How fraudsters can use stolen identities for ghost loans and mule accounts

There is no denying that our digital economy has taken off massively in the last couple of years. Over 80 per cent of Indians have a bank account today. This is the very reason why we can make payments online almost wherever we wish to, be it on Amazon or to your rickshaw wala. Market regulators like the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have been acting swiftly to stimulate this growth by allowing for new, digital modes of customer onboarding. On the flip side, it also means that scenarios like your waking up to a loan you never applied for are possible. These come as a result of processes, and consequently our identities, being digitised. Or rather the lax handling of our identities, allowing fraudsters to access them and commit identity theft fraud. Identity theft fraud is when someone steals your identity and pretends to be you to commit a financial crime, such as applying for credit or opening bank accounts. Here are some of the most common ways in which your stolen identities can be used for it: Ghost loans: Ghost loans are loans taken by fraudsters using stolen identities with no intention of paying back. Let’s take a look at how fraudsters can avail them in your name using stolen documents. In order to verify your credentials, a typical KYC process checks for three things: proof of identity (POI), proof of address (POA) and photo proof. Lending companies require you to submit your PAN Card as your proof of identity. This is to confirm that you are indeed who you claim to be. Let’s say fraudsters manage to land a copy of your PAN card. They then replace your photo on the PAN with their own using sophisticated software programmes. These cleverly tampered documents tend to go undetected in cases where the verification process is highly manual in nature. Similarly, fraudsters also tamper with the photo on proof of address documents such as your Aadhaar card or your driving license. A photo proof is needed to confirm if it is the same person applying for the loan as the one whose documents are being submitted. Having already tampered with POI and POA documents, fraudsters happily submit their own picture as part of this last step. Buy now pay later apps Most Buy Now Pay Later (BNPL) companies only require a PAN card and a selfie for KYC purposes. Over here, instead of tampering with the photo, fraudsters simply submit the stolen PAN card as-is. This is because the only level of authentication here is a facial comparison check between the photo on the PAN card and the selfie. At the time of submitting the selfie, fraudsters will scour your social media profiles to find a picture that resembles a selfie. Now, if the underlying facial recognition solutions aren’t sophisticated enough, some attempts end up in success. And just like that, you now have a BNPL account in your name without your knowledge. Mule accounts Yet another way in which your stolen documents can be misused is by opening bank accounts in your name. Such accounts are called ‘mule accounts’. They are typically used as stepping stones in moving money obtained from criminal activities. Remember all those times when you went down to your local stationery to get your documents photocopied? Chances are, your sensitive information may have been saved on their machines. People with malicious intentions can use this to open accounts at banks using offline channels. This type of scam typically happens during the month-end period when bank branches are already overworked with achieving their targets. Fraudsters simply walk in and submit the required documents to open a normal savings account. These documents are manipulated such that the photo on them is blurry enough to avoid suspicion. The month-end frenzy allows them to escape further scrutiny from bank employees. A constant risk As we can see, it’s surprisingly easy to have our identity stolen and used fraudulently in the digital world. No matter how careful we are, we end up leaving traces on the internet as well as in the physical world. If our identity hasn’t been compromised so far, it’s not as much about being careful as being lucky. At the end of the day, life really is a game of chance. The author is Chief Product Officer, IDfy. Views are personal. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.