Preventing criminals exploiting disasters

Amidst the chaos following a natural disaster, the potential for fraud is substantial. In such climates, trust is vital to ensure that fraudsters don’t disrupt the flow of funds.

Since the world was created, natural disasters have been a part of it. However, it sadly seems that the scale and frequency of these disasters are on the rise lately. In the first few months of 2020 alone, the coronavirus outbreak, the Australian bushfires, and the Japanese earthquake have all hit the headlines. And, in addition to the tragic loss of life and wider social and economic implications of these events, with each disaster comes opportunities for the world’s criminal fraternity to take advantage of the chaos for their own interests.

Surge in disaster related fraud

After catastrophic events such as hurricanes and wildfires, con artists and identity thieves flood into areas to take advantage of victims. The Federal Emergency Management Agency reported that fraud after natural disasters has surged over the past several years.According to Trulioo's World in Data, 282 globally reported natural disaster events led to an estimated US$ 108 billion (£85 billion) in damages in 2019 alone, while the National Center for Disaster Fraud has received over 95,000 complaints related to disaster fraud since 2005. Identity theft is the unnatural disaster that too often follows the natural disaster.

Fortunately, identity verification and authentication technology currently on the market can go a long way towards addressing this problem, if the right approach is taken. Generally speaking, in an attempt to speed up the overall process of distributing aid, many aid organisations rely heavily on the use of digital and mobile technologies, which in a way should be a positive approach, however, the digital world can inadvertently create loopholes for fraudsters to exploit.

Typically, they assume the identity of victims (individuals and businesses) to intercept aid intended to help victims get back on their feet. With such a heightened level of risk, how can trust be maintained between donors, victims and aid organisations to ensure the proper flow of much-needed funds?

The answer lies in building a multi-layered approach to verify and authenticate the identities of those affected by disasters to ensure that relief funds reach their intended destination.

Establishing trust

Amidst the chaos and displacement of people and businesses following a natural disaster, the potential for fraud is substantial. In such climates, trust is vital to ensure that fraudsters don’t disrupt the flow of funds. For instance, off the back of the recent bushfires in Australia, more than 500 scams were reported, according to the Australian Competition and Consumer Commission (ACCC).

A verified identity is the first layer of trust between natural disaster victims, non-profits, governments, financial institutions and other entities involved in the process. As in most online interactions and transactions, anonymity is the biggest threat to trust and it can impede investment. Particularly for disaster relief aid, anonymity can be a major problem.

When people wanting to donate to natural disaster relief efforts don’t trust that a certain organisation will deliver the funds to victims, they may withhold aid entirely. Similarly, when an organisation doesn’t have the means to properly verify victims, funds may get delayed and some victims may not receive the needed help on time, or at all.

The key to these concerns is ensuring that all online transactions are built on a layer of trust. Failing to do so can result in regulatory pressure and investigation — even punishment — and can lead to a decrease in donations from the public. So, how do we go about establishing trust to ensure aid flows correctly? The answer lies in verifying identities.

A multi-layered approach

The disorder and misery following a disaster can be overwhelming, and it unfortunately provides ample opportunity for both financial and identity theft: multiple respondents and agencies must work as quickly as possible, and often, people are without essential documentation, computers and mobile devices. In these cases, a multi-layered approach is a reliable solution to establishing trust amidst chaos. This approach to identity verification leverages multiple identity networks in combination with advanced machine learning algorithms and fraud prevention tools to confirm the identities of people and businesses affected by disasters while weeding out the fraudsters.

Without a trusted way to verify identities, a fraudster can steal someone’s ID and reset their email password, which restricts the victim from being able to verify their identity to receive financial aid and services. The fraudster can receive the aid by pretending they’re the victim; meanwhile, the rightful user cannot do anything about it.

On the contrary, with a multi-layered approach, the disaster victim would have set up their email account so that if their password fails, they can authenticate the account through another method, such as a two-factor authentication or facial recognition. Such biometric identifiers are less likely to be easily replicable by the fraudster, and in addition, they enable the system to differentiate between two different people who are presenting the same set of legitimate-looking credentials. When it comes to organisations, using a multi-layered approach means they can leverage the additional biometric identifiers and combine them with advanced algorithms and tools to verify the identity of a victim via a more secure method.

If one biometric identifier was the only identity data point, security issues, such as fraud, would be cause for concern. However, when layered in with numerous other data points, it’s not a single point of failure but rather just part of the overall security system. Thus, traditional records such as data from credit sources, electoral roll data and national ID can be layered with biometric identifiers and passed through advanced machine learning algorithms and fraud prevention tools to create a verified online identity.

Ultimately, in any case of natural disasters, aid needs to move as quickly as possible. Therefore, organisations must ensure they’re equipped with the right technology to remove fraudsters from the process without the manual labour, ensuring that funds end up in the hands of those who need it. In such difficult times, the last thing that the victims should worry about is proving that they are who they claim to be.

This article first appeared on SC Magazine UK.