Every business exists to serve their customers – the actual ones – not the stolen or synthetic identities but the actual people looking to buy the actual product and service; those who will pay for it.
Socure helps identify the actual customers, CEO Sunil Madhu said. Socure blends machine learning techniques with data gleaned from email, phone, IP, social media and the wider internet.
“We help businesses sign up more customers without friction,” Mr. Madhu said.
That becomes a more challenging issue as demographics change in an increasingly global economy, Mr. Madhu explained. Credit bureaus based their assessment protocols on behaviours that are not as widely adopted by this generation, and with millennials ages 18-34 to be making up 80 per cent of the American workforce within the next three years, those discrepancies will only become more pronounced.
Roughly 50 million American adults live on cash, a number that is growing. More people are staying at home longer, choosing Airbnb over hotels, and taking Ubers instead of buying cars. That means more thin or no-file people may be in a for a shock when they apply for a mortgage. It is also a lost opportunity for lenders.
“When an institution relies on a credit bureau and that bureau is unable to return scores, applicants will either be rejected or ordered to turn up at a branch with a bunch of paperwork,” Mr. Madhu said.
“Millennials have no patience for that, especially when their branch location is in their pocket on their mobile device.”
Think of Socure as a detective agency of sorts, as they piece together the electronic crumbs we leave on the internet from our social media activity, public records and even our utility bills.
Accepting the actual customers who have positive intent becomes even more important when one considers the collective effect of all of the major data breaches, Mr. Madhu said. In 2016, six times the population of the United States, or roughly two billion records, were stolen.
Be assured that information is on the dark web, Mr. Madhu added. You’ve heard of SaaS (software as a service), and PaaS (platform as a service), now welcome to FaaS – fraud as a service.
An individual may not be able to detect if their identity has been stolen until it is too late because each new fraudster may change a detail such as an email address or phone number, so when basic validation methods contact them they can confirm they are who they are actually not.
That’s harder to do when you have the ability to gather different components of a person’s history from many different sectors, Mr. Madhu explained. A LinkedIn profile that has been active for years with hundreds of contacts is hard to fake and is not worth the fraudster’s time and money.
“Combining the digital footprint of someone and comparing it to offline alternatives is a very powerful thing,” Mr. Madhu said. “We’re changing the economics of fraud in favour of the legitimate user.”
Socure studies the behaviour patterns of different age groups around the world in an attempt to flag fraudulent behaviour earlier in the process, if not on the first attempt, Mr.Madhu said. Knowing the typical patterns of a 34-year-old, for example, they can risk grade an application and determine the chance of that identity being used to commit fraud in the next 30, 60 or 90 days. As the database increases fewer false positives and false negatives are flagged.
“To commit a crime a criminal needs a motive, means and opportunity,” Mr. Madhu said.
“We take away motive and means and all they have is opportunity.” – Socure CEO Sunil Madhu
One of the benefits of the United States being late to the EMV party is they can have a pretty good idea of what types of fraudulent behaviour to expect. In Europe, online fraud rose by 75 per cent following EMV adoption and new account fraud also rose.
Digital wallet adoption has also been curtailed by fraud fears, Mr. Madhu believes. The fraud rate with ApplePay is six per cent, a level roughly 60 times that of swipe cards. Fraudsters can easily dupe a call centre employee to provide identity information, which the scammer then transfers to a wallet and binds to their thumbprint. They don’t have to risk getting caught at a store because they can sit at home and use it at an ApplePay vendor.
“Generally the trend we’re seeing is the fraudsters are using the front door to attack businesses,” Mr. Madhu said.
Socure recently announced an integration with Au10tix, a developer of ID authentication and processing solutions, a move which extends Socure’s ID+ platform. The solution produces a seamless, digital to physical identity verification procedure.
“We wanted the capability to cover digital to physical identity verification,” Mr. Madhu said. “Through a single API, the customer can do all of the digital ID verification and physical document verification.
“It’s a step up in authentication from the same solution. If the risk is identified in the ID we can subject the individual to document verification.”