New Account Fraud - Use Cases - XTN Cognitive Security


Stop fraud during the opening process of new accounts.

Market Overview

Today, business starts and grows digital. The pandemic has accelerated this process, pushing online services to evolve to digital onboarding procedures instead of traditional, face-to-face ones. Fraudsters are always moving in the same direction, resulting in a significant increase in New Account Fraud (also known as New Account Opening Fraud). The security issues related to the onboarding process transversely concern Financial Services, eCommerce, and PA. Therefore, it is necessary to allow digitized access to the service while recognizing fake or fraudulent users in this context.

What is it?

New Account Fraud is a form of identity fraud that involves a fraudster creating a new account in a service or product using stolen or synthetic identities. This type of fraud is often the consequence of previously accomplished data breaches that provide attackers with massive personal information data sets that are then used to forge synthetic identities or impersonate somebody else. It’s not only a financial-related threat. Usual targets are bank accounts, credit or debit cards, and loans. But fraudsters also target public administrations to hijack tax refunds, pension funds, or e-commerce loyalty programs.

How does it work?

In New Account fraud, a fake customer scams the service provider using poorly designed validation processes. Then, when personal details are stolen, fraudsters can use them to open up a new account and start completely new accounts for a digital service. Fake accounts are usually opened with banks or credit card companies to easily access funds using the victim’s details or other digital services such as a mobile phone contract. New Account Fraud lets fraudsters perpetrate other attacks, such as:

  • Application Fraud: a fraudster applies for new bank accounts or similar financial services with fake credentials. Then the fraudulent account is used to commit illicit transactions.
  • Money Muling: a fraudster opens a new account to use it as a mule and move illicit funds. Mule accounts are often related to money laundering.
  • Card Testing Fraud: a fraudster creates new accounts, usually on an e-commerce platform, to verify if stolen credit cards have expired or been blocked.

The challenge

The digital onboarding procedures focus on gaining as many new users as possible. Pursuing this goal often means preferring user experience over security during solution development. An easy and enjoyable onboarding experience is sure to attract new users, but balancing it with identity checks is a must unless you want your service to be affected by fraud. Here is why New Account fraud imposes new challenges and requires new approaches to detection and protection. The financial institutions should let convergence traditional fraud monitoring with AML instruments. Preventing New Account Fraud requires a holistic approach that considers several factors, such as user information, biometric behavior, and device fingerprints.

How we can help

XTN Cognitive Security Platform® offers dedicated modules capable of detecting New Account Fraud spotting fraudulent attempts such as:

  • Identity Fraud: new account registration based on a stolen or synthetic account.
  • Fraudulent Funds: incoming fraudulent funds to mule accounts.
  • Cash-outs: cash-out transactions originating from a mule account.
Business Risks
Consequences of Application Fraud can impact a digital business by:
  • Outstanding debts
  • Customer acquisition campaigns damaged
  • Compliance and reputational issues


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