For finance and procurement leaders, the prospect of fraud can be one of your biggest fears. Most companies don’t detect fraud until after it’s already happened, but this causes huge financial losses and reputational damage remains with an organization for years to come. In fact, 93% of UK businesses were targeted by fraud in 2024. Approaching fraud verification through an operational lens, with set systems and processes, should help proactively defend your company from fraudsters.
Stay one step ahead by building a solid online fraud verification process and learn about how Trustpair can help you stop payment fraudsters before they cost your company.
What is a fraud verification process and why does it matter?
A fraud verification process involves confirming the identity of all those associated in a transaction to prevent deceitful practices, often called identity verification.
Sometimes known as due diligence, Know Your Supplier (KYS) or Know Your Client (KYC) – depending on the context -, the process requires companies to validate the data and documents – financial, legal -they’ve received against external sources to ensure it’s accurate and true. Otherwise, the risk is that impersonators can infiltrate a number of processes and cause a data leak, or take advantage through unauthorized access or payments.
Without a defined process for identity verification, fighting fraud becomes much harder, as it’s easy for fraudsters to exploit vulnerabilities. These checks go beyond a simple ID match and help to mitigate other risks associated with making an online payment.
Deploying a fraud verification process should be a priority at all established enterprise level businesses, but especially those most publically-scrutinized by compliance and regulation restraints. It’s at these companies that mistakes or errors in identity verification can have the most profound impacts, including significant financial losses caused by the likes of business email compromise, invoice fraud, and employee (internal) fraud.
Key steps in a secure fraud verification process
A secure fraud and identity verification process requires (at least) the following steps:
- User registration – the user will provide their own details, including name, address and bank details. If they are representing a company, such as those verifying new supplier details, they should provide details on the business and access personnel.
- Identity verification – prove that the given identities match to external records and independent databases (the account is real and active).
- Account authentication – checking that the user is the account holder and that it’s not an impersonator, typically this requires optical recognition to official documents and selfies.
- Account validation – gather information from third-party sources to check whether the account is associated with a history of fraud or suspicious behavior, like fraudulent transactions.
- User approval – once digital checks have been passed, the new account will be granted to the user (could be personal or business).
- Continuous monitoring – ongoing checks are required to prevent security breaches even after an account has been verified, especially if details like the bank account change throughout your partnership.
What are the top challenges companies face in verifying fraud risks?
The three top challenges associated with fraud verification include:
- Device identification
- Process too complex and slow
- Juggling multiple software
Device identification
56% of companies say they struggle with identification as part of the fraud verification process due to a lack of device fingerprinting. This is the process of gathering information around a device’s operating system, integrations and apps to track a user, even if they switch between web browsers.
Many businesses view this service as an integral part of the fraud verification process because it gathers data on customers, suppliers and users that they don’t intentionally give – meaning that it’s harder to manipulate this data.
Overcoming this challenge first and foremost requires a change in mindset, away from random checks and towards ongoing fraud monitoring practices. Companies benefit from continuous oversight by developing device fingerprints and tracking user behaviour. This can enable the flagging of suspicious activity in real time – thanks to pattern recognition software – which is an effective fraud prevention method.
Process is too complex and slow
Performing the fraud verification process correctly involves a lot of steps; so it’s no wonder that some organizations find that all the documentation directly blocks their speed and efficiency. Not only that – but having to wait for one step to be fulfilled before starting another means that the process can be filled with bottlenecks.
The best way to overcome this challenge is by relying on automation – specific platforms built to efficiently accept the user information and automatically validate and verify using external databases.
For example, Trustpair flips the script on traditional fraud detection by verifying third-party data before transactions are made, with new vendor checks and ongoing monitoring happening in the background at all times. When suspicious activity or a mismatch in information is detected, we automatically block outgoing payments in real-time until the accounts are verified. This means you’re sure to pay the person or company. This also helps companies to meet KYC compliance, even in the case of business users.
Our services also include extensive customer support and dashboards to have an overview of fraud risk levels.
Juggling multiple software
A large chunk of the fraud verification software out there today only focuses on one or two of the authentication methods required, leaving companies forced to undergo a fragmented experience in order to cover all bases. However, it can quickly become costly to rely on multiple solutions, and also increases the risk of fraud thanks to multiple points of vulnerability.
Integration and management are the key to juggling multiple software and ensuring that they work in tandem to interconnect and reduce the points of vulnerability. Moreover, when considering the various solutions available, it can be useful to choose a single solution with more upfront capabilities (likely more expensive) compared to a suite of different platforms, each with their own strengths, which teams then have to integrate with one another.
Manual vs. automated verification: what is the difference?
As you can imagine, manual fraud verification is a very time-consuming process, requiring involvement from at least one person to:
- Make contact with the user
- Gather their account data
- Find external sources to verify this against
- Authenticate the account data
- Authenticate the user data
- Approve the account
- Repeat the process again each time a change is made to the account, including the change of bank details or a new employee takes over account management, to ensure that the changes are legitimate and that the account has not been compromised
This manual process is subject to a higher risk of errors when compared with automated fraud verification, especially considering the pressure on employees to get an already-slow process done quickly.
Instead, the automated version of fraud verification is simplified:
Integrate the user’s data upon account creation – automatically verify data in real time – maintain security by completing an ongoing monitoring cycle.
Automating fraud verification provides higher accuracy, efficiency and leaves employees to focus on the suspicious cases, rather than wasting their time. Trustpair helps prevent payment fraud with best-in-class bank account ownership verification and complex security systems to bulletproof business bank accounts and answer the need for greater defenses and thorough identity verifications..
Future trends in fraud verification and what to expect
The rise of AI is affecting fraud and business’ verification methods, especially with how realistic some of the deep fake technology is these days. Right now, this means that some companies are letting fraudsters fall through the cracks, because their authentication solutions can’t tell the difference between a live selfie and an AI-generated image, for example.
Automated platforms are catching up to this, but in the future, expect to see even more technological breakthroughs to get around the classic fraud prevention strategies. To prepare for this, companies should consider how they protect their payments even after accounts are compromised.
For example, partnering with Trustpair means that you can prevent unauthorized payments and enhance overall security, using seamless integrations and a state-of-the-art API. Because although AI is reshaping fraud, we’re fighting back.
Simplifying the fraud verification process
When completed manually, the fraud verification process is challenging because it takes too long, is too complex, and it’s too hard to verify the data. But automation software like Trustpair works to accurately and efficiently validate user and account data to prevent fraud at enterprise level, blocking outgoing payments to suspicious accounts.
