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In the United States last year alone, 14.4 million consumers were victims of identity fraud. Fraudulent operations caused a loss of 14.7 billion dollars. Fortunately, both figures have been falling, although they are still high, as shown by the study “The 2019 Identity Fraud Study” (in free translation: "Identity Fraud Study 2019") carried out by the consultancy Javelin Strategy & Research. In 2017, just as a basis for comparison, the number of victims set a record by reaching 16.7 million.

Identity fraud is when a criminal assumes someone else's identity in order to carry out financial transactions in their name, for example. The use of credit cards for online purchases is one of the most common types. But there are other, more serious types, which tend to cause greater damage, such as when the criminal takes complete control of the victim's cell phone and bank account. From 2017 to 2018, in the space of a year, the control of cell phones practically doubled in the United States - from 380,000 victims to 679,000.

In the modern world, the smartphone has become an indispensable item and holds all kinds of personal information. Our cell phones hold a lot of data such as passwords, documents and photographs. In the hands of a criminal, the device can create a huge headache for the victim.

In these cases of cell phone hacking, WiFi is often the gateway for the criminal. An unsecured network such as an airport network can allow the criminal to take control of a cell phone. There are cases in which the criminal, pretending to be the victim, starts communicating with the bank from the controlled cell phone. The aim is to retrieve the victim's money available in the bank account.

Here in Brazil, according to research by the credit bureau sector, almost 9 million people were victims of identity fraud between March 2018 and March 2019. There are 4,700 attempts per day. Telephony is the leading segment for attempted fraud. Services in general are in second place, and banks and financial institutions are in third place.

These scams, as I wrote earlier, take place in a context of easy access to personal data, which is typical of the society in which we live. They are also taking place at a time of expanding online commerce, which accounts for an ever-increasing share of consumer purchases, the increased use of apps, the spread of malicious links via email and social networks and the proliferation of payment machines connected to WiFi networks.

These machines have also been used to clone credit cards, which is the most common type of identity fraud in Brazil. Next up, according to the study by the bureau sector, are fraud involving sending fake boletos, cloning debit cards, taking out loans and financing and opening a bank account.

Among the perverse effects of fraud, apart from the financial loss, is the inclusion of the consumer's name on the debtors' register. As the consumer didn't make the purchase, they don't recognize the payment, which can lead to their name being blacklisted. Nowadays, transactions are made very quickly and automatically, which makes it easier for criminals to act.

To avoid this situation, credit bureaus are engaged in offering services to identify and combat fraud. CPF monitoring is one example. Consumers are notified by e-mail and/or SMS of any movement relating to their document, such as queries about making installment purchases, checking if their name is restricted, inclusion of default records and changes to their registration details. It's an effective way for consumers to keep track of changes to their CPF.

Artificial intelligence has helped in the work of verifying transactions that are atypical of the consumer's profile. In this sense, with the same purpose of preventing fraud, the use of geolocation in physical transactions also stands out. Finally, avoiding false positives contributes to the fight against fraud, and the Positive Registry, which, among other features, expands knowledge of consumer behavior, enhances this analysis.

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By: Elias Sfeir President of ANBC & Member of the Climate Council of the City of São Paulo & Certified Advisor