3 Reasons Why Businesses Find Application Fraud So Devastating

Published on: 17 March 2021 Last Updated on: 27 December 2024

There are all kinds of businesses for which individuals have to fill out applications. You might have a banking app, for instance, and someone wants to fill out an application so they can purchase a CD or open a new checking account. You might have a website set up with a paywall, and some individual is trying to apply for membership.

There are many more business models where people try to fill out applications to become members, purchase things, get in line to buy new products coming out, and more. If they can fill out an application with no issues, it benefits them since they can get what they want, and it helps the business since it can generate revenue.

However, application fraud does exist, and it can harm a business entity significantly. In this article, we’ll explain what application fraud is, and we’ll go over some reasons it can devastate a business if that company can’t figure out a way to identify and block it.

What Exactly is Application Fraud, and Why Does It Happen?

There are all kinds of ways to block application fraud, such as AI machine-learning fraud protection. Before we talk about any of that, though, you should understand exactly what we mean when we use the term “application fraud.”

Application fraud occurs when a malicious individual or entity tries to sign up for a new account. They might do so on a website or through an app. They will usually use stolen or synthetic identities to do so.

They might sign up for a single fraudulent account, or they might create and run programs that try to activate hundreds or even thousands of new accounts at the same time. But why would anyone do that?

Profit is one reason. Someone might sign up for thousands of fraudulent accounts and then use the dark web to sell those activated accounts for a much lower price than the business would charge.

Mischief is another reason. Someone might try to activate all of those new accounts because they like destroying a company and tearing down what the business has tried to build. Some hackers are essentially anarchists, and they try to demolish legitimate businesses for no other reason than because they can.

Now, let’s examine three potential application fraud impacts.

A Company Can Lose Money When This Happens:

Let’s say that a hacker creates a program that tries to open thousands of new accounts at one time. The accounts they create give those who utilize them access to exclusive website content behind a paywall.

If the hacker is successful and sells those active accounts to dark web users, they will start using those accounts. The website, or site network, can potentially lose thousands of dollars or more. If they cannot generate revenue through legitimate, active accounts, then they may have to shut down eventually.

Their Site Can Crash:

A hacker might also create a program to try to open up lots of fraudulent accounts at the same time, and the website has safeguards in place that can identify and nullify the attack. However, the program might be so pernicious that it overwhelms the website’s defenses.

The hacker might not be able to get all of the active accounts that they wanted, but the company’s site can crash. When that happens, it might take their IT department several days to get it up and running again.

They Might Have to Pay for Tons of Overtime Hours:

In the scenario we just described, the company might have to pay their IT staff lots of money for the overtime hours they are putting in to get the website running once more. They might not even have a regular IT department, in which case, they will likely have to reach out to web developers or IT specialists via Upwork or some other freelancer platform.

This will ultimately cost the company money, and though they might have blocked the hacker’s attempt at stealing accounts, that hacker will have the last laugh. The company must still expend both cash and resources trying to bring their site back online.

Application fraud can be problematic, but entities do exist that can help companies that are dealing with it. For instance, you can reach out to an entity that has AI-enabled software that can detect these attacks as they happen. They use advanced algorithms to zero in on the attack and stop it before it can go into effect.

The Role of AI in Detecting and Preventing Application Fraud

Application fraud is a problem that every business faces, regardless of size. Whether it’s a person using fake or stolen information to open an account or a hacker trying to create thousands of fraudulent accounts at once, the impact can be significant.

And Artificial Intelligence (AI) is helping businesses more effectively detect and prevent application fraud than ever before. But what is AI? And how does it stop fraud?

How AI Helps Prevent Application Fraud

Fraudsters often try to trick systems by creating fake accounts, using stolen identities, or running automated programs that generate multiple applications at once.

Traditional methods of fraud detection, like setting up rules that flag suspicious behavior (e.g., if someone opens multiple accounts in a short period), can catch some fraud, but they often fall short. Fraudsters are always coming up with new tricks to bypass these rules.

AI, on the other hand, also analyses but not according to strict pre-determined rules. It analyses real-time patterns and can catch even the tiniest of hastily hidden needles that may escape older systems.

