KBA Surveys May Become a Thing of the Past, Predicts Frank McKenna in April’s Auto Remarketing Magazine
The risk of identity fraud is increasing in the auto industry, shares Point Predictive’s co-founder and Chief Fraud Strategist Frank McKenna in the April 2023 issue of Auto Remarketing Magazine (Volume 34, Issue 4).
Traditionally, lenders and dealers have validated identities for loans using Dynamic Knowledge Based Authentication (KBA) surveys. This uses knowledge questions to verify each individual identity with data from public and private data sources such as marketing databases and credit reports. However, these have increasingly become unreliable and are frequently compromised by fraudsters who use stolen identities after extensively studying their victim’s consumer history.
In the article, McKenna highlights that a staggering 92% of fraudsters pass KBA surveys, while only 54% of valid customers do, further dismantling the credibility of such validation tools.
A better, more fool-proof solution is phone validation, which involves a series of simple steps that can be completed in under a minute.
As a first step, the mobile phone number submitted on the application is validated against the consumer’s previous application history. If consistent with previous records, a one-time passcode (OTP) is generated and sent to the consumer’s mobile phone. Once the code is received, the consumer provides it to the dealer or lender to complete the validation process, proving that they own the phone on the application and are in possession of it, which further corroborates their identity.
Dealers who have tested this process have found that they can reduce the identity validation time from five minutes to about 45 seconds and decrease identity risk.
According to McKenna, phone validation is becoming essential in the fight against identity fraud and could render KBA surveys a thing of the past.
Read the full article in the April Edition of Auto Remarketing Magazine (page 95).
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