New account fraud, also known as onboarding fraud, is a prevent fraudulent account opening that occurs when cybercriminals use stolen or fabricated identities to open financial accounts and other services. The fraudsters often use the accounts to obtain credit, purchase merchandise or services and then drop out of sight, leaving the victim with bills and potential long-term financial damage. Fraudsters may also sell these accounts on the dark web or use them as money mules.

Identifying new account fraud can be difficult because the accounts are often opened remotely and through multiple devices, creating red flags that may not be picked up by human reviewers. A variety of signals can be used to detect suspicious activity, such as an inconsistently formatted name or a phone number that matches a fake email address. A device fingerprinting check can also flag a new account that is opened on a previously seen emulator or virtual machine, which can be indicative of bot activity.

Strategies to Prevent Fraudulent Account Opening

Protecting against this type of fraud requires a comprehensive approach to risk management, including combining data analytics and monitoring tools to uncover fraudulent activity. By putting the right friction in place during onboarding, authentication and any consequential transaction, institutions can reduce the likelihood of new account fraud while maintaining digital trust with customers.