Here are some ways how AI can stop application fraud:

Real-Time Detection

As applications come in, AI analyses them and looks for mismatched personal details. This could be within themselves or from other sources. For example, strange relationships between entities, strange activity, or use of synthetic identities (fake identities created based on stolen/made-up information).

Since AI can analyze fast enough, it flags these suspicions in real-time and helps companies shut down a fraudster before they have a chance to attempt fraud.

Recognizing Patterns of Fraudulent Behavior

AI learns from past incidents of fraud.

For example, if fraudsters often use certain email domains or apply for accounts at specific times of the day, AI can pick up on these trends and flag them in the future.

The more data AI systems are exposed to, the better they become at spotting fraudulent behavior, even if the fraudsters change their tactics.

Blocking Automated Fraud Attempts

Some fraudsters use bots (automated programs) to create thousands of fake applications in a short time.

AI can easily spot when an abnormal number of applications are coming in from a single source. Or, when bots are generating these applications based on behavior patterns that differ from human activity.

Once it’s been determined that fraud is occurring, AI can block these attempts so that you don’t have to deal with this type of fraud further down in your process.

Improving Over Time

AI’s biggest advantage is its ability to learn and improve. The more it is exposed to fraud, the more it understands new types of fraud.

Traditional methods require manual updates and are often redundant when confronted with evolving fraud.

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Why Military Status Verification Is Important For Businesses

