Ghosting, a form of identity theft used to create zombie accounts, occurs when a fraudster steals the identity of a deceased person to open financial accounts, take out loans, and collect tax refunds or other government benefits before the executor gains control of assets.
Fraudsters are also increasingly creating synthetic identities using valid social security numbers with accompanying false names, addresses, or birth dates – and deceased people are a prime target. The problem of synthetic identity fraud is growing and resulted in $20 billion in losses for financial institutions in the United States in 2020.
With operational costs for fraud investigation and recovery increasing nearly 10% since before the pandemic, it is vital for financial institutions and other organizations to define benchmark performance indicators (e.g., precision, catch-rate) to track the effectiveness of their fraud prevention programs and understand their risk in context. Knowing whether a customer is alive or deceased is foundational and the cornerstone of any compliance program.
The pandemic also ushered in a wave of customers using digital channels for service, increasing the need for safeguards that secure the user experience. Customers now demand a clear strategy from organizations to protect their personal data and assets, accelerating the shift from reactive to proactive customer service and the need for real-time data monitoring.
As the pandemic wanes and the “Great Wealth Transfer” looms, proactive decedent identification can help financial institutions and other organizations be better financial stewards to both customers and their families by protecting a customer’s assets from fraudsters and helping to unburden families overwhelmed with the estate distribution process. Organizations that connect with heirs, beneficiaries, and estate representatives learn that they can generate valuable goodwill and often retain the relationship with the customer’s family.
Because third-party vendors have more experience with both fraud threats and the solutions available to protect deceased customers, they can be valuable partners for organizations seeking more effective technology and optimized integration into their fraud prevention and compliance platforms.
Financial institutions, for instance, are increasingly using sophisticated third-party tools and ‘death audits’ to augment their customer data to meet regulatory obligations, optimize and streamline operations, combat fraud, and understand the intersection of their customers, services, and market.
VitalAudit, Guidehouse’s industry-leading death audit solution, helps organizations to combat fraud through fast, accurate, and comprehensive customer death identification, enabling companies to take quick action on vulnerable accounts. VitalAudit combines a nationwide decedent database and sophisticated match algorithms with comprehensive location and outreach capabilities to help organizations contact and return assets to rightful heirs upon a customer death, bridge the customer-to-beneficiary relationship gap, and mitigate fraud.