Fraud season close for businesses
THE period of greatest risk for application fraud and non payment for Australian businesses is about to begin.
The Christmas period and corresponding post-Christmas sales are the main drivers behind this risk with young adults (18-22) the highest risk category, almost twice as likely than any other age group to commit application fraud.
The findings are from research by Dun and Bradstreet that investigated customers who quickly increased their balance on a line of credit and then intentionally did not make any payments. In a large majority of cases applicants who miss their first payment of a bill are extremely unlikely to have any debt recovered at all.
For one organisation, it was found that those in collections who had never made a payment were 93 times less likely to ever have funds collected.
Applicants who commit application fraud are 25 per cent more likely to occur in December than other months. That number increases to 36 per cent in January, 77 per cent in February and 60 per cent in March.
The research also unveiled that applicants who repeatedly attempted application fraud made an application on average every 18 days.
Soft fraud or application fraud can be anything from a slight exaggeration on an insurance claim to a small omission in an application for a mobile phone.
To prevent soft fraud predictive analytics and electronic identity verification can provide companies with details about their customers and prospects.
This information can be included in the credit process to build checklists to alter behaviours, improve payment terms and reduce the risk of bad debt.
The use of electronic ID verification also significantly reduces opportunities for fraud as the data cannot be readily manipulated.