In today's society, many businesses are seeking ways to ensure that their employees and customers are who they claim to be. One critical aspect of identity verification is verifying military status. Military verification is an essential tool for businesses that want to ensure that their employees and customers are truthful about their military service. It is especially important for companies that work closely with the government or industries that require a security clearance. Military verification services provide businesses with the necessary tools to confirm an individual's military status. These services offer a range of options to verify military service, from a simple database check to more complex verification methods, such as contacting military authorities. While it may seem like a straightforward task to verify military status, there are many complexities and challenges that businesses may face. This article will explore why military status verification is crucial for businesses, the different methods of verifying military status, the challenges businesses may face, and the benefits of using a third-party verification service. By the end of this article, businesses will have a clear understanding of the importance of military verification and the steps they can take to ensure their employees and customers are truthful about their military service. The Importance of Verifying Military Status Verifying military status is essential for businesses for several reasons. Firstly, it is often a legal requirement for companies to verify an employee's military status. For instance, the Uniformed Services Employment and Reemployment Rights Act (USERRA) requires employers to reemploy servicemembers who have been absent from work due to military service. To fulfill this legal obligation, employers must verify the employee's military status before reemploying them. Secondly, verifying military status helps businesses ensure that they are complying with other legal requirements, such as those related to security clearances or government contracts. These industries have specific rules and regulations that require businesses to verify an individual's military status before granting access to sensitive information or facilities. Thirdly, verifying military status can help businesses make informed decisions when hiring, promoting, or awarding contracts. Knowing an individual's military status can provide valuable insight into their skills, training, and character. Military experience is often associated with qualities such as discipline, leadership, and teamwork, making veterans and active-duty servicemembers desirable candidates for many industries. Lastly, failing to verify military status can have significant consequences for businesses. For instance, if an employee falsely claims to be a veteran or active-duty servicemember, it can damage the business's reputation and lead to legal consequences. Additionally, companies that fail to comply with legal requirements related to military status verification may face financial penalties, lawsuits, or the loss of government contracts. Overall, the importance of verifying military status cannot be overstated. By ensuring that their employees and customers are truthful about their military service, businesses can comply with legal requirements, make informed decisions, and avoid potential legal and financial consequences. How to Verify Military Status? There are several different methods that businesses can use to verify military status. The following are some of the most common methods: DD Form 214: This is the official document issued by the military to indicate a servicemember's discharge status. Businesses can request a copy of the DD Form 214 from the employee or the National Personnel Records Center (NPRC). Pros: DD Form 214 is an official document issued by the military that provides a comprehensive summary of the servicemember's military service, making it a reliable source of information. Cons: Obtaining a copy of the DD Form 214 can be time-consuming, and it may not be possible to obtain one for certain individuals, such as those who are still on active duty. Military Service Records: These records are maintained by the NPRC and provide detailed information about a servicemember's military service. Pros: Military Service Records are a reliable and comprehensive source of information about a servicemember's military service. Cons: Access to Military Service Records is limited, and it can take several weeks or months to obtain them. Additionally, the records may not be available for certain individuals, such as those who served before the 20th century. Defense Manpower Data Center (DMDC): The DMDC maintains a database that businesses can use to verify a servicemember's military status. Pros: The DMDC database is a quick and easy way to verify military status. Cons: The DMDC database may not be up to date or accurate, and it may not be possible to verify the military status of certain individuals, such as those who served in the National Guard or Reserves. Best practices for verifying military status include: Verifying military status with multiple sources to ensure accuracy and completeness. Keeping records of the verification process and the sources used. Ensuring that personal information is handled securely and in compliance with applicable laws and regulations. Providing clear communication to the employee or customer about why their military status is being verified and how the information will be used. In summary, there are several different methods that businesses can use to verify military status, each with its pros and cons. Best practices include verifying the military status with multiple sources, keeping records of the verification process, and handling personal information securely. The Challenges of Military Status Verification Verifying military status can be challenging for businesses due to several factors, including: Complex Military Records: Military records can be complex and difficult to interpret, particularly for those unfamiliar with military terminology and abbreviations. The information contained in military records may also be incomplete or inaccurate, further complicating the verification process. Limited Access to Records: Access to military records is often limited to authorized personnel, making it challenging for businesses to obtain the necessary information. Additionally, the time and resources required to obtain records can be significant, further complicating the verification process. False Claims: Some individuals may falsely claim military status, making it challenging for businesses to verify the accuracy of the information provided. False claims may be intentional or unintentional, such as confusion about discharge status or military branch affiliation. Privacy Concerns: Military service records contain personal information, including Social Security numbers and dates of birth. Businesses must handle this information securely and in compliance with applicable laws and regulations, further adding to the complexity of the verification process. Changing Military Status: Military status can change over time, making it challenging for businesses to keep up with the current status of their employees or customers. For instance, an employee who was previously on active duty may have transitioned to the National Guard or Reserve, requiring a different verification process. To overcome these challenges, businesses can use third-party verification services that specialize in military status verification. These services have the expertise and resources necessary to navigate the complexities of military records and can help businesses ensure that their verification processes are accurate and compliant with applicable laws and regulations. Additionally, businesses can implement best practices, such as verifying the military status with multiple sources and keeping records of the verification process, to help overcome these challenges. Conclusion In conclusion, verifying military status is an important step for businesses that employ or serve military personnel. It ensures that businesses are compliant with laws and regulations related to military personnel and provides benefits such as tax credits and preferential treatment for government contracts. While there are challenges associated with verifying military status, including complex military records, limited access to records, false claims, privacy concerns, and changing military status, businesses can overcome these challenges by using third-party verification services and implementing best practices. By doing so, businesses can ensure that their verification processes are accurate, efficient, and compliant with applicable laws and regulations. Read Also: Negotiate Your Salary Wisely With These Seven Employment Law Tips 7 Best Employment Law Tips For Businesses In Dubai Most Common Merchant Account Issues Explained

How To Reduce The Operating Cost of Your Business?

You might come across account words you're unfamiliar with when looking at papers like the balance sheet and income statement. Understanding these operating cost concepts, on the other hand, is critical. This can help you better comprehend your financial accounts and improve the financial health of your company. Are you interested in learning more about operating costs and how they affect your company? We'll give you a detailed breakdown of running costs. Then, following a definition and explanation of the phrase, we'll go over some of the things you can do to lower your operational costs. If you are just starting your business, then you might even need to consider a startup mentor. What Are The Operating Costs? The costs of running your firm on a day-to-day basis are referred to as operating costs. Therefore, the operating expenses, operating expenditures, and all terms of OPLEX are used to describe the operating costs. 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In addition, you can better plan for anticipated operational expenses if you get an accurate quote. 4. Cancel Unused Services Examine your variable operating cost to find out which services you are no longer using. Look for a cheaper plan or cancel them completely if you haven't used them in a few months. If you're not using them, they're not helping you make more money. It's easy to lose track of unused services, especially if you have them set up on auto-pay with your credit card. If you do decide to keep service, do some comparison shopping to see if there are any cheaper options. 5. Go green If you have an office, think about making it as environmentally friendly as feasible. To save energy, replace incandescent light bulbs with compact fluorescent bulbs, enhance your insulation and windows to save money on heating and cooling, and reduce the amount of bodily waste you make. Not only will you save money on electricity, but you'll also save money on office supplies on a monthly basis for an operating cost. 6. Telecommute Leasing office space, paying utility bills, and keeping a physical workplace can all put a strain on your budget. Allowing your workers to telecommute can help you save money overall. In the United States, telecommuting is becoming increasingly popular. In 2005, 1.8 million employees in the United States reported they worked from home for half of the week. That number had risen to 3.9 million in 2015, and it has continued to rise up. With today's level of connectivity, the difference between a person working in an office and one working from home is almost indistinguishable. Employees will often benefit from this as well since they will be able to reduce their commute times and expenses. Take Charge Of Your Company's Money Are you the type of business owner that simply watches spending and income without delving into the details? 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Financial Planning For Contractors: Ensuring Project Viability

