Know-Your-Customer (KYC) is an essential verification procedure for all businesses to comply with Anti-Money Laundering (AML) regulations. Regulatory authorities have introduced strict obligations to curb fraud by screening customers. Online KYC verification comes with efficient checks that examine customer data thoroughly and create a long-term impact on customer relationships.
Leaving the customer’s data and not conducting effective KYC procedures can be costly for companies. It destroys reputation and can cause financial fines. Companies interacting with high-risk customers and working in finance must comply with regulations. These businesses should design an adequate KYC verification process that enhances customers’ onboarding experience and protects companies from scams. An efficient online KYC check is the process that engages a customer and analyzes the risk according to their industry.
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The E-commerce market witnessed growth during the pandemic. Where most businesses lost their revenue, online retailers grew promptly. According to Statistics, the online shopping business reaped $5.2 trillion worldwide revenue in 2021. It is expected to grow 56% in the next five years, and the e-commerce marketplace will reach about $8.6 trillion by the end of 2026.
With all of this leverage from technology, online retailers also face various scams from imposters. Identity theft, fraudsters use counterfeit information for check-in at e-commerce websites. Advancements in technology make it easy for scammers to access the personal information of anyone and commit fraud. That’s why online retailers providing services or products lost an estimated $41 billion in 2022, and the value is expected to grow to $48 billion by the end of 2023.
Criminals use frauds to attack e-commerce platforms which include:
This is the most common fraud in the e-commerce market, it happens when scammers access customers’ account credentials. Scammers can use various techniques to gain access, from purchasing stolen information on the dark web to successfully conducting phishing attacks on a particular customer. They can quickly access personal information, including the address, date of birth, and contact details, which is enough to log in to any other customer account.
When scammers have acquired the client’s personal information, they can use that to open a fraudulent new fake account for illicit activities. After scammers take over the report, they can easily change the credentials and quickly purchase or withdraw funds from the user. Online KYC verification ensures that the individual opening or accessing an account is the rightful owner. It validates clients’ identities, making it more difficult for fraudsters to take over existing accounts and do unauthorized activities.
Personal information is unsafe online, especially credit card details on unauthentic websites. Credit card fraud is when scammers gain access to or steal a credit card. But for card testing fraud, scammers must acquire many cards. They can get these stolen numbers from the dark web or steal from different techniques, such as phishing, counterfeit portals, fake websites, etc. Although scammers gain access to credit card numbers, they don’t know which card numbers are valid.
To confirm which credit cards are accurate, scammers conduct small purchases and try multiple attempts at once. They use bots and proactive technology to test various credit cards. It is only to confirm if that card is valid. After ensuring it can be used on that particular e-commerce store, they use it for several significant purchases. Unfortunately, the victim or online retailers can not trace their whereabouts.
This involves scammers accessing personal information about anyone worldwide. After that, they make a fake account submitting fake bio-data to disguise their identity. Identity fraud is a significant scam happening in the online retail industry. Counterfeit identity can lead the business toward various frauds. Many scammers, such as cybercriminals, money launderers, or terrorist financiers, commit identity theft.
Identity theft fraud is not like credit card scams, scammers can conduct this only by name, address, or email. The main aim of scammers behind this is to mask illicit funds and disguise their identity. Identity theft can lead to fraudulent purchases, the creation of multiple fake accounts, and money laundering from one account to another.
Digital businesses can develop a safe and secure environment for themselves by uncovering the hidden identity of customers. Online retailers must comply with various regulations to beat scammers. KYC Online enhances e-commerce platforms’ security and protects them from unwanted financial fraud and fines. KYC compliance checks verify the identity of the customers by document attestation and biometric verification. It examines the paper through machine learning and AI innovations. Implementing digital technology in identity verification eliminates the chance of mistakes. The machine learning algorithms automatically update the process and create new queries according to a customer. This will help online retailers to analyze particular customer profiles and conclude risk assessments.
Online KYC solution is an ideal tool for all these industries that must cope with various regulations. It accelerates the onboarding process, including customer satisfaction. Online KYC verification also creates a trustworthy environment between sellers and buyers. Merchants can confidently sell the products or services, eliminating any concern about payment due and transaction of illegal funds.
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