Online Identity Verification Company Jumio Records Drop in New Account Fraud

Jumio, a leading provider of AI-powered end-to-end identity verification and eKYC solutions, said fraud rates for new account openings decreased in 2020, a trend that could be explained by rising adoption of verification methods like selfie and live capture requirements.

The findings were shared in Jumio’s Holiday New Account Fraud Report, an annual report that looks at emerging trends in online identity fraud in new account openings, an attack where fraudsters use stolen or synthetic identities to open new bank accounts.

The report is based on the analysis of tens of millions of transactions from Jumio’s customers around the world operating in industries including banking, cryptocurrency exchanges, online gaming and more.

This year’s study found that despite widespread reports of fraud increases amid the COVID-19 pandemic, Jumio saw new account fraud rates drop 24% in the January to October timeframe in 2020 compared to the same period in 2019, decreasing from 1.86% in 2019 to 1.41% in 2020.

New account fraud rate, 2020 Holiday New Account Fraud Report, Jumio

Jumio says this could be due to several factors including rising adoption of live capture and selfie requirements. Jumio says an increasing number of its customers are demanding end-users to live capture their photo ID documents using their webcam or mobile device’s camera instead of upload files. This provides an extra layer of security, it says, given that image files can easily be tampered in contrast to live capture.

Jumio’s customer data suggest that fraud rates are more than twice as high when end-users upload a picture of their government-issued ID instead of capturing a photo of it using their webcam.

Photo capture vs upload in web channel, 2020 Holiday New Account Fraud Report, Jumio

The report also reveals that selfie fraud rates are significantly higher than fraud based on just a government- issued ID. In fact, Jumio customers that require an ID and a selfie during identity verification have seen 80% less fraud compared to those who only require a government-issued ID. Most fraudsters will abandon the account opening process when they learn that they will be required to take a live selfie, as they most likely don’t want to show their face to a business they’re attempting to defraud.

When looking at geographical disparities, the study found that North America continued to have the lowest rate of new account fraud in 2020 (0.79%) while Asia Pacific continued to record the highest rate (2.37%).

Fraud rates tend to be lower in developed countries like Singapore, Germany and the US, the study found, where it stood at less than 1% in 2020. In comparison, new account fraud rates reached 1.87%-2.90% in India, and 8.03%-8.74% in Indonesia.

Unchanged from previous years, financial services, cryptocurrency and gaming continued to have higher fraud overall in 2020 as compared to other industries.

Fraud rates by industry, 2020 Holiday New Account Fraud Report, Jumio

New account fraud is a growing problem that’s costing financial institutions billions of dollars. Cybersecurity firm BioCatch estimates that new account fraud cost US financial institutions US$3.1 billion in losses in 2020 alone.

In this context, Jumio formulates several recommendations to help companies prevent financial crime. For one, it advises them to require end users to capture photo ID and selfies through webcam or mobile devices whenever possible instead of allowing users to upload images. It also recommends companies to incorporate additional fraud checks such as a selfie requirement for geographic regions that have higher levels of fraud.

For companies in high-fraud and high-value industries like financial services, Jumio recommends consuming more fraud signals such as geolocation, behavioral biometrics and email/phone information to equip them with a higher level of identity assurance.