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It is an important aspect of the entire industry. A personalized plan can help you pinpoint these changes and be prepared to face the challenges in the future. 2. Managing The Flow Of Cash Cash flow management is another critical aspect of any business. The construction business is no exception. The irregular scheme of payments and also the out-of-plan expenditure can, indeed, disrupt the flow of cash. A personalized flow of finance in the construction industry can help you maintain quite a healthy cash flow. It helps manage the sudden need for finance and fix issues. 3. Long-Term Sustainability A well-planned financial plan offers a roadmap for the long-term sustainability of the construction companies. They assist companies in setting attainable goals and targets. If you do not have a solid base of finances, you won’t be able to plan ahead in the future. One of the biggest challenges that business organizations face today is the long-term sustainability. As a business, you could only attain it if you have a steady supply of finances. 4. Managing The Risks The construction industry is quite risky. There are financial liabilities, safety, legal and other issues. A personalized financial plan helps create the strategies. They help reduce the chances of financial setbacks and also the circumstances hitherto not experienced. 5. Reducing The Cost Of Borrowing You all know that the construction industry is quite fund-intensive. You need to have a large sum of money. Under the circumstances, borrowing is the biggest way to handle it. But they have their interest associated with it, which is quite hefty at times. They may affect your budget and the prices of the products. Therefore, you must have the planning and a strong pedestal in place. But there is no alternative to a strong planning. 6. Increased Profitability The be-all and end-all of business is earning profits. 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It assures project owners that you have the financial capacity to complete the project. By including these bonds in your bids, you signal to clients that you are financially stable and capable of fulfilling the contract. This can set you apart from competitors and instill confidence in project owners. Financial Planning For Contractors Emergency Fund As mentioned earlier, cash flow can be unpredictable. Having an emergency fund that covers at least three to six months' worth of expenses can provide a safety net during lean times or unexpected setbacks. Diversify Your Client Base Relying on a single client or type of project can be risky. Diversifying your client base and the types of projects you take on can help stabilize your income and reduce vulnerability to market fluctuations. Regularly Review And Adjust Your Financial Plan Financial planning is not a one-and-done task. It's essential to review and adjust your plan regularly, especially as your business grows and evolves. Insurance Coverage Consider various insurance options to protect your business against unforeseen events. Liability insurance, workers' compensation, and equipment insurance are just a few examples of coverage that can safeguard your financial stability. Invest Wisely Make informed investment choices for any surplus funds you may have. Consult with a financial advisor to develop an investment strategy that aligns with your long-term financial goals. Conclusion In conclusion, financial planning is a critical component of a contractor's success. It ensures project viability, stability, and, ultimately, the growth of your business. Remember to create a comprehensive budget, manage your cash flow efficiently, and explore various financial strategies to secure your financial future as a contractor. By following these principles, you can build a strong foundation for your contracting business and thrive in the competitive construction industry. Read Also: Construction Safety – What You Didn’t Know! All You Must Know About Construction Business Management Software Construction Safeguards: What Are The Top 3 Leading Risks For Machine-Related Amputation?

3 Reasons Why Businesses Find Application Fraud So Devastating

What Exactly is Application Fraud, and Why Does It Happen?

A Company Can Lose Money When This Happens:

Their Site Can Crash:

They Might Have to Pay for Tons of Overtime Hours: