Online Account Origination Fraud is a fraud technique where a criminal signs up for a service, product or online account on an e-commerce site, dating app, financial institution, or other platform using stolen or synthetic identities. This type of fraud is often perpetrated by organized crime rings who target high-end products or services and are able to evade detection by blending a variety of different real and fake identities.

Criminals commit this type of fraud by purchasing stolen PII from the dark web or through phishing, vishing and other social engineering attacks. The data is then used to create a synthetic identity which can be used for fraudulent transactions on the platform, such as unauthorized purchases or applying for credit cards and lines of credit. Perpetrators will nurture these accounts for months or even years to build up their credits, at which point they typically strike – a practice known as bust-out fraud.

Combatting Online Account Origination Fraud: Strengthening Verification Processes

The costs for businesses can be devastating, ranging from chargebacks and losses to reputational damage. For example, criminals will use bogus profiles to spread false reviews and misinformation on a service or product causing consumers to choose competitors and ultimately costing the victim business revenue. Criminals will also use these fake profiles to post and sell stolen or cloned payment information (known as card not present fraud) which can be used to make unauthorized transactions on an ecommerce site. To combat this, merchants need to balance a desire to roll out the red carpet during digital onboarding with ensuring that they are assessing all new customers for fraud.