Posted on August 24, 2018 by staff

Charities need FinTech to fight ‘rising tide’ of fraud


With fraud on the rise in the charity sector, over £2 billion a year is now being siphoned away from good causes into the pockets of fraudsters.

As people caught in the middle of humanitarian disasters are particularly vulnerable to identity theft, this translates into very real problems on the ground.

Stephen Ufford, CEO of Canadian FinTech firm Trulioo, says charities are being exploited as a vehicle for money laundering and identity fraud in the midst of the chaos these situations bring.

He believes that the answer is to fight fraud with innovative tech solutions.

“An individuals’ identity is tied to their mobile phone in effortless ways,” he said.

“MNOs (Mobile Network Operators) currently have information about mobile users, linking their name, mobile number and address, as well as device information, geo-location and usage.

“Sending one-time authentication codes to the mobile numbers associated with a particular name and address, or using geo-location to detect where the claim is coming from, are key ways to check that people are who they say they are.”

This kind of technology is especially important for disaster relief victims, says Ufford, because when people can’t be verified quickly, they may have to wait hours or days to access funds.

Wait times such as these can mean the difference between eating dinner that night or going hungry.

“When a not-for-profit organisation suspects fraud or any illegitimate transactions, it must temporarily cease operations and manually verify the recipients of charitable proceeds, which is a time-consuming, tedious and often problematic endeavour,” explained Ufford.

“The technologies now available can enable charities to automatically identify and verify the identities of donors and recipients, a process that could otherwise require great amounts of time-consuming manual processing.

“Innovative apps and financial technology providers, in particular, have the power to revolutionise fundraising, verification processes, and – in the instance of the wildfires – keep track of where the fires are located, how fast they’re spreading, send evacuation alerts and provide 24/7 support.”

Last year, for example, The Red Cross aided fire evacuees in British Columbia on the west coast of Canada, following the worst fire season ever recorded.

“In the midst of the aid efforts, the Red Cross had to confront allegations that fraudsters were trying to claim money set aside for evacuees,” said Ufford.

“They were using the addresses of victims to commit identity fraud and falsely claim compensation. In situations like this it is imperative to be able to confirm an evacuee’s identity.”

Trulioo recently introduced MNOs as a new data source for identity verification to help provide another layer of identity intelligence.

Ufford believes the development of automated identity verification solutions such as this will be a godsend for not-for-profit organisations that are currently struggling.

“It is one of the most significant leaps forward for not-for-profit organisations seeking to redistribute desperately needed aid and mitigates the risk of nefarious players accessing scarce resources,” he concluded.