to assess data and verify an applicant’s identity can also be helpful, as can integrity tests to measure candidates’ trustworthiness, compliance with rules, and attitudes toward authority and honesty.