Document Fraud: Detection and Prevention

We live in the technology era where data scraping and image editing are easy processes. If you are not careful about your data you will become a victim of document fraud. You can also lose your identity to a fraud.

Lenders and loan officers are facing challenges in approving loans to individuals due to the rise in cases of fake bank statements. They need to be extra careful in checking the legitimacy of documents provided by the people.

If you are worried about fake documents, you are not the only one. One mistake can make you lose money and reputation. However, with proper fraud detection tools, you can prevent losses related to forged documents.

What Is Document Fraud?

Document fraud refers to creating, manipulating or using fake or illegitimate documents to fool others. The act of document forgeries includes minor changes to identity cards to falsifying financial records or academic credentials.

This alteration can be used for various illegal activities, including identity theft, human trafficking and terrorism. You don’t even know when document forgery can put you at risk of significant financial losses, reputational damage, security breaches and non-compliance with industry regulations like KYC and AML rules. 

The prime targets of the fraud are financial institutions, Government agencies, and other entities to gain access to resources.

Types Of Document Fraud

Criminals create different kinds of fake documents, each needing specific detection methods. Below we have mentioned fraud types you should know to protect you and your business.

• Document Forgery

Document forgery simply means creating a fake documents from scratch or manipulating the original document. Document forgery refers to manipulating genuine documents like changing names or numbers. Now fraudsters are using technology to edit images which makes it difficult to detect. 

• Identity Theft

Identity theft occurs when someone tries to steal someone others identity by using their details and documents like ID numbers. Frauds can use someone’s identity to open a bank account, purchase vehicles or start a business. They can use someone another credential to create social media profiles using their name, photos and personal information. Which makes identity verification crucial.

• Image Fraud

Image fraud is like stealing someone’s other picture. For instance, if someone loses their Waller and a scammer finds it. They can use their documents for their wicked reasons.

• Invoice Fraud

This occurs when an employee pretends to be a vendor and creates a fake invoice. The company then pays the invoice, unknowingly transferring funds directly to the employee’s account.

• Receipt Fraud

Receipt fraud involves altering the original receipt creating up, or submitting the same receipts more than once. This kind of practice leads to fake expense reimbursements. These frauds are commonly found everywhere and decrease the profit of businesses.

• Loan or Mortgage fraud

Loan or mortgage fraud is when a bank submits fake documents, like bank statements, tax returns, or proper appraisals, to get loans and mortgages. This can lead to financial losses for you as a lender and create compliance issues.

• Insurance Fraud

Insurance fraud occurs when people fake claims and application forms to receive money. These claims include fake medical records, property damages, and other financial losses. These kinds of activities cause financial losses to the insurance company.

How To Detect Document Fraud?

There are two methods of detecting document fraud, manual and AI. Manual fraud verification seems easy but with increasing advancements in the falsification of documents. It becomes difficult to detect tampering of documents with human eyes. Secondly, manual verification is equipped with errors and inefficient methods.

Using technology such as OCR, Intelligent Document Processing, AI (Artificial Intelligence) and Optical character recognition.

Important points to consider while detecting fraudulent documents.

• Duplicate document detection is crucial to prevent financial losses by paying for the same service twice. Duplicate detection helps in eliminating this kind of document fraud.
• Photoshop usually refers to finding whether the document is forged with digital alteration using image editing software like Photoshop.
• Comparing the documents with the original documents utilizing OCR and document verification API. API helps verify the document with the original one from the authentic database. It helps prevent and detect fraudulent documents.
• Every document has its format checking the fonts, formatting is a must.
• Checking seals, watermarks, logos, and stamps carefully.
• Pay attention to each detail like date, signatures, and numerical consistency. Any irregularity is potentially indicative of tampering of documents.

Tips To Prevent Document Fraud

• Educate your employees on how to detect fraud related to documents.
• Utilize technology such as fraud document detection API and OCR.
• Be aware of the latest fraud tactics and security advancements.
• Keep sensitive documents safe and secure with digital signatures online.
• Always verify the document details with the original one.
• Use Automation for large document fraud verification.

FAQs

1. What Is The Simplest Document Fraud?

The simplest sign of a fraudulent document is an alteration in name, address, or image using image editing software.

2. What Is The Penalty For Document Fraud?

Falsification of documents can result in fines, imprisonment or both depending on the severity of the offence.

3. What Is An Example Of A Fake Document?

Examples of fake documents include altered driver’s licenses, forged passports, and fake bank statements.

4. How Do Identify Fraud Related To Document?

You can check manually or simply use API to fraud verify processes related to fraudulent documents.