Pension fraud is a scheme where fraudsters try to divide government benefits for old-aged citizens. Criminals impersonate agents and convince elderly people for transferring their money into non-existent projects or not genuine schemes. With a promise to increase their income, fraudsters leave old-age citizens with huge financial losses. Quick payment processing, cash incentives, and annuity loan scams are some of the other threats.
According to the Financial Conduct Authority (FCA), there were over £30 million lost to pension scams till August 2022. With identity theft being the major cause behind the fraud, integrating AI-powered IDV checks has become a liability. Therefore, annuity service providers need to strengthen their crime prevention mechanisms. This blog entails how Identity verification solutions help safeguard pension companies from illicit actions.
The Pension Industry and the Plausibility of Status Quo
Financial institutions have crystallized an understanding of online customer engagement in the previous years of digitization. Similarly, annuity firms have also understood the need to replace paper-based data handling and physical visits with remote interactions. While elderly people lose their strength with ageing, they often rely on their relatives for collecting pensions. However, this process is prone to several risks, from account takeovers and money theft to deprivation of their basic legal rights.
The pension sector should strengthen its ID verification systems and assist old-age citizens more conveniently. By using automated digital onboarding tools, they won’t have to go through the additional hassle or become a part of some scam. Furthermore, elderly people can transfer their hard-earned benefits directly to their accounts without involving any third party.
For pension companies, ID verification solutions prevent cybersecurity threats, increase customer data protection, and ensure a positive experience through secure facilities.
Manual Customer Authentication Methods Increase Vulnerability
The pension sector is embracing technological innovations to assist elderly people in a risk-free way. Annuity firms strive to assist citizens in a more improved manner and are revamping their financial systems. By introducing digital baking methods, they are increasing client conversion rates while reducing the need for physical visits. Simultaneously, unscrupulous people are equally deploying efforts to manipulate government benefits and get their illicit share out of them.
The increase in synthetic identity fraud and annuity compromising is major due to companies’ reliance on paper-based data handling methods. Document forgery is no longer a tough task, as criminals have advanced tampering tools. Given the error associated with human interpretation, manual identity verification has become an attention-seeking element for pension companies. This way, impersonation also goes undetected.
Rikki Nicholls and Mark Kelly Sentenced to Six Years Imprisonment
A prominent instance of pension fraud is from July 2022, when Mark Kelly and Rikki Nicholls managed to steal more than £20 million. They convinced hundreds of elderly people to move their money from government benefits into self-investment schemes. This pair of advisors was later sentenced to six years imprisonment due to their fraudulent scheme.
Identity Verification Services – Strengthening Fraud Prevention Controls
The pension sector is integrating identity verification services to offer remote financial assistance. This way, elderly people won’t have to visit facilities or submit documents for lengthy time-taking paperwork repeatedly. AI-powered identity authentication solutions enable pension companies to deliver risk-free, frictionless, and automated payment processing services.
Accurate User Authentication
Manual ID verification methods are error-prone, time-taking, and less reliable due to sophisticated fraud attempts. On the contrary, AI-powered IDV services automate data handling while eliminating discrepancies, identifying forgeries, and overcoming inaccurate authentication.
Biometric identity verification systems leverage further accuracy by incorporating an extra layer of protection into customer authentication. By rolling facial recognition for funds transfer authorization and liveness detection to ensure real-time presence, pension companies can overcome the challenges they face while assisting elderly people remotely.
Enhances Customer Experience
Accurate analysis of information and forgery detection in documents has a long-standing history of issues with annuity firms. Tampering with documents enables criminals to hide identity verification by supporting their counterfeit profiles. This later helps fraudsters to avail governmental benefits such as pensions illicitly, depriving elderly people of their basic rights.
On the contrary, integrating ID verification solutions help safeguard old-aged citizens from fraud risks. They ensure secure digital onboarding with thorough authentication that leaves less room for criminals. Ultimately AI-powered IDV solutions enhance customer experience by eliminating the hassle and offering more security.
Aligning the Facts
Identity verification services replace manual involvement with advanced AI-powered algorithms that not only automate onboarding but also eliminate human errors. This way, old-aged citizens can escape repeated physical visits and document submissions. Furthermore, pension companies can ensure funds are disbursed to legitimate accounts. They can also check whether the person requesting the money transfer is the profile holder.
With ID verification tools, pension companies can detect real-time presence through selfies. Hence, they can elevate customer engagement, reduce friction, and safeguard payments from takeovers.