In the digital age, account signup fraud detection expect a seamless signup process with minimal friction. Fraud detection tools that add steps or require the user to go through multiple verifications can create a bottleneck during the registration process and cause users to abandon the digital process and either contact the company on a non-digital channel or open a new account elsewhere. While security checks are necessary, if too many are required at the initial account creation stage they can deter potential fraudsters and lead to a decrease in conversions and revenue.

Account creation fraud is a common method for bad actors to use stolen identities in order to carry out various kinds of fraudulent activities. These can include buying or selling stolen credit card details, conducting identity theft, committing first-party fraud, or using the resulting forged profile to buy or sell items or services on your platform. Oftentimes, these stolen profiles are created by leveraging bots or other pieces of code to generate a high volume of fake accounts very quickly.

Unveiling the Imposters: Strategies for Account Signup Fraud Detection

While it is challenging for businesses to spot these types of fraudulent activities, there are ways that they can do so. For example, assessing the legitimacy of account information can be done through the use of third-party verification services that check provided data against existing records (e.g. public records, phone number reputation databases, etc.) or by analyzing the user’s device and network fingerprint (e.g., IP, languages, geolocation). In addition to this, evaluating post-account creation behaviors can help flag fraud patterns. For instance, if a user opens a new account and then changes key account information (e.g., address, email address, phone number) this is a strong indicator of fraud.