Account Opening Fraud

Account opening fraud can be defined as any attack or criminal activity that targets the customer onboarding process for the purpose of creating fraudulent or false accounts. In what is also known as account onboarding fraud, criminals use stolen, false, or synthetic identities to gain an entry point and pose as a business’s legitimate customers.

Criminals use false accounts in different ways depending on the type of service they are targeting:

• Social media: Criminals use false accounts to spread disinformation.
• Review sites: Criminals use false accounts to create fake reviews for hire.
• Ecommerce: Criminals use false accounts to order goods with stolen credit cards.
• Cryptocurrency exchanges: Criminals use false accounts to exploit user referral promotions.
• Banks: Criminals use false accounts to launder money.
• Government agencies: Criminals use false accounts to apply for benefits.

Bots and Mass Registrations

As is the case with other forms of fraud, criminal groups often use bots and other advanced technologies in their activities. In account opening fraud, these techniques are used to register accounts at scale and exponentially increase the damage inflicted.

For example, fintech companies may offer new-account incentives or promotions to attract customers who will eventually contribute to revenue. Fraudsters can use bots and batches of false or stolen identities to register thousands of accounts, obtain the promotional bonuses, and then abandon the accounts.

Dormant Accounts and Money Mules