Wednesday, September 27, 2023

Pension Fraud and the Need for Building Effective ID Verification Checks

Pension scams refer to fraudulent schemes where imposters try to part with old-aged citizens for government benefits. Criminals convince victims to move funds into either not genuine or non-existent projects. Schemes such as annuity loans, cash incentives, and quick payment processing scams are other ways to defraud elderly members. Consequently, pension holders are left with severe tax implications and huge financial losses.

Action Fraud report shows there were complaints from more than 107 people in the first three months of 2021 regarding pension fraud. Hence, safeguarding old-age citizens from illicit actions is the topmost priority. Therefore, pension companies are integrating efficient identity verification services to ensure right entities are receiving the money. Read on to learn more about the benefits of incorporating digital ID checks.

Status Quo is Longer Defensible in the Pension Industry

The previous years helped crystallize financial institutions’ understanding of what digital engagement holds for their operations. Pension companies have understood the superiority of providing online monetary services over paper-based accounts and transaction handling. As membership grows, customers are demanding more convenient, touchless, and secure financial solutions. Therefore, the pension sector needs to upgrade its identity verification systems to provide a risk-free experience. 

With automated authentication of ID and multilayer user authentication, pension companies can restrict fraudsters from exploiting illicit government benefits. While Increased account takeover, fraudulent payment transfers, and identity fraud risks are compromising the integrity of these financial institutions, identity verification services are enhancing protection against them. 

For Detailed ID verification Demo

AI-powered digital ID checks help pension companies to safeguard the hard-earned benefits of old-aged members from criminal activities. As a result, this financial institution can also prevent their chances of facing serious legal and reputational repercussions. However, while digitizing their services, pension companies should ensure they don’t increase friction. Otherwise, they will fail to meet customer demands and online global ID verification standards.  

Vulnerability of Manual Customer Verification Checks 

The coronavirus outbreak brought adverse effects for every industry while governing a rapid shift towards digitization. Similarly, the pension sector is also not left behind and is making efforts to provide old-aged members with digital financial assistance. However, unscrupulous people can exploit these services to obtain a fair share of government benefits. 

A prominent example of pension fraud is from July 2022, when an adviser pair was sentenced to six years imprisonment for stealing over

. Rikki Nicholls and Mark Kelly convinced more than hundreds of people to transfer their funds into self-investment schemes. Later, the money was moved into their personal accounts, after which this pair of advisors vanished.  

Considering the increase in annuity fraud and identity theft, reliance on paper-based account handling is no more sufficient. Criminals easily create counterfeit documents to breach validation of identity by using advanced forgery techniques. Manual verifiers are not capable of identifying these tempering and hence unwillingly facilitate imposters. On the contrary, advanced ID verification systems streamline transaction processing by carrying out thorough user authentication. 

Identity Verification Services – Upgrading Onboarding Operations of Pension Companies 

The pension industry is embracing digitization and offering online payment processing services. Old-aged members won’t have to visit the facilities or go through lengthy time-taking paperwork physically. Furthermore, pension companies can deliver frictionless onboarding with fraud-free financial services. Digital ID checks further help these institutions in the following ways:

Accurate User Authentication   

Manual ID verification relies on human efforts to analyze and authenticate users before providing them with government benefits. However, these methods are prone to data discrepancies, inaccurate validation, and forgery detection failure. As a result, fraudsters manipulate pension companies and avail illicit benefits. 

On the contrary, biometric-based digital identity verification for finance offers an additional layer of security to onboarding processes. With real-time selfie-based authentication, liveness detection, and accurate consent validation, pension companies can ensure the person applying for benefits is a legitimate member of the old-aged group.  

Enhances Customer Experience 

Accurate extraction and analysis of data have a long-standing issue with pensions. Document forgery enables criminals to manipulate individuals’ information and bypass identity verification. As a result, fraudsters avail illicit government benefits without the account holder noticing. Furthermore, the status quo is reliant on outbound engagement, so pension companies require identity verification services to improve inbound customer relationships

AI-powered ID verification solutions use mathematical algorithms for data extraction and analysis. While this reduces information discrepancy, pension companies can ensure accurate customer authentication. Later, this aids in identity theft protection and enhances customer experience. 

In a Nutshell

Identity authentication solutions automate individual onboarding, reducing the need for manual efforts. With AI-powered mathematical algorithms in place, old-aged members will not have to undergo repeated document submission. They further enhance identity theft protection and help pension companies route fund transfers to legitimate accounts. Hence, ID verification solutions improve customer engagement, prevent transaction scams, and provide a secure digital way to process government benefit payments.

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