Know your clients to prevent ID fraud

Identity theft is on the rise. It’s a huge problem for lenders looking to weed out fraud and potentially threatens the security of sensitive data.

Impersonation is one of the most common routes of attack for data thieves. Several broker networks were targeted in March by fraudsters, who pose as members of a network’s finance department and contact lenders to try to get proc fees paid direct to them, rather than to the organisation’s usual bank account.

Cases like this make the delay to the Financial Services Authority’s approved persons regime all the more disappointing. In the final Mortgage Market Review paper, the FSA promised to crack down on fraud by expanding the approved person regime, but this has been delayed until 2013.

The onus falls on brokers and lenders to assume responsibility for knowing who they are dealing with.

They should use anti-fraud technology from trusted providers to obtain reliable information about who they are doing business with. This technology returns data in a simple format and makes analysis easy. It also protects data from impersonators.

Brokers should also endeavour to meet customers face-to-face as technology makes it remarkably easy for fraudsters to assume a separate identity. If advisers fail to do this, it can lead to permanent damage to their reputation and they will lose business.

However you do it, make sure the person you are dealing with is who they say they are.